By WU Yangyu

Internet insurer Waterdrop Inc. is exploring a listing in the United States, sources close to the company told Jiemian News on Thursday. The company’s latest valuation came in at tens of billions of dollars.

Waterdrop has carried out five rounds of financing to the tune of about 3.2 billion yuan (US$500 million). In July last year, Bloomberg reported that the startup had been preparing for an IPO as early as 2020, seeking a valuation between US$4 billion and US$6 billion, while raising funds in the primary market at a valuation of $2 billion.

At that time, Waterdrop said that it had no clear IPO plan but would continue to explore opportunities in the capital market. Soon afterward, the company wrapped up a $230 million Series D financing.

In October last year, an industry source known online as “IPO Zaozhidao” said that Waterdrop planned to list in the United States in the first quarter of 2021, as a way of raising about $500 million.

New premiums reached 6 billion yuan in 2019, a year-on-year rise of nearly 600 percent. In July 2020, the company stated that the target for 2020 was 11 billion yuan, and had almost raised 6 billion yuan in H1. General manager Yang Guan said that actual premiums received in 2020 are expected to be four times those of 2019.

As of end-June 2020, independent paying users amounted to nearly 330 million on all platforms (crowdfunding company Shuidichou, mutual aid platform Shuidi Huzhu, and Shuidi Insurance), of which insurance covers more than 100 million users.

The valuation of Waterdrop Company and haste to IPO may relate to the success of China's first online-only insurer ZhongAn Online Property & Casualty Insurance, listed in Hong Kong in September 2017 with an issue price of HK$59.70 (US$7.70, 50 yuan) per share.

When Hong Kong started trading on Tuesday, the stock price jumped by over 32 percent taking its market value over HK$100 billion. Momentum was maintained with shares now trading at around HK$72 per share, down 8.1 percent from the peak.

The rebound was attributed to a glittering earnings report. Prior to this, ZhongAn was expected to turn losses into profits in 2020. As of December 31, 2020, the net profit attributable to shareholders was not less than 500 million yuan. The company explained that performance came with a steady increase in premiums, while optimizing the combined ratio and reducing underwriting losses.

According to media outlet The Paper, the three other domestic online insurance operators are performing remarkably badly. Taikang Life Insurance lost 650 million yuan, Anxin Property & Casualty Insurance 535 million yuan and 1an.com was taken under the control of the China Banking and Insurance Regulatory Commission.

SHEN Peng, CEO of Waterdrop, said in July that the Tencent-backed company is not concerned by profits at the current stage, more concerned by the overall size of operations. Around that time, the company claimed to have been profitable for three months.

The entire online insurance sector has been helped out by increased fears brought by COVID-19. Insurance premiums crept up throughout 2020, while pandemic prevention and control indirectly fueled the digital transformation of the insurance business.

Online insurers reach many potential users and some predict that China's internet insurance market will be valued at 2.5 trillion yuan around 2030. That’s a compound growth rate of 25 percent.