CNinsure Reports Fourth Quarter and Fiscal Year 2009 Unaudited Financial Results

GUANGZHOU, China, March 2 /PRNewswire-Asia-FirstCall/ -- CNinsure Inc. (Nasdaq: CISG) (the "Company" or "CNinsure"), a leading independent insurance intermediary company operating in China, today announced its unaudited financial results for the fourth quarter and fiscal year ended December 31, 2009.(1)

     Financial Highlights      Highlights for Fourth Quarter 2009     -- Total net revenues: RMB355.5 million (US$52.1 million), representing an        increase of 26.3% from the corresponding period of 2008, which exceeded        the previous guidance of approximately 26% growth from the        corresponding period of 2008.     -- Income from operations: RMB110.2 million (US$16.1 million),        representing an increase of 117.8% from the corresponding period of        2008.     -- Net income attributable to the Company's shareholders: RMB93.8 million        (US$13.7 million), representing an increase of 114. 4% from the        corresponding period of 2008, and an increase of 27.8% from adjusted        net income attributable to the Company's shareholders excluding        one-time share-based compensation expense (non-GAAP) for the        corresponding period of 2008.     -- Basic and diluted net income per American Depositary Share ("ADS"):        RMB2.055 (US$0.301) and RMB1.995 (US$0.292), respectively, representing        an increase of 114.4% and 109.1%, respectively, from the corresponding        period of 2008.      Highlights for Fiscal Year 2009     -- Total net revenues: RMB1,154.9 million (US$169.2 million), representing        an increase of 36.8% from 2008, exceeding the previous guidance of        approximately 36% growth from 2008.     -- Income from operations: RMB326.2 million (US$47.8 million),        representing an increase of 55.5% from 2008.     -- Net income attributable to the Company's shareholders: RMB300.8 million        (US$44.1 million), representing an increase of 56.9% from 2008, and an        increase of 35.9% from adjusted net income attributable to the        Company's shareholders excluding the one-time share-based compensation        expense (non-GAAP) in fiscal year 2008.     -- Basic and diluted net income per ADS: RMB6.594 (US$0.966) and RMB6.481        (US$0.950), respectively, representing an increase of 56.9% and 55.0%,        respectively, from 2008. 

"We are pleased to report continuing solid performance and net revenues in the fourth quarter of 2009 exceeding our previous guidance. This demonstrates our ability to execute on our strategy and deliver consistent results," commenting on the fourth quarter and 2009 full year financial results, Mr. Yinan Hu, Chairman and CEO of CNinsure, stated. "We are also pleased to report the further refinement of our business mix, which resulted from increased efforts to develop our life distribution capability as well as the recent industry-wide life insurance product mix restructuring campaign strongly advocated by the China Insurance Regulatory Commission ("CIRC")."

"Our leadership and values enabled us to further strengthen our partnership with insurers in 2009, making significant progress in achieving corporate-to-corporate arrangements not only within life insurance segments but also within the P&C insurance and claims adjusting segments, which translated into higher performance bonuses and strengthened margins as a whole."

"While continuing to deliver near-term profitability, we took multiple actions during 2009 to further improve our competitiveness to ensure sustainable growth in the long term. These initiatives include:

     (i)   diversifying our product and service offerings by introducing more           customized insurance policies;     (ii)  extending our service offerings to consumer finance brokerage           through acquisition; and     (iii) rolling out our new operating platform company-wide." 

Mr. Hu concluded, "Looking ahead to 2010, we expect to deliver strong growth of over 30% in net income with improving gross margin, driven by a few strong initiatives in the pipeline. These include build-out of new distribution channels (e.g. tele-marketing, online sales, brokerage business channel and bancassurance), introduction of more customized products for exclusive sales, and launching of bundled-sales campaigns. In addition, we expect to implement a fee-based revenue model, which has been successfully used by several of our P&C insurance agencies in 2009, on a wider-scale among our affiliated subsidiaries. With these moves, we believe that CNinsure's competitiveness and its leading position will be further enhanced amid the steadily recovering economy and a well regulated insurance market."

Financial Results for the Fourth Quarter Ended December 31, 2009

Total net revenues for the fourth quarter ended December 31, 2009 were RMB355.5 million (US$52.1 million), representing an increase of 26.3% from RMB281.4 million for the corresponding period of 2008. The increase was primarily driven by the significant growth of the life insurance business, and the increase in performance bonuses paid by life insurers as a result of growth in sales volume and more contracts entered into with life insurers at group levels.

