Fanhua Announces Spin-off of its P&C Insurance Subsidiaries
Fanhua Inc., (Nasdaq:FANH), (the “Company” or “Fanhua”), a leading independent online-to-offline (“O2O”) financial services provider in China, today announced that, as part of its transition towards the fee-based property and casualty (“P&C”) insurance platform model, it has entered into a share purchase agreement with Beijing Cheche Technology Co., Ltd. (“Cheche”), which operates an online auto insurance platform. Under this agreement, Fanhua agrees to sell the equity interests in Fanhua Times Sales & Service Co., Ltd., and its P&C insurance subsidiaries (collectively, the “P&C Insurance Division”), to Cheche for total consideration of approximately RMB222 million, which represents RMB130 million above the combined net asset value of the P&C Insurance Division.
Fanhua’s plan to change its P&C insurance business from a commission spread-based profit model to a fee-based platform model was previously announced on August 22, 2017. Under the new model, Fanhua will give all participants in the P&C industry access to CNpad App, through which both P&C insurance providers and purchasers can transact directly with each other.
The spin-off of its P&C Insurance Division marks an important step forward towards Fanhua’s transition to the P&C insurance platform model. Starting from October 1, 2017, Fanhua will no longer charge insurance companies commissions and pay commissions to sales agents for the P&C insurance business. Instead, it will charge P&C insurance providers platform management and technology service fees based on the actual amount of premiums transacted over CNpad App.
As the result of the transition, Fanhua expects a substantial decline in both of its total revenues and commission costs, while its gross margin is expected to improve significantly. The impact on its operating profit and net profit should be limited. From a long-term perspective, the Company expect this move will help elevate its overall profitability.
Mr. Chunlin Wang, Chairman of the Board and Chief Executive Officer of Fanhua, stated, “The transaction is a win-win for both parties. It accelerates the transition to our platform model and allows Cheche to gain quick access to brick-and-mortar offline support and broader insurance business resources. We look forward to establishing a strong long-term business partnership with Cheche.”
About Fanhua Inc.
Fanhua Inc., formerly known as CNinsure Inc., is a leading independent online-to-offline financial services provider. Through our online platforms and offline sales and service network, we offer a wide variety of financial products and services provided by over 90 insurance companies to individuals and businesses, including property and casualty and life insurance products. We also provide insurance claims adjusting services, such as damage assessments, surveys, authentications and loss estimations, as well as value-added services, such as emergency vehicle roadside assistance.
Our online platforms include (1) Baoxian.com, a consumer-oriented online entry portal for comparing and purchasing hundreds of health, accident, travel and homeowner insurance products provided by over 30 insurance companies; (2) CNpad App, a mobile sales support application that helps insurance agents provide real-time quotations and online transactions of a wide spectrum of auto insurance, life insurance and wealth management products to customers; and (3) eHuzhu (www.ehuzhu.com), a non-profit online mutual aid platform in China.
Our offline insurance distribution and service networks cover 29 provinces across China, including most economically developed cities and regions in China.
