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Apr 15, 2008
CNinsure Announces Large Scale Consolidation for a Nationwide Insurance Adjusting Service Network
CNinsure Announces Large Scale Consolidation for a Nationwide Insurance Adjusting Service Network
CNinsure Announces Large Scale Consolidation for a Nationwide Insurance Adjusting Service Network
Under the terms of the agreements, Fangzhong will acquire all of the equity interests in Khubon from Khubon’s existing shareholders, who in return will receive 29.4% of the equity interests in Fangzhong. CNinsure will invest an additional RMB51 million in Fangzhong. Together with its investment in the initial acquisition of 60% of Fangzhong, CNinsure’s total investment in these transactions will be RMB58 million. Upon the completion of these transactions, CNinsure will hold 51% of the enlarged Fangzhong. In addition, two senior executives of the enlarged Fangzhong will transfer some of their equity interests in Fangzhong back to CNinsure for nominal value if Fangzhong fails to meet certain performance targets in 2008 to 2010. The transaction is expected to close in the second quarter of 2008 subject to certain consents, authorizations and other customary closing conditions.
The three adjusting companies are all among the top 20 insurance adjusting firms in terms of revenue in 2007, according to the Insurance Intermediary Market Development Report 2007 published by the China Insurance Regulatory Commission (“CIRC”). Fangzhong was the first CIRC-certified adjusting company in China and ranked No. 17 according to the CIRC report. It specializes in property insurance adjusting. Khubon ranked No. 4 among the top 20. It provides adjusting services to customers in over 20 provinces, with branches in 9 major cities and a professional team of loss surveyors and adjusters. It is particularly strong in vehicle insurance adjusting. Tianheng,ranked No. 5 among China’s top 20 insurance adjusting firms in 2007, according to the same CIRC report. It is one of the two leading adjusters in the non-vehicle insurance adjusting sector, particularly in marine insurance adjusting. According to the combined revenues of Fangzhong, Khubon and Tianheng in 2007 as shown in the CIRC report, “Fanhua Insurance Adjusting Group” would become the No. 2 insurance adjusting company in China.
Commenting on the events, CNinsure's Chairman and Chief Executive Officer, Yinan Hu, said, "We are excited to enter into the agreements and MOU for the acquisitions of Khubon and Tianheng, respectively. The insurance adjusting sector is fast growing and presents growth opportunity for CNinsure. With the acquisitions, we expect that our insurance adjusting revenue will see a significant growth and exceed our forecast for 2008. As gross margin and operating margin for adjusting business are in the range between those for new life insurance policies and P&C insurance, we expect that significant growth in adjusting revenue likely will have a negative impact on our overall gross margin and operating margin. Nevertheless, insurance adjusting is a crucial part of a nationwide after-sales service system that we aim to build. The acquisition of Khubon will help accelerate our effort to build such a system, which will benefit our partners and clients and provide strong support for CNinsure’s future growth."
About CNinsure Inc.
CNinsure is a leading independent insurance agency and brokerage company operating in China. CNinsure's distribution network reaches many of China's most economically developed regions and affluent cities. The company distributes a wide variety of property and casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China, as well as other insurance-related services.
Forward-looking Statements
This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward- looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Among other things, the management's quotations contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about CNinsure and the industry. Potential risks and uncertainties include, but are not limited to, those relating to CNinsure's limited operating history, especially its limited experience in selling life insurance products, its ability to attract and retain productive agents, especially entrepreneurial agents, its ability to maintain existing and develop new business relationships with insurance companies, its ability to execute its growth strategy, its ability to adapt to the evolving regulatory environment in Chinese insurance industry, and its ability to compete effectively against its competitors. All information provided in this press release is as of April 15, 2008, and CNinsure undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although CNinsure believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by CNinsure is included in CNinsure's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1.
