CNinsure Announces Large Scale Market Consolidation For A Nationwide Adjusting Service Network
April 15 2008 - 10:00AM
PR Newswire (US)
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. For more information,
please contact: Phoebe Meng Investor Relations Officer Tel:
+86-20-6122-2777 Email: Oasis Qiu Investor Relations Tel:
+86-20-6122-2777 x850 Email: DATASOURCE: CNinsure Inc. CONTACT:
Phoebe Meng, Investor Relations Officer, +86-20-61222777, or ; or
Oasis Qiu of Investor Relations, +86-20-61222777-850, or
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