CONTENTS Five-Year Financial Summary 2 Results Summary 3 Message from the Chairman and CEO 5 Corporate Milestone 10 Management Discussion and Analysis 12 Directors, Supervisors and Senior Management 39 Corporate Governance Report 46 Report of Directors 59 Report of the Supervisory Committee 78 Environmental, Social and Governance (ESG) Report 80 Independent Auditor’s Report 113 Definitions 215 Glossary 218 Corporate Information 219 02 ZhongAn Online P & C Insurance Co., Ltd. / Annual Report 2020 Five-Year Financial Summary AUDITED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (RMB’000) Y2020 Y2019 Y2018 Y2017 Y2016 Gross written premiums 16,708,504 14,629,589 11,255,718 5,954,475 3,408,048 Net profit/(loss) for the year 254,380 (638,645) (1,796,718) (996,356) 9,372 Net profit/(loss) attributable to owners of the parent 553,786 (454,101) (1,743,895) (997,250) 9,372 Basic earnings/(loss) per share (in RMB) 0.38 (0.31) (1.19) (0.77) 0.01 Total assets 45,673,436 30,907,575 26,341,096 21,149,492 9,332,223 Total liabilities 28,280,101 14,402,044 9,866,423 3,878,796 2,473,251 Total equity 17,393,335 16,505,531 16,474,673 17,270,696 6,858,972 Equity attributable to equity owners of the parent 15,705,350 14,911,655 15,432,039 17,126,913 6,858,972 Combined ratio (%) 102.5% 113.3% 120.9% 133.1% 104.7% Comprehensive solvency margin ratio (%) 560% 502% 600% 1,178% 722% ZhongAn Online P & C Insurance Co., Ltd. / Annual Report 2020 03 Results Summary Overall Operating Results Gross written premiums1 Net profit/(loss) attributable to Combined ratio% (RMB million) owners of the parent (RMB million) -10.8pct +14.2% Turnaround 554 16,706 113.3 14,630 102.5 (454) 2019 2020 2019 2020 2019 2020 Total assets Total equity Comprehensive solvency (RMB million) (RMB million) margin ratio (RMB million) +5.4% +58pct +47.8% 45,673 560% 17,393 16,506 502% 30,908 2019 2020 2019 2020 2019 2020 Revenue from technology export Number of insurance industry (RMB million) customers of insurance system products +35.4% +108.3% 365 75 270 36 2019 2020 2019 2020 1 excluding life insurance business Message from the Chairman and CEO 06 ZhongAn Online P & C Insurance Co., Ltd. / Annual Report 2020 Message from the Chairman With a focus on the new starting point and pursuing growth with quality, ZhongAn will continue to enhance its strengths in technology, product and brand. We are confident to continuously lead the development in the new era of insurance in this land of passion. Yaping Ou Chairman Dear Shareholders, connecting scenarios to integrating different operations and further to promoting digital transformation through technology The year 2020 was memorable and full of uncertainties. export, we have been committed to redefining the finance While the COVID-19 pandemic has accelerated the pace of value chain through technology and maximizing the synergetic digitalization across industries, the PRC insurance sector is value of various ecosystems. Looking forward, with a focus also experiencing a shift toward lean operation and high- on the new starting point and pursuing growth with quality, quality growth, and the market landscape is gradually evolving ZhongAn will continue to enhance its strengths in technology, toward an all-win Eco model. In this special time, we continued product and brand. We are confident to continuously lead to pursue growth with quality and reached new heights in the development in the new era of insurance in this land of various aspects. For instance, we ranked among the top 10 passion. players in the PRC property and casualty insurance sector in terms of scale of GWP for the first time, turning us into a force Over the past seven years, our every success has depended to be reckoned with on insurance market. While maintaining on the trust and support from our Shareholders, partners and a steady business growth, we continued to increase our clients, and for which I am very grateful. With you, we could investment in the Insuretech sector. We completed our have more courage and determination to unswervingly do first offshore debt financing by public issuance as well as the hard things and do the right things, and write a wonderful the H Share full circulation. Meanwhile, ZhongAn Bank and passage of our own on a path mush less travelled. I wish ZA Life officially opened for business in Hong Kong. These that everyone in ZhongAn could, with hope and dream, take new breakthroughs accomplished in business, capital and real actions to make exploration into possibility and achieve technology have laid down a solid foundation for ZhongAn to breakthrough and development all together. pursue its development and strategic plan in the future. As a Chinese saying goes, with deeds, we are bound to make a Technology is the bedrock for insurance in the future, and the long destination reached and a hard job done. Let’s adhere to “New Infrastructure” for insurance sector and digital-driven our original aspiration and keep working hard to jointly create new ecosystem cannot do without being backed