Total operating costs and expenses were RMB245.3 million (US$35.9 million) for the fourth quarter of 2009, representing an increase of 6.2% from RMB230.9 million for the corresponding period of 2008, and an increase of 21.9% from adjusted operating costs and expenses of RMB201.2 million (non-GAAP) for the fourth quarter of 2008, which excluded a one-time charge of RMB29.6 million in share-based compensation expenses in the fourth quarter of 2008 that was associated with the surrender and cancellation of options to purchase an aggregate of 30,804,500 ordinary shares by various option holders.

Commissions and fees expenses were RMB177.2 million (US$26.0 million) for the fourth quarter of 2009, representing an increase of 21.5% from RMB145.9 million for the corresponding period of 2008. The increase was primarily due to sales growth and largely tracked the increase in net revenues from commissions and fees.

Selling expenses were RMB15.3 million (US$2.2 million) for the fourth quarter of 2009, representing an increase of 146.8% from RMB6.2 million for the corresponding period of 2008, primarily due to sales growth and the increase in expenses incurred by newly acquired entities.

General and administrative expenses were RMB52.8 million (US$7.7 million) for the fourth quarter of 2009, representing a decrease of 33.0% from RMB78.8 million for the corresponding period of 2008, and an increase of 7.5% from adjusted general and administrative expenses of RMB49.1 million (non-GAAP) for the fourth quarter of 2008, which excluded the aforementioned one-time share-based compensation expense. The increase was primarily due to the following factors:

     1. increases in depreciation of fixed assets as a result of the        commencement of the operation of the upgraded IT system in affiliated        entities in 2009; and     2. increases in amortization of intangible assets as a result of the        acquisitions that we made in 2008 and 2009; 

As a result of the foregoing factors, income from operations was RMB110.2 million (US$16.1 million) for the fourth quarter of 2009, representing an increase of 117.8% from RMB50.6 million for the corresponding period of 2008, and an increase of 37.4% from adjusted income from operations of RMB80.2 million (non-GAAP) for the fourth quarter of 2008, which excluded the aforementioned one-time share-based compensation expense. Operating margin was 31.0% for the fourth quarter of 2009, compared to 18.0% for the corresponding period of 2008.

Interest income for the fourth quarter of 2009 was RMB7.2 million (US$1.1 million), representing a decrease of 36.8% from RMB11.4 million for the corresponding period of 2008, primarily due to a decrease in bank deposit interest rates.

Income tax expense for the fourth quarter of 2009 was RMB28.3 million (US$4.2 million), representing an increase of 60.8% from RMB17.6 million for the corresponding period of 2008. The increase was primarily attributable to the increases of operating income and effective income tax rate in Shenzhen from 18% in 2008 to 20% in 2009. The effective income tax rate applicable to the Company was 24.1% for the fourth quarter of 2009, compared to 28.3% for the corresponding period of 2008.

Net income attributable to the Company's shareholders was RMB93.8 million (US$13.7 million) for the fourth quarter of 2009, representing an increase of 114.4% from RMB43.7 million for the corresponding period of 2008, and an increase of 27.8% from adjusted net income attributable to the Company's shareholders of RMB73.4 million (non-GAAP) for the corresponding period of 2008, which excluded the aforementioned share-based compensation expense.

Net margin was 26.4% for the fourth quarter of 2009 compared to 15.6% for the corresponding period of 2008.

Basic net income per ADS was RMB2.055(US$0.301) for the fourth quarter of 2009, representing an increase of 114.4% from RMB0.959 for the corresponding period of 2008. Fully diluted net income per ADS was RMB1.995(US$0.292) for the fourth quarter of 2009, representing an increase of 109.1% from RMB0.954 for the corresponding period of 2008.

As of December 31, 2009, the Company had RMB1,457.9 million (US$213.6 million) in cash and cash equivalents.

Financial Results for the Year Ended December 31, 2009

Total net revenues for fiscal year 2009 were RMB1,154.9 million (US$169.2 million), representing an increase of 36.8% from RMB844.0 million in fiscal year 2008.

