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Scholz in the Wirecard scandal Political leadership from yesterday

Status: 22.06.2021 5:50 p.m.

Finance Minister Scholz bears political responsibility for the Wirecard scandal. An apology would be appropriate. Because of his antiquated understanding of political leadership, there won’t be.

A comment by Tobias Betz, ARD capital studio

After eight months of the committee of inquiry, the question of political responsibility remains. And that is a fundamental question of political culture. Because there is not a word of regret from the government. Let’s not kid ourselves: this is shameful, but the reality.

The finance minister is politically responsible

Let’s take a look at the situation: The Wirecard case is one of the biggest financial scandals in Germany. At least 24 billion euros in damage. Everything happened in front of the eyes of the responsible authorities, which did not do their job in any way and at any time. And that is why there is certainly someone who is politically responsible – and that is the Federal Minister of Finance in this financial scandal. But Olaf Scholz makes it easy for himself. Not responsible, not involved, more like an observer. He could very well have – and should have – intervened. Because the Ministry of Finance has the legal and technical supervision of the Bafin. This is the financial supervisory authority. And she made gross miscalculations; she even supported Wirecard at times, reported journalists who had clues.

Not ready for self-reflection

Mistakes have been made. And the Scholz Ministry is responsible for ensuring that the financial supervision process works. If it just doesn’t work, then Scholz, as a minister, could be the size and have the courage to admit that mistakes have happened here. Honest words of regret. Society doesn’t really ask that much, a “Mea Culpa!”, “My mistake!” Is often enough. But Scholz is apparently not ready for this kind of error culture, critical self-reflection.

Don’t make any mistakes, least of all admit none

Maybe he’s not ready to do so because of the election campaign. Just don’t make any mistakes, least of all admit any mistakes. Protect yourself, after all, he is a candidate for chancellor. Namely one who advertises to have a lot of government experience. But leadership doesn’t include ironing out and fending off everything. That is an understanding of political leadership from the past. Mistakes happen, people make mistakes and they are allowed to admit them. That would be honest and brave. But as a consequence, calls for resignation like those from the AfD are out of place.

The Chancellor apologized

That promotes this unspeakable error culture in politics. If every mistake immediately costs the post, then it is already clear that there can be no political Mea Culpa. Chancellor Angela Merkel once broke with this culture of mistakes. During the lockdown policy at Easter. She had to withdraw an overnight decision to introduce an additional public holiday. But she didn’t do that quietly and without comment. No, she stood in front of Parliament and apologized in public for it. Apparently this remains an exception. But the Chancellor has the format of a chancellor. Editorial note Comments generally reflect the opinion of the respective author and not that of the editors

Dispute over ECB bond purchases Get together!

As of: June 9th, 2021 6:05 p.m.

It is understandable that the EU Commission is reacting to the Karlsruhe ECB ruling with proceedings against Germany. But that won’t resolve the dispute. Only the courts themselves can do that. A comment from Frank Bräutigam, ARD legal editors If anyone at Karlsruhe’s Schlossplatz had hoped that the high waves after the Karlsruhe ECB judgment of May 2020 would fizzle out silently, they were disappointed today. The EU Commission is initiating infringement proceedings against Germany because of a ruling by the Federal Constitutional Court. ´ That has never happened before. The relationship between Karlsruhe and Luxembourg has always been somewhat tense. But this is now a unique escalation.

Do not lose sight of questions of democracy

The starting point of the Federal Constitutional Court on EU issues is absolutely correct and important. To see that the legal limits remain an important currency at the EU level. Because one must not lose sight of the individual voter, i.e. questions of democracy. Because the individual states have not given up all their competences to the EU. With its “yes, but” approach, the court has achieved a lot in several rulings since the financial crisis in 2012 at the latest. In this specific case of the ECB bond purchase, pulling the emergency brake, accusing the ECB and ECJ of arbitrary action, went too far.

