Huize (HUIZ) Q2 2025: AI-Driven Expense Ratio Drops 16.6 Points as Premiums Surge 73%
Huize delivered a breakout quarter, fueled by a 73% surge in first-year premiums and transformative AI-driven efficiency gains. The company’s full-stack digital insurance platform is scaling rapidly across China and Southeast Asia, with proprietary AI agents reshaping everything from customer acquisition to claims. Management’s focus on high-value, long-term products and international expansion signals a new phase of profitable, technology-led growth.
Summary
- AI Transformation Accelerates: Company-wide adoption of AI agents slashed expense ratio and boosted productivity.
- Premium Mix Shifts to Long-Term: First-year premiums and average ticket size jumped, driven by high-value, customized products.
- International Expansion Gains Traction: Southeast Asia business delivered double-digit growth, deepening Huize’s cross-border moat.
Performance Analysis
Huize’s Q2 results mark a decisive inflection in both scale and profitability. Total revenue hit a three-year high, while net profit returned to positive territory, reflecting both top-line momentum and disciplined cost management. The standout driver was a 73% year-over-year increase in first-year premiums—now the company’s core focus—supported by a robust 87% jump in long-term average ticket size. Persistency ratios for long-term products remained above 95%, underscoring strong customer retention and product-market fit.
AI deployment fundamentally reshaped the cost structure. The expense-to-income ratio improved by 16.6 percentage points to 23.9%, as over 700 AI agents automated workflows and 24-7 AI customer support boosted self-service rates by 50%. Internationally, the Southeast Asia business (notably Vietnam) grew revenue and gross written premiums by 32%, with new digital distribution channels and embedded insurance partnerships driving reach. The product mix is increasingly weighted toward customized, high-commission offerings, supporting margin stability even amid regulatory shifts.
- Expense Ratio Breakthrough: AI-powered automation drove a 17% YoY drop in operating expenses, unlocking margin expansion.
- Premium Upshift: Average ticket size for long-term products rose 41% sequentially, reflecting a pivot to premium offerings and international demand.
- Persistency and Retention: Both 13th and 25th month persistency ratios for long-term insurance remained above 95%, reinforcing customer lifetime value.
Huize’s omnichannel distribution and proprietary technology are now translating directly into both scale and improved unit economics. The company added 400,000 new users, with over 65% of long-term customers in top-tier cities, cementing its position in high-value segments.
Executive Commentary
"We accelerated the deployment of AI tools and fostered an AI native culture within our company, delivering measurable productivity improvements. In R&D, we introduced the vibe coding model, where AI now generates and contributes more than 200,000 accepted lines of code each month, significantly accelerating product iteration and technological innovation."
Chen Junma, Founder & CEO
"Our broad deployment of AI-driven automation has delivered cost savings and productivity gains. As such, our total operating expenses decreased 17% year-over-year to RMB 95 million, and our expense-to-income ratio improved significantly by 16.6 percentage points year-over-year to 23.9% in the second quarter."
Ron Tam, Co-CFO
Strategic Positioning
1. AI as Core Growth Engine
AI is now embedded across Huize’s value chain, from customer acquisition to claims and underwriting. Over 300 employees are trained to develop and deploy AI agents, with more than 700 tools released, driving both cost efficiency and process innovation. The proprietary data asset—spanning millions of customer interactions and over 10,000 products—enables hyper-personalized service and product recommendations, strengthening conversion and retention.
2. Premium Product Focus and Distribution Strength
Long-term, high-ticket insurance products now account for over 90% of gross written premiums, with customized PAR (participating) products and annuities leading growth. Strategic partnerships with 146 insurers and the ability to co-develop tailored offerings—such as children’s and student accident insurance—have reinforced Huize’s differentiation. The omnichannel distribution network, including innovative KOL (key opinion leader) platforms abroad, underpins broad reach and channel resilience.