Company Contacts:
Phoebe Meng
Tel: +86-20-61222777
Email: mengyf@cninsure.net
Oasis Qiu
Tel: +86-20-61222777-850
Email: qiusr@cninsure.net
GUANGZHOU, China, April 15 /Xinhua-PRNewswire-FirstCall/ -- CNinsure Inc. (Nasdaq: CISG), a leading independent insurance agency and brokerage company operating in China, today announced that it has entered into definitive agreements to acquire Khubon Insurance Loss Surveyors & Adjusters Co., Ltd.( “Khubon”). Separately, CNinsure has signed an MOU with Shanghai Tianheng Insurance Loss Surveyors & Adjusters Co., Ltd.(“Tianheng”) for a proposed acquisition of 51% of Tianheng. CNinsure acquired 60% of Fangzhong Insurance Loss Surveyors & Adjusters Co., Ltd. (“Fangzhong”), an insurance adjusting company based in Guangzhou, in December, 2007. With the acquisitions, it intends to incorporate Fangzhong, Khubon and Tianheng into one big group, and combine the networks, expertise and customer bases of the three companies into one large adjusting service network in China. The proposed group will adopt the brand of “CNinsure” and be named as “Fanhua (‘CNinsure’) Insurance Adjusting Group.”
Under the terms of the agreements, Fangzhong will acquire all of the equity interests in Khubon from Khubon’s existing shareholders, who in return will receive 29.4% of the equity interests in Fangzhong. CNinsure will invest an additional RMB51 million in Fangzhong. Together with its investment in the initial acquisition of 60% of Fangzhong, CNinsure’s total investment in these transactions will be RMB58 million. Upon the completion of these transactions, CNinsure will hold 51% of the enlarged Fangzhong. In addition, two senior executives of the enlarged Fangzhong will transfer some of their equity interests in Fangzhong back to CNinsure for nominal value if Fangzhong fails to meet certain performance targets in 2008 to 2010. The transaction is expected to close in the second quarter of 2008 subject to certain consents, authorizations and other customary closing conditions.
The three adjusting companies are all among the top 20 insurance adjusting firms in terms of revenue in 2007, according to the Insurance Intermediary Market Development Report 2007 published by the China Insurance Regulatory Commission (“CIRC”). Fangzhong was the first CIRC-certified adjusting company in China and ranked No. 17 according to the CIRC report. It specializes in property insurance adjusting. Khubon ranked No. 4 among the top 20. It provides adjusting services to customers in over 20 provinces, with branches in 9 major cities and a professional team of loss surveyors and adjusters. It is particularly strong in vehicle insurance adjusting. Tianheng,ranked No. 5 among China’s top 20 insurance adjusting firms in 2007, according to the same CIRC report. It is one of the two leading adjusters in the non-vehicle insurance adjusting sector, particularly in marine insurance adjusting. According to the combined revenues of Fangzhong, Khubon and Tianheng in 2007 as shown in the CIRC report, “Fanhua Insurance Adjusting Group” would become the No. 2 insurance adjusting company in China.
Commenting on the events, CNinsure's Chairman and Chief Executive Officer, Yinan Hu, said, "We are excited to enter into the agreements and MOU for the acquisitions of Khubon and Tianheng, respectively. The insurance adjusting sector is fast growing and presents growth opportunity for CNinsure. With the acquisitions, we expect that our insurance adjusting revenue will see a significant growth and exceed our forecast for 2008. As gross margin and operating margin for adjusting business are in the range between those for new life insurance policies and P&C insurance, we expect that significant growth in adjusting revenue likely will have a negative impact on our overall gross margin and operating margin. Nevertheless, insurance adjusting is a crucial part of a nationwide after-sales service system that we aim to build. The acquisition of Khubon will help accelerate our effort to build such a system, which will benefit our partners and clients and provide strong support for CNinsure’s future growth."
About CNinsure Inc.
CNinsure is a leading independent insurance agency and brokerage company operating in China. CNinsure's distribution network reaches many of China's most economically developed regions and affluent cities. The company distributes a wide variety of property and casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China, as well as other insurance-related services.
Forward-looking Statements
This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward- looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Among other things, the management's quotations contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about CNinsure and the industry. Potential risks and uncertainties include, but are not limited to, those relating to CNinsure's limited operating history, especially its limited experience in selling life insurance products, its ability to attract and retain productive agents, especially entrepreneurial agents, its ability to maintain existing and develop new business relationships with insurance companies, its ability to execute its growth strategy, its ability to adapt to the evolving regulatory environment in Chinese insurance industry, and its ability to compete effectively against its competitors. All information provided in this press release is as of April 15, 2008, and CNinsure undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although CNinsure believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by CNinsure is included in CNinsure's filings with the U.S. Securities and Exchange Commission, including its registration statement on Form F-1.
Company Contacts:
Phoebe Meng
Tel: +86-20-61222777
Email: mengyf@cninsure.net
Oasis Qiu
Tel: +86-20-61222777-850
Email: qiusr@cninsure.net