CNinsure Acquires Online Service Provider in E-Commerce Expansion

Insurance intermediary CNinsure plans to expand into online insurance distribution in China following its acquisition of a 65.1% stake in IncCom Holding Ltd., the parent of Shenzhen IncCom E-commerce Co. Ltd., a domestic online insurance service provider, for 84 million yuan (US$12 million).

Consumers are attracted to the convenience of buying daily commodities online and are showing an interest in shopping online for commodity-typed insurance products, such as automobile, accident, homeowner and travel insurance, said Yinan Hu, chairman and chief executive of CNinsure.

"The change in consumption habits must come with changes in how insurance is sold," said Hu, who added the company expects the traditional way of insurance distribution that primarily relies on on-the-ground distribution will be replaced by a multichannel distribution system that will "create substantial room for the development of online sales and telemarketing."

"The acquisition of InsCom marks our step forward into the online insurance distribution business that we expect will enjoy flourishing growth in the coming years," said Hu in a statement.

Shenzhen InsCom, headquartered in southern China's special economic zone Shenzhen, operates an e-commerce insurance website in China and provides insurance products online, as well as industry and regulatory information, said CNinsure.

As part of the corporate restructuring of InsCom, CNinsure said its equity interests in six of its affiliated property/casualty insurance agencies will be transferred to an affiliated subsidiary of InsCom in exchange for preference shares newly issued by InsCom.

Following the acquisition, Hu said CNinsure will allocate resources to further strengthen InsCom's existing call center and e-commerce platform. Both companies will then combine the new call center and the reinforced e-commerce platform. "With proper integration, and by sharing our customer base and technology competencies, we expect the acquisition will generate compelling synergies for both parties," said Hu.

Chunlin Wang, head of CNinsure's property/casualty insurance business unit, will be the chairman and CEO of Shenzhen InsCom. Yuan Tian, former chairman and CEO of Shenzhen InsCom, will be vice president on completion of the transaction, said Guangzhou-based CNinsure.

The transaction is expected to close in the fourth quarter of 2010, subject to regulatory approvals.

(By Rebecca Ng, Hong Kong news editor: [email protected])