CNinsure, an insurance agency and brokerage company, has entered into definitive agreements to acquire Khubon Insurance Loss Surveyors & Adjusters.
Separately, CNinsure has also signed a memorandum of understanding with Shanghai Tianheng Insurance Loss Surveyors & Adjusters for a proposed acquisition of 51% of Tianheng. CNinsure acquired 60% of Fangzhong Insurance Loss Surveyors & Adjusters, an insurance adjusting company based in Guangzhou, in December 2007.
With the acquisitions, it intends to incorporate Fangzhong, Khubon and Tianheng into one 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 its 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.