Cninsure Beats Q2 Earnings on Solid Segmental Performance - Analyst Blog

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Cninsure Inc. ( CISG ) posted net income of 18 cents per share in the second quarter 2014, which surpassed the Zacks Consensus Estimate by 80% and significantly improved from the year-ago net income of 7 cents per share.

The improvement stemmed from strong performance at the insurance brokerage and claims adjusting businesses. In addition, costs were controlled through effective expense management.

Behind the Headlines

Cninsure generated total revenue of $82 million in the reported quarter, marking year-over-year growth of 19.5%, driven by solid growth across all the business segments with insurance brokerage business and claims adjusting business being the major contributors and life insurance agency business rebounding from two years of negative growth to a positive one.

Higher revenues from insurance brokerage business were driven by an increased customer base due to sales channels expansion and development in the innovative product offerings in the last three years.

The non-auto insurance related claims adjusting business resulted in increased revenues in the claims adjusting business for the said quarter.

Cninsure's total operating cost and expenses increased 15.2% to $79 million year over year in the reported quarter.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDA) reported in the second quarter was $7.3 million, up 55% year over year.  Adjusted EBITDA margin rose 210 basis points to 8.9%.

Interest income increased 6.1% year over year to $3.5 million in the quarter, driven by increase in other receivables.

Cninsure completed electronic data interchange (EDI) connections with Sunshine Property and Casualty Insurance Company Limited in the second quarter.

The company also launched eHuzhu, the first non-profit online mutual aid platform in China. eHuzhu's first program targeted the principal providers of families between the ages of 20 and 50, and offered financial aid of up to RMB500,000.

As of Jun 30, 2014, Cninsure had a distribution and service network of 536 sales and services outlets operating in 28 provinces, up from 479 sales and service outlets operating in 27 provinces as of Jun 30, 2013.

Cninsure exited the quarter with cash and cash equivalents of $323.9 million (down 14.3% from 2013 end-level). Cash from operations amounted to $13.5 million in the reported quarter (up 60.4% from year ago quarter).

Total shareholders' equity for Cninsure was $506 million as of Jun 30, 2014, up 1.2% from 2013 end-level.

Outlook

Cninsure projects third-quarter 2014 total net revenue to increase 15% year over year.

Performance of Other Insurance Brokers

Validus Holdings, Ltd. ( VR ) reported second-quarter 2014 net operating income of $1.39 per share, which lagged the Zacks Consensus Estimate by 4.1% but improved 35% year over year.

Brown & Brown Inc. ( BRO ) posted an operating net income of 38 cents per share for second-quarter 2014, falling short of the Zacks Consensus Estimate by 7.3%. However, the figure marked a year-over-year increase of 8.6% based on higher revenues.

Aon plc's ( AON ) second-quarter 2014 operating earnings of $1.25 per share exceeded the Zacks Consensus Estimate of $1.20 and rose 13% from the prior-year quarter.


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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of The NASDAQ OMX Group, Inc.



This article appears in: Investing , Business , Earnings , Stocks

Referenced Stocks: EDI , CISG , AON , BRO , VR

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