Chinese Online Insurance Platform Huize Files For US IPO

Huize Holding, the operator of an online insurance intermediation platform in China, has filed to raise about $150 million in an initial public offering (IPO) in the US, according to its preliminary prospectus.

The filing is heavily redacted, and Huize, founded by Ma Cunjun in 2014, has not specified the number of and price of American depositary shares it intends to sell. Its prospectus showed that it plans to list on the New York Stock Exchange or the Nasdaq under the symbol HUIZ.

Focusing on China’s younger generation, Huize distributes insurance products and services with the aim of helping insurance firms serve a large number of purchasers, it said in its prospectus.

“Targeting the younger generation, we are dedicated to serving our insurance clients for their life-long insurance needs,” the company said.

Its products cover two major categories—life and health insurance, property & casualty insurance products.

Huize operates in the same space with online insurance giant Zhong An and newer player Waterdrop, a Beijing-based online insurance platform backed by Tencent. Waterdrop raised more than $145 million in its Series C funding round led by China-focused investment firm Boyu Capital in June.

Other competitors in the online insurance space are independent insurance products and services service platforms, insurance distribution businesses, traditional insurance intermediaries, and other online insurance technology players.

A new industry report done by WeSure Internet Insurance Ltd, an insurance agency platform affiliated with Tencent Holdings, showed that the country’s internet insurance market is predicted to see further growth on the back of the country’s large population of netizens and high acceptance of seeking protection online.

Huize, which is based in Shenzhen, booked $108 million in revenue for the 12 months ended June 30, 2019. Its annual revenue in 2018 nearly doubled to $74.1 million from the preceding year.

The firm turned to profit in 2018, reporting $400,000 in income in contrast to bearing losses in 2017. It made $900,000 in profit in the first half of this year, serving a cumulative 5.8 million insurance clients as of June 30.

Its life and health insurance products contributed to approximately 89.8 per cent of its brokerage income in the six months ended June 30, 2019. In particular, long-term life and health insurance products, which typically generate higher commission fees, served as a driving factor for the significant increase in its operating revenue in 2018 and the first half of this year.

Huize disclosed that the proceeds from its IPO will be used to invest in technology and big data analytics to boost user acquisition and risk management capabilities. Part of the proceeds will also be used to further improve its product and cover general corporate expenses.

Among its principal shareholders is SAIF IV Healthcare Ltd, which owns a 21-per cent stake. The said fund is managed by Asian private equity and venture capital firm SAIF Partners.