The latest: Online insurer ZhongAn Online P & C Insurance Co. Ltd. (6060.HK) announced Tuesday that its aggregate gross written premiums in the first five months of the year rose 33.81% year-on-year to 11.22 billion yuan ($1.57 billion).

Looking up: The company’s aggregate gross written premiums increased by 27.93% in the first four months of the year, meaning its income growth accelerated in May.

Take Note: ZhongAn’s aggregate gross written premium growth in the first half of last year was only 6.9%, much lower than the 24.5% growth in the second half of the year. Therefore, the growth in this year’s first five months may have benefited from a low year-ago base. But the market will be watching closely to see if that growth can be sustained in the second half of this year.

Digging Deeper: Established in 2013 by Ant Financial, Tencent (700.HK) and Ping An Insurance (2318.HK; 601318.SH), ZhongAn is the first and largest online insurance company in China, and was listed in Hong Kong in 2017. The company’s premium income has been steadily increasing in recent years, but its financial results have varied due to volatility in its investment income. Last year, the company’s adoption of the new IFRS 9 accounting standard for financial instruments magnified the negative impact of poor investment income on its results. That, combined with a foreign exchange loss, led the company to report an annual net loss of 1.36 billion yuan last year, reversing a year-ago profit.

Market Reaction: ZhongAn shares rose on Wednesday, closing up 0.7% at HK$22.5 by the midday break. The stock now trades in the middle of its 52-week range.

Translation by Jony Ho

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