ZA ONLINE has achieved profitability for five consecutive years, with AI cost reduction driving changes in profit structure

The profit structure of ZA ONLINE is undergoing substantial changes. On March 19, ZA ONLINE released its 2025 annual report, revealing that the company recorded a net profit attributable to shareholders of RMB 1.102 billion, a year-on-year increase of 82.5%. After excluding short-term fluctuations and other factors, the adjusted net profit attributable to shareholders was RMB 1.8 billion, with a year-on-year growth rate of 198.3%. Compared to the growth in absolute values, a more core signal lies in the shift in profit sources. In the past, ZA ONLINE's performance was often seen as reliant on the scale expansion driven by internet dividends; now, financial data points to a squeeze on internal costs and an improvement in underwriting quality. Total investment income in 2025 increased by 59.1% year-on-year, providing support for the profit statement. However, breaking down its core driving force, the underwriting side has achieved profitability for five consecutive years, which is a more critical business foundation. During the period, ZA ONLINE's combined cost ratio (COR) decreased by 1.1 percentage points to 95.8%. Against the backdrop of a slight increase in the loss ratio due to business structure adjustments, the combined expense ratio fell from 42.2% last year to 38.7%. This 3.5 percentage point reduction directly fed back into the profit statement for the period, while the underlying driving force points to the penetration of technologies such as AI in the business chain— According to disclosures, in 2025, ZA ONLINE's large model was called over 2 billion times, consuming over 30 trillion tokens. The intuitive financial transformation lies in the improvement of labor efficiency, with each service representative able to serve 100,000 end users. In the health insurance claims sector, the automatic review and approval ratio has exceeded 45%. The technological replacement of human labor in operational processes has built the current cost barrier. The growth in premium scale is also accompanied by structural trade-offs and adjustments. The total premium for the health ecosystem, as a basic plate, reached RMB 12.68 billion, a year-on-year increase of 22.7%. Among them, the premium growth of the "Zhongminbao" series reached 456.1%, becoming the main driving force in this sector. Digital life and automotive ecosystems constitute the main incremental growth in premiums. Pet insurance premiums approached RMB 1.3 billion, a year-on-year increase of 88.2%, aligning with current changes in consumer trends. The overall growth of auto insurance premiums was 34.6%. Among them, the growth rate of new energy vehicle insurance premiums exceeded 200%, with its share of total auto insurance premiums rising to 28.3%. In a context where the entire industry is generally troubled by high accident rates and high claims rates for new energy vehicle insurance, ZA ONLINE has controlled the combined cost ratio of this segment at 93.1%, better than the industry average, reflecting the effectiveness of its earlier data pricing models. At the same time, the premiums for consumer finance business were actively reduced by 10.6%. In the face of macroeconomic uncertainties, management chose to scale down to control underlying asset risks, reflecting a prudent operational consideration prioritizing risk control quality. The Hong Kong business within the consolidation scope also welcomed a clear financial turning point. In 2025, the Hong Kong virtual bank ZA Bank achieved its first annual profit, recording a net profit of HKD 17.27 million. During the period, the bank's retail users surpassed 1 million, with net income increasing by 62.7% year-on-year This means that ZA Bank has passed the initial customer acquisition investment phase and has entered a normalized commercial monetization period. At the group level, this business, which once brought losses, is transforming into positive financial indicators. In terms of basic financial data, ZhongAn Online maintains ample liquidity. The comprehensive solvency adequacy ratio recorded 242%, and the net cash flow generated from operating activities increased from 1.98 billion yuan to 3.54 billion yuan. However, potential disruptive factors in the profit and loss statement still exist. In 2025, against the backdrop of an 18.4% increase in the Shanghai Composite Index, ZhongAn Online adjusted to market conditions by increasing the proportion of equity investments from 4.3% to 7.6%. This means that if the capital market experiences fluctuations or corrections in 2026, the amplified asset exposure will directly reflect in the fair value changes in profit and loss, thereby putting pressure on the net profit for that period. After realizing the logic of reducing costs and increasing efficiency in its main business, how to smooth out the fluctuations on the investment side will be a practical issue that ZhongAn Online needs to face during the profit release period