The EU Commission had to react

That was not proportionate: in terms of content, but also with a view to the possible role model effect for other states such as Poland or Hungary. What happens there in terms of content within the judiciary is of course not comparable to Germany. Nevertheless, there is this bare result: The German court does not adhere to what the ECJ says. Then why should we do this? The fact that, from its point of view, the EU Commission must therefore react and initiate a procedure – which is understandable.

Dilemma for several actors at the same time

But you also have to be aware that if you think through the process started today, it will lead several actors into a real dilemma. First of all, the federal government, which now has to take a position as a first step. What is she supposed to do? Somehow signal an independent court to correct its judgment or take other action? And in the last step, the ECJ would decide on a breach of contract. Who? Yes exactly. One of the arguing actors. He would be a kind of judge in his own case. Would that lead to a good solution?

Take “cooperation relationship” at its word

Arguing over who “has the last word” is almost always devastating. In private life, in politics and also within a network of national and European courts. It is the last thing the citizens of the EU need in these times. If the “cooperation relationship” between the courts can be heard in many speeches, this must be taken literally. Mind you: the courts cooperate with each other. Not the courts with the state and the EU. They are supposed to strictly control these two. The fact that there is often still room for improvement at the ECJ on this point has expressly contributed to this conflict.

It is the courts’ turn

An example from the two companies at issue here shows that cooperation is fundamentally possible. Because the First Senate of the Federal Constitutional Court (the Second Senate acts in the ECB conflict) has shown with important rulings from 2019 that Karlsruhe and Luxembourg can achieve control of national and European fundamental rights in the interests of the citizens together. That means: the current situation can only be defused by the courts themselves. Not from the Federal Government or the EU Commission. The actors from the judiciary know each other. Well, actually. You have to pull yourself together. It is unclear what the one solution to the specific dispute should look like, but there has been no lack of creative ideas in Karlsruhe or Luxembourg for many decades.

Editorial note Comments generally reflect the opinion of the respective author and not that of the editors.

The swordsmen failed miserably In order to avoid the long dreamy night, Master Logos broke the barrier and ordered the Shindai brothers to attack the swordsmen of the northern division. Standing in front of the power of the two most powerful swordsmen, Sword of Logos, warriors fell one after another. While Ogami / Kamen Rider Buster was severely beaten by Zoous, Daishinji / Kamen Rider Slash was defeated by Sabela. Neither Touma nor Yuri were capable of defeating Durandal, even though they used both X-Swordman and Elemental Dragon. Counterattack In the midst of a dire situation, Rintaro suddenly remembers the teachings of his former master, Blades, realizing that his task is to protect his friends and teammates from the Sword of Logos – the organization he once considered a family. family. In response to his determination, the secret book Sophia kept became a new Wonder Ride Book, with the power to surpass any previous Wonder Ride Book. As a part of the all-powerful book, as well as the sustaining power source for the northern subdivision, this secret book contains an immense amount of information, including the history and strength of previous swordsmen at that icy geography. Now, it becomes the Tategami Hyoujuusenki Wonder Ride Book, helping Rintaro to evolve to new heights with the power of all sorts of ice creatures. On land, in the air or under the sea, there is no longer any place that would make it difficult for the king of the ice continent. Putting a vow before the Sword of the Water Luu Thuy, Rintaro will now protect those most important to him. Faced with the power that surpassed the definition of absolute zero of the Blades, Zoous failed. In the end, Rintaro proves himself to be a true Water Swordsman and avenge his master. Tategami Hyoujuusenki not only possesses the power of previous swordsmen, but also includes the power of creatures from the ice continent. Meanwhile, although he was unable to defeat Durandal, Touma had discovered the secret of his move thanks to the Elemental Dragon’s “seeing through the principles of the world” ability. It turned out, the Time of the World Sword Period could create a dimension where the flow of time was slowed down, and Durandal could observe and move freely in it. After he acts, the other “time” will be deleted. However, due to the time difference between this dimension and the real world, Durandal was unable to affect the target. In order to be able to attack, he would have to “turn off” this ability first. Therefore, Touma was able to temporarily “catch” him and counterattack. But right now, Master Logos “forced” him to return, thus the battle ended. Sabela will change? After witnessing Master Logos teaming up with Megid, Shindai Reika became confused. Most likely, she would awaken in time and join the swordsmen guild against her own master. Touma sacrifice? In the preview of episode 33, we saw a scene of Touma / Saber and Kento / Calibur fighting Master Logos together. With the Lightning Strike, the Lightning Sword and the Earth Swordsman Sword (acquired by Sabela after Buster’s defeat), Master Logos overwhelmed both of these swordsmen. Also in this preview, we see Touma dying in Kento’s arms, along with the end of the world. But is it really Touma going to die, or is this just a prospect of a possible future? If you remember, Kento was not killed by Kamijou Daichi but was sealed into the Darkness Sword of the Moon. At this time, Kento had seen a series of future scenarios thanks to the power of the dark sword, so decided to seal all of the holy swords in order to protect the world. Therefore, it is very likely that this is just a result that Moon Dark showed Kento only. After all, Master Logos is still incapable of destroying everything.

