JD.com to partner Allianz on insurance, Fintech push

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E-commerce giant JD.com is set to buy a 33-percent stake in the Chinese arm of German insurer Allianz, in the latest move into Fintech and insurtech by a major Chinese Internet company.

JD.com will spend 536.6 million yuan (85.4 million US dollars) to become the second biggest shareholder in Allianz China General Insurance Co, according to a filing posted by the insurance company on Monday.

The financial backing from JD.com comes as part of an 805-million-yuan (128.2-million-US-dollar) round of fundraising by Allianz China, which is set to partner up with the Nasdaq-listed tech company on a digital insurance joint venture.

VCG Photo

JD.com told Reuters that “Allianz and JD.com have entered into a long-term partnership… We expect this type of insurance to give consumers even greater confidence when buying online.”

In March 2017, JD.com was reorganized in a process that saw the establishment of JD Finance, a spin-off that would focus on Fintech, insurance and rival Alibaba’s Ant Financial. While JD.com is listed in the US, JD Finance operates exclusively under Chinese shareholders, allowing the company to obtain various licenses in China for securities trading and other financial services.

Last month, the China Securities Journal reported that JD Finance was looking to raise two billion US dollars in its latest round of financing. That would value the company as high as 30 billion US dollars, following a 132.1-percent year-on-year growth in revenue in 2017. Financial services accounted for 51 percent of the 10.3 billion yuan (1.6 billion US dollars) in revenue last year.

While JD.com enjoyed a 24.7-percent market share in the Chinese B2C e-commerce industry in 2016, it does not have its own mobile payments branch, like Ant Financial’s Alipay or Tencent’s WeChat Pay.

JD.com CEO and chairman Liu Qiangdong. /VCG Photo

In 2017, JD.com CEO Liu Qiangdong told CNBC one of the main reasons for the spin-off of JD Finance was for the company to probe further into the online payments sector.

At JD.com’s annual meeting in 2017, Liu told investors that the company would soon launch an online insurance service, with plans to make JD Finance one of the world’s top three Fintech companies by 2020.

According to financial analysis firm Oliver Wyman, the Chinese online insurance sector is set to be worth some 145 billion US dollars by 2021. JD.com is arguably late to the party when it comes to setting up joint ventures with existing insurance firms – Alibaba Group, Tencent and Baidu have all entered partnerships and given significant financial backing to insurance companies since 2015.

However, regulations have proved a hurdle to joint ventures between big tech and the insurance sector. A joint venture between Baidu, Allianz and Hillhouse Capital Group to establish a nationwide digital insurance company in China was agreed in 2015, but has still not received a license to operate in the country.

Allianz is one of the world’s biggest insurance companies, with 1.96 trillion euros’ (2.43 trillion US dollars) worth of assets under its control at the end of 2017.

However, it has struggled to gain a significant foothold in China or the Asian market. In 2017, only four percent of its insurance premiums were sold in the Asia-Pacific region, compared to 10 percent for French insurer Axa and 36 percent for London-based Prudential Plc.