3. Internationalization and Ecosystem Expansion
Huize’s international arm, PolyInsurTech, is scaling rapidly in Southeast Asia, securing regulatory licenses in Singapore and driving 32% YoY growth in Vietnam. The launch of digital-first distribution models and embedded insurance with local partners (such as logistics and retail giants) is unlocking new customer segments. International revenue contribution is rising, and the cross-border playbook is replicating China’s proven digital model.
4. Margin and Commission Mix Optimization
Margin stability is being achieved through a mix shift toward higher-commission, customized products. Improved blended commission rates reflect this strategic pivot, while gross margins stabilized at 27% post-regulatory changes. The company is balancing premium growth with disciplined channel cost management, aided by AI-driven process automation.
5. Regulatory and Market Adaptability
Management has proactively adapted to regulatory changes, both in China (Baoxin He Yi regime) and offshore (Hong Kong commission caps). Early training and product innovation have allowed Huize to maintain growth and margin despite policy headwinds, while consumer education and digital engagement continue to drive demand for high-yield products in a low-rate environment.
Key Considerations
Huize’s Q2 marks a turning point—technology and product mix are now compounding to drive profitable scale, while international expansion is gaining operational momentum. Investors should weigh the following:
Key Considerations:
- AI-Driven Efficiency: Cost savings and productivity gains from proprietary AI agents are structural, not cyclical.
- Premium Mix Shift: Focus on long-term, high-value products supports margin durability and customer retention.
- International Leverage: Southeast Asia growth validates the cross-border digital insurance model and extends Huize’s addressable market.
- Channel and Product Innovation: KOL platforms and embedded insurance partnerships are extending distribution reach and customer engagement.
- Regulatory Navigation: Early adaptation to policy changes demonstrates execution agility, but continued vigilance is required as commission structures evolve.
Risks
Regulatory uncertainty remains a key risk, particularly as new commission caps and spread requirements are implemented in Hong Kong and China. Macroeconomic volatility could impact consumer demand for discretionary insurance products, while international expansion exposes Huize to new compliance and competitive pressures. Sustaining AI-driven cost advantages will require ongoing investment and talent development.
Forward Outlook
For Q3 2025, Huize guided to:
- Continued sequential growth in participating (PAR) product sales, supported by consumer education and digital engagement.
- Sustained margin stability as product mix and AI efficiencies offset regulatory headwinds.
For full-year 2025, management maintained guidance:
- Second-half profitability, with a meaningful sequential improvement in Q3 earnings.
Management emphasized several drivers:
- Structural demand for long-term protection and wealth planning in China and Southeast Asia.
- Ongoing deployment of AI across the value chain to unlock new growth curves and margin upside.
Takeaways
Huize is entering a new phase of scalable, profitable growth, with AI and internationalization as core levers.
- Technology-Led Margin Expansion: AI agent deployment has structurally lowered costs and accelerated product innovation, setting a new baseline for operating leverage.
- Strategic Product and Channel Focus: Customized, high-commission products and omnichannel distribution are driving both scale and resilience amid regulatory change.
- International and Digital Ecosystem Build-Out: Southeast Asia is emerging as a second engine, and investors should monitor the pace and profitability of cross-border expansion in coming quarters.
Conclusion
Huize’s Q2 2025 results showcase a business at the intersection of digital transformation and insurance market evolution. With AI embedded across operations and an expanding international footprint, the company is well positioned for long-term value creation, though regulatory and execution risks remain front of mind for investors.
Industry Read-Through
Huize’s results underscore a broader industry pivot toward AI-driven cost reduction and digital-first insurance distribution. The success of proprietary AI agents and embedded insurance partnerships in Southeast Asia signals that traditional carriers and brokers must accelerate technology adoption to remain competitive. Persistency ratios above 95% highlight the value of customer-centric, data-driven engagement. Regulatory adaptation, especially around commissions and digital product design, will increasingly separate winners from laggards in both China and offshore markets. Expect further consolidation and tech investment as digital platforms extend their lead in scale and efficiency.