Produced | Tiger Sniff Business Team

Author｜Li Ling

Head image｜IC photo

On April 17, Beijing time, the parent company of DipChip submitted a listing application to the SEC, planning to list on the New York Stock Exchange through the issuance of ADS under the code “WDH”.

In this prospectus, Waterdrop defines itself as “a leading technology platform dedicated to insurance protection and medical and health services”, but did not announce the number of shares issued and the amount of funds raised. When the news of Waterdrop’s listing in the United States came out in the second half of 2020, its market value was around US$6 billion.

In fact, in the current division of business areas in my country, it is difficult to properly summarize and define Drip. If the only profitable insurance brokerage business currently fits “insurance protection”, medical and health services are part of Drip’s unproven feasibility.

The core business model of Waterdrop at this stage is to “establish a social network of protection and assistance through Waterdrop Chips, Waterdrop Mutual Aid and Waterdrop Insurance, so as to increase the insurance awareness of domestic consumers, and then provide insurance protection and medical and health services.”

In other words, Waterdrop first obtains strong-associated social users through online fundraising (waterdrop financing) and network mutual assistance (waterdrop mutual assistance), and establishes the user’s risk control mind, and then uses the Internet insurance broker (waterdrop insurance mall) business to provide users with risks. The solution is to sell insurance.

Not long ago in March, Water droplets shut down water droplets help each other . Compared with Meituan, which shut down its mutual assistance business earlier and returned all of the user’s share of the money, Waterdrop made a unilateral notice and did not give users any compensatory measures. From the perspective of the industry, The unilateral shutdown of Waterdrop Mutual Aid is clearing the barriers to listing and also reflects the urgency of its listing.

No matter what, the water droplet will have the title of “first share”, but the specific definition of which field is not so appropriate. Both online mutual assistance and online crowdfunding are currently in a dark area of ​​regulation. The former is forced to close due to compliance risks, and the latter has not yet issued suitable regulatory regulations, but it has been criticized by public opinion several times for harvesting love. Neither of them has the ability to be benchmarked for listing.

The intermediary commissions earned by insurance brokers are essentially flow realization, with limited sustainability, and it is hard to say how high the technological barriers are.

The core business is under a strong regulatory environment, and the new business is still in its infancy. Why is Water Drop eager to go public at this time? The answer is hidden in the data in the prospectus.

Lose for three years, you may lose more years

The prospectus disclosed that from 2018 to 2020, the total revenue of Waterdrop was 238 million yuan, 1.511 billion yuan, and 3.028 billion yuan, respectively. Revenue in 2019 increased by 535% year-on-year, and in 2020 it increased by 100% year-on-year.

Water drop’s revenue has not yet covered expenditures. Water drop’s total operating expenses for the same period were 426 million yuan, 1.705 billion yuan, and 3.524 billion yuan, respectively, with year-on-year growth of 300% and 107% in 2019 and 2020, respectively.

