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CNinsure Inc, (CISG - Snapshot Report) delivered operating net income of 8 cents per share in the fourth quarter of 2013, lagging the Zacks Consensus Estimate by a couple of cents. Earnings improved 60% year over year.

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

For 2013, operating net income came in at 32 cents on revenues of $290.2 million. While the top line improved 10.8%, earnings moved down by 26.4%.

Behind the Headlines

CNinsure generated total revenue of $83.2 million, up 15.6% year over year. The outperformance was driven by higher net revenue at the P&C insurance and claims adjusting business segments that offset the decline in net revenue at the life insurance business segment.

Higher revenues from P&C business segment was primarily fueled by increases in both sales volume and commission rates received from insurance underwriters.
Total operating costs and expenses increased 14% year over year to $80.9 million.

Adjusted Earnings before Interest, Tax, Depreciation and Amortization (EBITDA) increased 8.3% year over year to $6 million with adjusted EBITDA margin contracting 50 basis points to 7.2%.

Interest income increased 8% year over year to $3.6 million in the quarter, driven by increase in other receivables.

As of Dec 31, 2013, CNinsure had a distribution and service network of 480 sales and services outlets operating in 27 provinces, up from 472 sales and service outlets operating in 26 provinces as of Dec 31, 2012.

CNinsure exited the quarter with cash and cash equivalents of $378.1 million and cash from operations in 2013 amounted to $29.7 million


CNinsure projects 2014 total net revenue to increase 15% year over year.

Performance of Other Insurance Brokers

Marsh & McLennan Cos. Inc. (MMC - Analyst Report) reported fourth-quarter 2013 operating earnings per share of 57 cents. The results were a penny higher than the Zacks Consensus Estimate of 56 cents, and a nickel higher than the year-ago quarter earnings of 52 cents.

Aon plc’s (AON - Analyst Report) fourth-quarter operating earnings of $1.54 per share exceeded the Zacks Consensus Estimate by a penny. The result also outpaced the year-ago quarter’s earnings by 21%.

Arthur J Gallagher & Co. (AJG - Snapshot Report) reported fourth-quarter operating net earnings of 48 cents a share that missed the Zacks Consensus Estimate by a penny. However, the result increased from the prior-year quarter number by 23.1%.

Zacks Rank

CNinsure carries a Zacks Rank #2 (Buy).

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