The increase was primarily attributable to (1) enhanced sales and marketing efforts with the number of sales agents increasing by 33.9% year-over-year to 38,675 and claims adjusters increasing by 86.6% year-over-year to 1,556 in 2009 respectively; (2) newly acquired and established entities, including the subsidiaries under the Datong segment; and (3) the increase in performance bonuses paid by life insurers as a result of growth in sales volume and more contracts entered into with life insurers at group levels.

Total operating costs and expenses were RMB828.7 million (US$121.4 million) for fiscal year 2009, representing an increase of 30.7% from RMB634.2 million in fiscal year 2008, and an increase of 37.1% from adjusted operating costs and expenses of RMB604.5 million (non-GAAP) for the fourth quarter of 2008, which excluded the aforementioned one-time share-based compensation expense.

Commissions and fees expenses were RMB579.9 million (US$85.0 million) for fiscal year 2009, representing an increase of 32.8% from RMB436.8 million in fiscal year 2008. The increase was primarily due to sales growth and largely tracked the increase in net revenues from commissions and fees.

Selling expenses were RMB49.5 million (US$7.3 million) for fiscal year 2009, representing an increase of 186.1% from RMB17.3 million in fiscal year 2008. The increase was primarily due to the establishment of more new branches and subsidiaries under the Datong and Claims Adjusting segments and an increase in sales promotion expenses.

General and administrative expenses were RMB199.2 million (US$29.2 million) for fiscal year 2009, representing an increase of 10.7% from RMB180.0 million in fiscal year 2008, and an increase of 32.4% from adjusted general and administrative expenses of RMB150.4 million (non-GAAP) in fiscal year 2008, which excluded the aforementioned one-time share-based compensation expense. The increase was primarily due to the following factors:

     1.  increases in depreciation of fixed assets as a result of the         commencement of the operation of our upgraded IT system in affiliated         entities in 2009;     2.  increases in headcount, primarily as result of the recruitment of more         high-caliber senior managers, and higher base salaries for the         managerial and administrative staff;     3.  increases in amortization of intangible assets as a result of the         acquisitions we made in 2008 and 2009; and     4.  increases in office rental expenses and expenses incurred by newly         acquired entities and the expansion of distribution and service         network. 

As a result of the foregoing factors, income from operations was RMB326.2 million (US$47.8 million) for fiscal year 2009, representing an increase of 55.5% from RMB209.8 million in fiscal year 2008, and an increase of 36.3% from adjusted income from operations of RMB239.4 million (non-GAAP) in fiscal year 2008, which excluded the aforementioned one-time charge of share-based compensation expense recognized in the fourth quarter of 2008. Operating margin was 28.2% for fiscal year 2009 as compared to 24.9% for fiscal year 2008.

Interest income for fiscal year 2009 was RMB33.3 million (US$4.9 million), representing a decrease of 30.6% from RMB48.0 million in fiscal year 2008, primarily attributable to a decrease in bank deposit interest rates.

Income tax expense for fiscal year 2009 was RMB95.6 million (US$14.0 million), representing an increase of 53.2% from RMB62.4 million in fiscal year 2008. The increase was primarily attributable to the increase of operating income and the increase of effective income tax rate in Shenzhen from 18% in 2008 to 20% in 2009. The effective income tax rate applicable to the Company was 25.6% for fiscal year 2009, compared to 24.2% for fiscal year 2008.

Net income attributable to the Company's shareholders was RMB300.8 million (US$44.1 million) for fiscal year 2009, representing an increase of 56.9% from RMB191.7 million in fiscal year 2008, and an increase of 35.9% from adjusted net income attributable to the Company's shareholders of RMB221.4 million (non-GAAP) in fiscal year 2008, which excluded the aforementioned one-time charge of share-based compensation expense recognized in the fourth quarter of 2008.

Net margin was 26.1% for fiscal year 2009, compared to 22.7% in fiscal year 2008.

Basic net income per ADS was RMB6.594(US$0.966) for fiscal year 2009, representing an increase of 56.9% from RMB4.202 in fiscal year 2008. Fully diluted net income per ADS was RMB6.481(US$0.938) for fiscal year 2009, representing an increase of 55.0% from RMB4.180 in fiscal year 2008.