Its net losses for the same period were 209 million yuan, 322 million yuan, and 664 million yuan.

In other words, in the past three years, Waterdrop has earned 4.8 billion yuan in revenue and nearly 1.2 billion yuan in losses. The loss in 2019 increased by 39% year-on-year. In 2020, the revenue growth rate dropped sharply, and the loss also expanded at the same time, with a year-on-year increase of 106%. The risk factors section of the prospectus stated that operating losses may continue in the future.

Judging from the growth rate of the last two years alone, the trend of water drop’s revenue and expenditure remains the same: when expenditure doubles in 2019, its revenue growth rate reaches its peak. Expenditure shrinks in 2020, and revenue growth has also begun to fall off a cliff.

Waterdrop was established in 2016. According to the development stage of the Internet company, it will either precipitate or erupt in three to five years. Waterdrop belongs to the latter. Based on social traffic, it broke out earlier, but the abnormal business growth at this stage “brakes” because the business model causes traffic. To the top of the realisation, or the phased investment is too large, some clues may be seen from the marketing expenses.

From 2018 to 2020, the marketing expenses of Water Drop were 185 million yuan, 1.058 billion yuan, and 2.131 billion yuan, respectively. The three-year marketing expenses were as high as 3.374 billion yuan.

If split into the proportion of annual operating expenses, Waterdrop’s marketing expenses in 2018 accounted for 43% of operating expenses, marketing expenses in 2019 accounted for 62% of operating expenses, and marketing expenses in 2020 accounted for 60% of operating expenses.

Marketing expenses account for 60% of operating expenses, and it is not a good thing to look at where they are placed. Furthermore, the high marketing costs also represent the high cost of acquiring customers at the front end of Waterdrop. Under the trend of tightening supervision, whether marketing can be used to drive business growth has to be questioned.

In contrast, the R&D expenses in the above period were 69 million yuan, 215 million yuan, and 244 million yuan, accounting for 16%, 13%, and 7% of operating expenses during the same period.

The highest proportion of R&D investment is less than 20%, and the lowest is only 7%, and there is a tendency to decrease. In this case, Waterdrop has to say that it is a technology platform, most likely to tell a good story to the capital market.

For water droplets whose income is far from covering expenditures and needs to rely on continuously increasing investment in marketing to maintain operation, Getting money on the market is a matter of course. But the previous valuation of 6 billion yuan is likely to be greatly discounted.

A company that sells insurance, worth $6 billion?

From the perspective of revenue composition, Waterdrop can be called “a company that sells insurance.”

Its revenue is composed of four parts: “income from securities, futures and insurance brokerage business”, “technical service income”, “management fee income” and “other business”.

The first income with a very long name can be simply understood as the diversion fee of Waterdrop Insurance, which is the commission for selling insurance; technical service fee refers to the technological solutions provided by Waterdrop to cooperative insurance companies and institutions; management fee refers to Waterdrop In the mutual assistance business, the platform extracts 8% of the operating and management expenses from the total mutual assistance fund; other businesses mainly refer to new businesses in the medical service field that have not achieved large-scale revenue.

In 2018, Waterdrop’s total revenue was 238 million yuan, of which insurance commission income was 122 million yuan, technical service income was 59 million yuan, management fee income was 47 million yuan, and other revenues were 10 million yuan, which contributed to the revenue respectively. They are 51%, 25%, 20% and 4%.

In 2019, Waterdrop’s total revenue was 1.511 billion yuan, of which insurance commission income was 1.31 billion yuan, technical service income was 50 million yuan, management fee income was 140 million yuan, and other income was 80 million yuan, accounting for 87% of revenue. , 3%, 9%, 1%.

In 2020, Waterdrop’s revenue is 3.028 billion yuan, of which insurance commission income is 2.695 billion yuan, technical service income is 194 million yuan, management fee income is 110 million yuan, and other income is 29 million yuan, accounting for 89% of revenue, respectively. 6%, 4%, 1%.

