泛华

中国保险中介泛华初次招股股价上涨58%

By Lynn Cowan

Last Update: 6:33 PM ET Oct 31, 2007

(Updates with closing stock prices.)

Investors' appetite for Chinese companies listing in the U.S. continued unabated Wednesday, with insurance brokerage CNinsure Inc. (CISG:) gaining 58% on its first day of trading.

CNinsure's initial public offering easily overshadowed that of Israeli telecommunications provider 012 Smile.Communications Ltd. (SMLC) which ended the day flat with its IPO price.

CNinsure's stock closed at $25.29 a share on the Nasdaq, up from its initial public offering price of $16. A total of 11.8 million American Depository Shares were sold at a price above its expected $13 to $15 price range, which was boosted by $2 earlier this week.

Based in Guangdong, CNinsure is an independent insurance agency and brokerage that offers property and casualty policies, as well as life insurance. It employs 11,000 sales people and operates 170 sales and service outlets in eight provinces in China. As a brokerage, it doesn't take on any of the risk associated with the insurance it sells; instead, it earns fees and commissions from insurance companies who underwrite the policies.

As is the case with many businesses from China that are listing in the U.S., CNinsure is a play on the country's growing wealth as well as a chance to get in on the early development of an industry that is well-established in other parts of the world. The Chinese insurance industry was the third largest in Asia and the ninth largest in the world by premiums in 2006, but the independent brokerage business is highly fragmented.

"The Chinese economy is growing very fast, and personal disposable income is accumulating at a high speed. Right now, the Chinese insurance market has low penetration rate," said CNinsure Chief Financial Officer David Tang during a telephone interview Wednesday. "We are an early mover in this market."

CNinsure is aiming to grow its business through acquisitions, recruitment of more sales agents and franchising, according to its prospectus. The company says it is focusing on increasing its presence in the life-insurance segment, which it entered in 2006; it sees that market as a large growth area, with recurring fee income.

In the first half of 2007, its net revenue rose 62% to $22.7 million and its net income more than doubled to $7.7 million, compared to the same period in 2006.

The company warns that its industry is very competitive and, since China's entry into the WTO in 2001, there has been a gradual decline in the premium rate levels of some insurance products, which reduces the commissions and fees CNinsure can earn.

CNinsure plans to use part of the proceeds from the IPO for acquisitions and joint ventures as it expands. Of the total shares sold in the IPO, 2.1 million came from prior shareholders, including the chief executive and the president of the company, so those proceeds won't go to the company. Morgan Stanley (MS:) was the lead manager on CNinsure's offering.