Cninsure Inc. (CISG) posted net income of 11 cents per share in the third quarter of 2014, which significantly surpassed the Zacks Consensus Estimate and improved 22.2% year over year.
The stellar results came on the back of top-line growth, which stemmed from strong performance at the property and casualty insurance agency business as well as insurance brokerage business.
Behind the Headlines
Cninsure generated total net revenue of $88.4 million in the reported quarter, marking year-over-year growth of 25.9% and also surpassing the company guidance. This upside was driven by solid growth across the property and casualty insurance agency business as well as insurance brokerage business, reflecting the increased premium contribution from CNpad Application that was available for free since May 2014.
Higher revenues from insurance agency business were owing to increase in net revenue derived from the P&C insurance agency business, partly offset by a decline in net revenue from the life insurance agency business.
Higher revenues from the insurance brokerage business resulted from an increased customer base due to expansion of sales channels and development of innovative products in the last three years.
Cninsure’s total operating cost and expenses increased 26.3% year over year to $88.2 million in the reported quarter.
Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) in the third quarter was $4.3 million, down 5.4% year over year. Adjusted EBITDA margin declined 160 basis points to 4.9%.
Interest income decreased 6.2% year over year to $3.2 million in the quarter due to lower term deposits, stemming from increased short-term investment.
Cninsure had launched chetong.net, an O2O auto insurance after-sales service platform on Aug 28, 2014, with the view to offer location-based auto services like car accident inspections, loss assessment, emergency assistance, quick repair and valet driving for beta-testing.
At the reported quarter-end, Cninsure had a distribution and service network of 548 sales and services outlets operating in 28 provinces, up from 476 sales and service outlets operating in 27 provinces as of Sep 30, 2013.
Cninsure exited the quarter with cash and cash equivalents of $327 million (down 12.2% from 2013 end-level). Cash from operations amounted to $9.03 million in the reported quarter (up 20.4% from a year ago).
Total shareholders' equity for Cninsure was $517.5 million as of Sep 30, 2014, up 4.9% from 2013 end-level.
Outlook
Cninsure projects fourth-quarter 2014 total net revenue to increase 20% year over year.
Zacks Rank
Currently, Cninsure has a Zacks Rank #3 (Hold).
Performance of Other Insurance Brokers
Brown & Brown Inc. (BRO) reported an operating net income of 43 cents per share for third-quarter 2014, missing the Zacks Consensus Estimate for the fifth time in a row – this time by 9.3%. However, the figure marked a year-over-year improvement of 10.3% based on higher revenues.
Willis Group Holdings plc (WSH) posted third-quarter 2014 adjusted net income of 14 cents per share, missing the Zacks Consensus Estimate by a couple of cents. The bottom line was also lower than the prior-year quarter figure by 26% due to higher expenses.
Erie Indemnity Company’s (ERIE) third-quarter 2014 net income of 90 cents per share fell short of the Zacks Consensus Estimate of 94 cents. However, the figure marked a year-over-year rise of 3.42%, driven by increased revenues from management operations and a low rise in expense.
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