A notable trend is that insurance commission income occupies an increasingly important position in revenue contribution, from 50% to nearly 90%. The technical service fees and management fees, which originally combined to contribute 45% of revenue, have been compressed to 10% of their revenue contribution. The contribution of other income to revenue in the past three years is very small, almost negligible.

The “partial branch” of Waterdrop has made insurance commissions a major part of its revenue. At the same time, its insurance income is also concentrated from ZhongAn Insurance, China Taiping Life Insurance, and Hongkang Life Insurance.

As of December 31, 2020, the cumulative number of insurance users of Waterdrop was approximately 79.4 million. In 2018, 2019, and 2020, the cumulative number of users who purchased insurance was 1.7 million, 8.8 million and 19.2 million. Insurance revenues in the first year were 972 million yuan, 6.668 billion yuan, and 14.426 billion yuan.

Among them, ZhongAn Insurance accounted for 21.7% of Waterdrop’s revenue in 2018, China Taiping Life Insurance accounted for 24.8% of Waterdrop’s total business in 2020, and Hongkang Life Insurance accounted for 11.1% of its total revenue in 2020.

With a single core business and a concentrated source of income, it is difficult to find a cure for the problems of Waterdrop’s profitability and growth space in a short period of time. Although the prospectus discloses that Waterdrop has obtained the online medical sales qualification and drug distribution license, its new business related to medical services has weak momentum and large uncertainties, so it is too far-fetched to define it as a medical service platform.

Even if it is valued according to its core business, ZhongAn Insurance, which has an insurance license, has a total market value of no more than 9 billion U.S. dollars. Only the water droplets with an insurance brokerage license are far away from 6 billion U.S. dollars.

The diversion artifact is gone, how else to tell the story

Even at the current stage of continuous loss of money and high marketing expenses, for the Internet star company blessed by the former executives of Meituan, this does not affect Waterdrop’s storytelling for investors.

Waterdrop’s prospectus stated that its user conversion capabilities can realize the lifetime value of user groups through my country’s insurance market, drive long-term growth, and expand the field of medical services.

In other words, insurance income will become the core income of Waterdrop in the longer term, and it will also become the basis for expanding medical services in the future.

But among the risk factors, Waterdrop cited insurance, crowdfunding Business growth is affected by the future development of third-party insurance brokerage agents and the medical crowdfunding industry. Risks such as the uncertainty of changes in the regulatory system .

Waterdrop’s insurance brokerage business is essentially flow monetization. Through waterdrop mutual assistance and waterdrop chip to obtain targeted traffic, it is also easier to convert to related insurance types. Waterdrop’s insurance brokerage license was officially obtained in May 2017, through a wholly-owned acquisition of Baoduoduo Insurance Brokers Co., Ltd.

The biggest difference between an insurance broker company and an insurance company is that the former does not produce insurance but only sells insurance, and at the same time can participate in the design of insurance products. Waterdrop’s second largest revenue is to design insurance jointly with insurance companies based on user data and charge technical service fees. It is still the realization of traffic (data).

After all, insurance brokers still work for insurance companies, and when traffic is always capped, the uncertainty brought about by regulatory changes also makes it harder and harder for platform intermediaries to make money.

In December 2020, the China Banking and Insurance Regulatory Commission will adjust the supervision of online insurance business, which will take effect in February 2021. The adjustment change is that the insurance brokerage platform sets up customer management, information protection, etc. It also requires the platform to standardize promotional materials and marketing activities, and users can only apply for insurance online through the online interface of insurance institutions.

In addition to restricting insurance brokers’ over-acquisition of user information, the China Banking and Insurance Regulatory Commission has also improved the platform’s infrastructure and network security standards, which will undoubtedly increase operational and security costs.

In March, the water drop shut down the water drop to help each other, and only the water drop chip can divert the insurance. In 2018, 2019 and 2020, the first year premium of Water Drop Insurance was approximately 46.5%, 23.0% and 13.0% were from water drop chips.