     Recent developments:     -- On February 23, 2010 and November 26, 2009, CNinsure signed strategic        partnership agreements with Sunshine Property and Casualty ("P&C")        Insurance Co., Ltd. and China Pacific Property Insurance Co., Ltd,        respectively, for collaboration in product distribution, development        and exclusive distribution of customized products as well as provision        of claims adjusting services. CNinsure has so far entered into        strategic partnerships with four P&C insurers in total.      -- On February 08, 2010, the Company's board of directors approved the        grant of options to purchase an aggregate of 48,000,000 ordinary shares        of the Company to various directors, officers and employees under the        Company's amended and restated 2007 Share Incentive Plan. The exercise        price of these options is US$0.840 per ordinary share, equal to the        closing price of the Company's ADS on the Nasdaq Global Select Market        at the grant date (after adjusting for the 20 ordinary shares to 1 ADS        ratio). The options granted to senior management and key employees will        be vested according to their Key Performance Indicator (KPI) results        for the fiscal year of 2010. The options will vest over a four-year        period starting from March 31, 2011.      -- As of December 31, 2009, CNinsure's distribution and service network        consisted of 47 insurance agencies, four insurance brokerages and four        claims adjusting firms with 501 sales and services outlets operating in        22 provinces, compared to 40 insurance agencies, five insurance        brokerages and three claims adjusting firms with 352 sales and service        outlets operating in 17 provinces as of December 31, 2008. CNinsure had        38,675 sales agents and 1,556 claims adjustors as of December 31, 2009,        compared to 28,886 sales agents and 834 claims adjustors as of December        31, 2008.      -- Net revenues from commissions and fees derived from the "P&C" Insurance,        Life Insurance and Claims Adjusting businesses for the fiscal year 2009        each contributed 67.8%, 20.0% and 12.2% of its total net revenues,        respectively, in 2009, compared to 75.0%, 14.4% and 10.6%, respectively,        in 2008.      -- On December 31, 2009, CNinsure announced the acquisition of an        additional 41% equity interest in Hebei Fanlian Insurance Agency Co.,        Ltd., increasing its stake from 10% to 51%. The transaction has been        completed in January 2010.      -- On December 30, 2009, Datong Insurance Sales & Service Company Limited,        a wholly-owned subsidiary of Beijing Fanhua Datong Investment and        Management Co., Ltd ("Datong"), which is 55% owned by CNinsure, was        granted the first nationwide insurance agency operating license by the        CIRC. The license will enable Datong and its branches to operate        insurance distribution business nationally without additional licensing        requirements.      -- According to the Insurance Intermediary Market Development Report        published by the CIRC, based on revenues for fiscal year 2009, CNinsure        had eight affiliated insurance agencies and three affiliated claims        adjusting firms among China's top 20 of their respective categories,        each accounting for 11.53% and 13.18% of the total revenues of all        insurance agencies and claims adjusting firms, respectively, in China.      -- CNinsure was selected by Forbes China as one of the most promising up        and comers in 2010, ranking 14th among the top 200 SMEs with greatest        growth potentials. Rankings are based on revenue growth, net income        growth, ROTA, ROE and operating margins of the candidates for the        previous three years.      -- Mr. Yinan Hu, CNinsure's Chairman and Chief Executive Officer, and Mr.        Yongwei Ma, CNinsure's independent director, former Chairman of the        CIRC, were named among "the 60 Greatest Insurance leaders in 60 Years        of New China's History" by the China Insurance News, in recognition of        their outstanding contributions to the growth of the insurance industry        in China 

Business Outlook

Going forward, the Company will offer quarterly guidance for net income attributable to the Company's shareholders instead of total net revenues in view of the increased uncertainty in its revenues due to the adoption of the new fee-based revenue model by some of its subsidiaries.

CNinsure expects its net income attributable to the Company's shareholders to grow by approximately 30% for the first quarter 2010 compared to the corresponding period of 2009. This forecast reflects CNinsure's current and preliminary view, which is subject to change.

Conference Call

The Company will host a conference call to discuss the fourth quarter 2009 results at

     Time:     8:00 pm Eastern Standard Time on March 2, 2010            or 9:00 am Beijing/Hong Kong Time on March 3, 2010      The dial-in numbers:       United States:             +1-877-538-6619      United Kingdom:            0808-234-6305      Canada:                    +1-866-8691-825      Singapore:                 800-852-3576      Taiwan:                    0080-185-6004      Hong Kong & Other Areas:   +852-3005-2050      China (Mainland):          400-681-6949       Password: 618842#      A replay of the call will be available for 30 days as follows:       +852-3005-2020       (Hong Kong & other areas)       PIN number: 147257# 

Additionally, a live and archived web cast of this call will be available at: http://www.corpasia.net/us/CISG/irwebsite/index.php?mod=event

About CNinsure Inc.