by technology. a more beautiful future. As the first Internet-based Insuretech company in China, ZhongAn has made promoting the integration of technology Yaping Ou and insurance its mission ever since its inception. From Chairman ZhongAn Online P & C Insurance Co., Ltd. / Annual Report 2020 07 Message from CEO As a leading Insuretech company in the world and with our well-established strengths in online operation for many years, ZhongAn will leverage on opportunities of the era to lead global fintech innovation. Xing Jiang Chief Executive Officer In 2020, the year of Gengzi, the sudden outbreak of the Internet P&C insurance market. In addition, benefiting from COVID-19 epidemic had huge impact on the global economy. the whole-process intensive integration of technology with The epidemic has caused interruptions to outdoor activities insurance, the combined ratio decreased by approximately and brought many irreversible changes to various industries 10.8 percentage points from approximately 113.3% for 2019 to worldwide. However, we saw more opportunities in such approximately 102.5% for 2020. We served over approximately risk: the digital wave has been sweeping across the world, 524 million insured users, with the total number of insurance and the global Insuretech industry is also accelerating the policies exceeding 7.9 billion. transformation from offline to online. As a leading Insuretech company in the world and with our well-established strengths We center around customers and interact with customers in online operation for many years, ZhongAn will leverage on more frequently through eco-oriented insurance product opportunities of the era to lead global fintech innovation. innovation. ZhongAn’s products and services have gained wider recognition. In 2020, ZhongAn recorded a GWP of approximately RMB16.71 billion, representing a year-on-year increase of approximately In 2020, our health ecosystem underwent an all-round 14.2%. ZhongAn achieved profitability for the first time since its strategic upgrade. By integrating health insurance products Listing. Net profit attributable to owners of the parent reached with Internet medical services, we launched the outpatient and 門急診版尊享 生 approximately RMB550 million, representing a year-on-year emergency version of Personal Clinic Policy ( e ), improvement of approximately RMB1,010 million. Internet which included ZhongAn’s Internet hospital outpatient service 眾安醫管家 insurance business has recorded positive profit for two into the coverage. “ZhongAn Medical Manager” ( ), consecutive years. Driven by a GWP growth rate higher than our family doctor service, was grandly launched to provide the industry average, ZhongAn for the first time ranked 9th customers with one-stop health management solutions. As among the top 10 companies in the PRC property and casualty such, ZhongAn completed the closed-loop layout of “insurance insurance market in terms of size of GWP, becoming the protection + medical service” in health ecosystem, upgrading youngest one of top 10 companies, and ranked 1st in the PRC from low-frequency coverage to high-frequency services. 08 ZhongAn Online P & C Insurance Co., Ltd. / Annual Report 2020 Message from CEO As digitalization further penetrates customers’ lives, we have In the early days of inception, ZhongAn has nailed down the followed customers’ steps closely to further enrich digital two-winged growth strategy of “Insurance + Technology”, lifestyle product matrix based on the original products such and since then has been long committed to the research and as e-commerce and travel, driving the rapid growth of digital development of cutting-edge technologies with a prospective lifestyle ecosystem with innovative products. We launched view, so that it could technologize and evolve all the elements phone screen crack insurance, which is based on big data throughout the process of its insurance business. In 2020, risk control capability and innovative photo-taking insurance ZhongAn invested approximately RMB900 million in research purchase method. We embraced pet economy and launched and development activities, representing an accumulated pet insurance with nose pattern recognition technology, which R&D investment of more than RMB3.6 billion since our has served millions of pet owners. establishment. As of the end of 2020, we accumulated up to 503 patent applications, including 174 overseas patent In the consumer finance ecosystem, in response to the rising applications. We have successfully implemented “Wujieshan risk in the consumer finance industry, we proactively raised 2.0”, the core insurance system of next generation built based our risk control standards and strictly monitored the risk on native cloud architecture. With long-term investment performance of the underlying assets. Relying on technology- and keeping an eye on blockchain area, the “Information enabled dual life cycle risk management system, we improved Technology – Blockchain and Distributed Ledger Technology the loss ratio significantly.