The user conversion rate of DipChip has dropped visibly. The prospectus did not disclose the total number of registered users of Waterdrop and related growth data. Therefore, it is difficult to judge whether the water drop chip will produce a continuous and stable transformation of insurance in the future.

Now, Waterdrop is undoubtedly a marketing-driven insurance brokerage company. Having not yet proven its potential in the field of medical and health services, coupled with weak profitability, and no longer listing to raise money, I am afraid that even Didi Chai, which has a low operating cost, will not be able to do it.

Produced | Tiger Sniff Business Team

Author｜Li Ling

Head image｜IC photo

On April 17, Beijing time, the parent company of DipChip submitted a listing application to the SEC, planning to list on the New York Stock Exchange through the issuance of ADS under the code “WDH”.

In this prospectus, Waterdrop defines itself as “a leading technology platform dedicated to insurance protection and medical and health services”, but did not announce the number of shares issued and the amount of funds raised. When the news of Waterdrop’s listing in the United States came out in the second half of 2020, its market value was around US$6 billion.

In fact, in the current division of business areas in my country, it is difficult to properly summarize and define Drip. If the only profitable insurance brokerage business currently fits “insurance protection”, medical and health services are part of Drip’s unproven feasibility.

The core business model of Waterdrop at this stage is to “establish a social network of protection and assistance through Waterdrop Chips, Waterdrop Mutual Aid and Waterdrop Insurance, so as to increase the insurance awareness of domestic consumers, and then provide insurance protection and medical and health services.”

In other words, Waterdrop first obtains strong-associated social users through online fundraising (waterdrop financing) and network mutual assistance (waterdrop mutual assistance), and establishes the user’s risk control mind, and then uses the Internet insurance broker (waterdrop insurance mall) business to provide users with risks The solution is to sell insurance.

Not long ago in March, Water droplets shut down water droplets help each other . Compared with Meituan, which shut down its mutual assistance business earlier and returned all of the user’s share of the money, Waterdrop made a unilateral notice and did not give users any compensatory measures. From the perspective of the industry, The unilateral shutdown of Waterdrop Mutual Aid is clearing the barriers to listing and also reflects the urgency of its listing.

No matter what, the water droplet will have the title of “first share”, but the specific definition of which field is not so appropriate. Both online mutual assistance and online crowdfunding are currently in a dark area of ​​regulation. The former is forced to close due to compliance risks, and the latter has not yet issued suitable regulatory regulations, but it has been criticized by public opinion several times for harvesting love. Neither of them has the ability to be benchmarked for listing.

The intermediary commissions earned by insurance brokers are essentially flow realization, with limited sustainability, and it is hard to say how high the technological barriers are.

The core business is under a strong regulatory environment, and the new business is still in its infancy. Why is Water Drop eager to go public at this time? The answer is hidden in the data in the prospectus.

Lose for three years, you may lose more years

The prospectus disclosed that from 2018 to 2020, the total revenue of Waterdrop was 238 million yuan, 1.511 billion yuan, and 3.028 billion yuan, respectively. Revenue in 2019 increased by 535% year-on-year, and in 2020 it increased by 100% year-on-year.

Water drop’s revenue has not yet covered expenditures. Water drop’s total operating expenses for the same period were 426 million yuan, 1.705 billion yuan, and 3.524 billion yuan, respectively, with year-on-year growth of 300% and 107% in 2019 and 2020, respectively.

Its net losses for the same period were 209 million yuan, 322 million yuan, and 664 million yuan.

In other words, in the past three years, Waterdrop has earned 4.8 billion yuan in revenue and lost nearly 1.2 billion yuan. The loss in 2019 increased by 39% year-on-year. In 2020, the revenue growth rate dropped sharply, and the loss also expanded at the same time, with a year-on-year increase of 106%. The risk factors section of the prospectus stated that operating losses may continue in the future.

Judging from the growth rate of the last two years alone, the trend of water drop’s revenue and expenditure remains the same: when expenditure doubles in 2019, its revenue growth rate reaches its peak. Expenditure shrinks in 2020, and revenue growth has also begun to fall off a cliff.

Waterdrop was established in 2016. According to the development stage of the Internet company, it will either precipitate or erupt in three to five years. Waterdrop belongs to the latter. Based on social traffic, it broke out earlier, but the abnormal business growth at this stage “brakes” because the business model causes traffic. To the top of the realisation, or the phased investment is too large, some clues may be seen from the marketing expenses.

From 2018 to 2020, the marketing expenses of Water Drop were 185 million yuan, 1.058 billion yuan, and 2.131 billion yuan, respectively. The three-year marketing expenses were as high as 3.374 billion yuan.

If split into the proportion of annual operating expenses, Waterdrop’s marketing expenses in 2018 accounted for 43% of operating expenses, marketing expenses in 2019 accounted for 62% of operating expenses, and marketing expenses in 2020 accounted for 60% of operating expenses.

Marketing expenses account for 60% of operating expenses, and it is not a good thing to look at where they are placed. Furthermore, the high marketing costs also represent the high cost of acquiring customers at the front end of Waterdrop. Under the trend of tightening supervision, whether marketing can be used to drive business growth has to be questioned.

In contrast, the R&D expenses in the above period were 69 million yuan, 215 million yuan, and 244 million yuan, accounting for 16%, 13%, and 7% of operating expenses during the same period.

The highest proportion of R&D investment is less than 20%, and the lowest is only 7%, and there is a tendency to decrease. In this case, Waterdrop has to say that it is a technology platform, most likely to tell a good story to the capital market.

For water droplets whose income is far from covering expenditures and needs to rely on continuously increasing investment in marketing to maintain operation, Getting money on the market is a matter of course. But the previous valuation of 6 billion yuan is likely to be greatly discounted.

A company that sells insurance, worth $6 billion?

From the perspective of revenue composition, Waterdrop can be called “a company that sells insurance.”

Its revenue is composed of four parts: “income from securities, futures and insurance brokerage business”, “technical service income”, “management fee income” and “other business”.

The first income with a very long name can be simply understood as the diversion fee of Waterdrop Insurance, which is the commission for selling insurance; technical service fee refers to the technological solutions provided by Waterdrop to cooperative insurance companies and institutions; management fee refers to Waterdrop In the mutual assistance business, the platform extracts 8% of the operating and management expenses from the total mutual assistance fund; other businesses mainly refer to new businesses in the medical service field that have not achieved large-scale revenue.

In 2018, Waterdrop’s total revenue was 238 million yuan, of which insurance commission income was 122 million yuan, technical service income was 59 million yuan, management fee income was 47 million yuan, and other revenues were 10 million yuan, which contributed to the revenue respectively. They are 51%, 25%, 20% and 4%.

In 2019, Waterdrop’s total revenue was 1.511 billion yuan, of which insurance commission income was 1.31 billion yuan, technical service income was 50 million yuan, management fee income was 140 million yuan, and other income was 80 million yuan, accounting for 87% of revenue. , 3%, 9%, 1%.

In 2020, Waterdrop’s revenue is 3.028 billion yuan, of which insurance commission income is 2.695 billion yuan, technical service income is 194 million yuan, management fee income is 110 million yuan, and other income is 29 million yuan, accounting for 89% of revenue, respectively. 6%, 4%, 1%.

A notable trend is that insurance commission income occupies an increasingly important position in revenue contribution, from 50% to nearly 90%. The technical service fees and management fees, which originally combined to contribute 45% of revenue, have been compressed to 10% of their revenue contribution. The contribution of other income to revenue in the past three years is very small, almost negligible.

The “partial branch” of Waterdrop has made insurance commissions a major part of its revenue. At the same time, its insurance income is also concentrated from ZhongAn Insurance, China Taiping Life Insurance, and Hongkang Life Insurance.

As of December 31, 2020, the cumulative number of insurance users of Waterdrop was approximately 79.4 million. In 2018, 2019, and 2020, the cumulative number of users who purchased insurance was 1.7 million, 8.8 million and 19.2 million. Insurance revenues in the first year were 972 million yuan, 6.668 billion yuan, and 14.426 billion yuan.

Among them, ZhongAn Insurance accounted for 21.7% of Waterdrop’s revenue in 2018, China Taiping Life Insurance accounted for 24.8% of Waterdrop’s total business in 2020, and Hongkang Life Insurance accounted for 11.1% of its total revenue in 2020.

With a single core business and a concentrated source of income, it is difficult to find a cure for the problems of Waterdrop’s profitability and growth space in a short period of time. Although the prospectus disclosed that Waterdrop has obtained the online medical sales qualification and drug distribution license, its new business related to medical services has weak momentum and large uncertainties, so it is too far-fetched to define it as a medical service platform.

Even if it is valued according to its core business, ZhongAn Insurance, which has an insurance license, has a total market value of no more than 9 billion U.S. dollars. Only the water droplets with an insurance brokerage license are far away from 6 billion U.S. dollars.

The diversion artifact is gone, how else to tell the story

Even at the current stage of continuous loss of money and high marketing expenses, for the Internet star company blessed by the former executives of Meituan, this does not affect Waterdrop’s storytelling for investors.

Waterdrop’s prospectus stated that its user conversion capabilities can realize the lifetime value of user groups through my country’s insurance market, drive long-term growth, and expand the field of medical services.

In other words, insurance income will become the core income of Waterdrop in the longer term, and it will also become the basis for expanding medical services in the future.

But among the risk factors, Waterdrop cited insurance, crowdfunding Business growth is affected by the future development of third-party insurance brokerage agents and the medical crowdfunding industry. Risks such as the uncertainty of changes in the regulatory system .

Waterdrop’s insurance brokerage business is essentially flow monetization. Through waterdrop mutual assistance and waterdrop chip to obtain targeted traffic, it is also easier to convert to related insurance types. Waterdrop’s insurance brokerage license was officially obtained in May 2017, through a wholly-owned acquisition of Baoduoduo Insurance Brokers Co., Ltd.

The biggest difference between an insurance broker company and an insurance company is that the former does not produce insurance but only sells insurance, and at the same time can participate in the design of insurance products. Waterdrop’s second largest revenue is to design insurance jointly with insurance companies based on user data and charge technical service fees. It is still the realization of traffic (data).

After all, insurance brokers still work for insurance companies, and when traffic is always capped, the uncertainty brought about by regulatory changes also makes it harder and harder for platform intermediaries to make money.

In December 2020, the China Banking and Insurance Regulatory Commission will adjust the supervision of online insurance business, which will take effect in February 2021. The adjustment change is that the insurance brokerage platform sets up customer management, information protection, etc. It also requires the platform to standardize promotional materials and marketing activities, and users can only apply for insurance online through the online interface of insurance institutions.

In addition to restricting insurance brokers’ over-acquisition of user information, the China Banking and Insurance Regulatory Commission has also improved the platform’s infrastructure and network security standards, which will undoubtedly increase operational and security costs.

In March, the water drop shut down the water drop to help each other, and only the water drop chip can divert the insurance. In 2018, 2019 and 2020, the first year premium of Water Drop Insurance was approximately 46.5%, 23.0% and 13.0% were from water drop chips.

The user conversion rate of DipChip has dropped visibly. The prospectus did not disclose the total number of registered users of Waterdrop and related growth data. Therefore, it is difficult to judge whether the water drop chip will produce a continuous and stable transformation of insurance in the future.

Now, Waterdrop is undoubtedly a marketing-driven insurance brokerage company. Having not yet proven its potential in the field of medical and health services, coupled with weak profitability, and no longer listing to raise money, I am afraid that even Didi Chai, which has a low operating cost, will not be able to do it.