CNinsure is a leading independent intermediary company operating in China. CNinsure's distribution network reaches many of China's most economically developed regions and affluent cities. The Company distributes a wide variety of property and casualty and life insurance products underwritten by domestic and foreign insurance companies operating in China, and provides insurance claims adjusting as well as other insurance-related services.

Forward-looking Statements

This press release contains statements of a forward-looking nature. These statements are made under the "safe harbor" provisions of the U.S. Private Securities Litigation Reform Act of 1995. You can identify these forward- looking statements by terminology such as "will," "expects," "believes," "anticipates," "intends," "estimates" and similar statements. Among other things, the management's quotations and the Business Outlook section contain forward-looking statements. These forward-looking statements involve known and unknown risks and uncertainties and are based on current expectations, assumptions, estimates and projections about CNinsure and the industry. Potential risks and uncertainties include, but are not limited to, those relating to CNinsure's limited operating history, especially its limited experience in selling life insurance products, its ability to attract and retain productive agents, especially entrepreneurial agents, its ability to maintain existing and develop new business relationships with insurance companies, its ability to execute its growth strategy, its ability to adapt to the evolving regulatory environment in the Chinese insurance industry, its ability to compete effectively against its competitors, quarterly variations in its operating results caused by factors beyond its control and macroeconomic conditions in China and their potential impact on the sales of insurance products. All information provided in this press release is as of March 2, 2010, and CNinsure undertakes no obligation to update any forward-looking statements to reflect subsequent occurring events or circumstances, or to changes in its expectations, except as may be required by law. Although CNinsure believes that the expectations expressed in these forward-looking statements are reasonable, it cannot assure you that its expectations will turn out to be correct, and investors are cautioned that actual results may differ materially from the anticipated results. Further information regarding risks and uncertainties faced by CNinsure is included in CNinsure's filings with the U.S. Securities and Exchange Commission, including its annual report on Form 20-F.

About Non-GAAP Financial Measures

To supplement CNinsure's consolidated financial results presented in accordance with GAAP, CNinsure uses in this release the following non-GAAP financial measures: adjusted total operating costs and expenses, adjusted general and administrative expenses, adjusted net income from operations and adjusted net income attributable the Company's shareholders, which exclude the one-time charge of RMB 29.6 million recognized as share-based compensation expenses in the fourth quarter of 2008, as a result of the surrender and cancellation of options to purchase an aggregate of 30,804,500 ordinary shares by various option holders in December 2008. The presentation of these non-GAAP financial measures is not intended to be considered in isolation or as a substitute for the financial information prepared and presented in accordance with GAAP. For more information on these non-GAAP financial measures, please see the tables captioned "Reconciliations of non-GAAP financial measures to comparable GAAP measures" set forth at the end of this release.

CNinsure believes that these non-GAAP financial measures provide meaningful supplemental information regarding its operating results. The Company believes that both management and investors benefit from referring to these non-GAAP financial measures in assessing the Company's performance and when planning and forecasting future periods. A limitation of using adjusted operating costs and expenses, adjusted general and administrative expenses, adjusted operating income and adjusted net income is that these non-GAAP measures exclude the one-time share-based compensation charge that was a significant expense in the fourth quarter of 2008. Management compensates for this limitation by providing specific information regarding the GAAP amounts excluded from each non-GAAP measure. The accompanying tables have more details on the reconciliations between GAAP financial measures that are comparable to non-GAAP financial measures.

                                   CNINSURE INC.                Unaudited Condensed Consolidated Balance Sheets                                 (In thousands)                                       As of          As of            As of                                    December 31,    December 31,   December 31,                                      2008(2)         2009             2009                                   (As Adjusted)                                        RMB            RMB              US$     ASSETS:     Current assets:     Cash and cash equivalents       1,510,432      1,457,890         213,582     Restricted cash                     4,200          1,957             287     Accounts receivable, net           90,452        181,360          26,569     Insurance premium receivables          21            230              34     Other receivables                  57,151         52,108           7,634     Deferred tax assets                 1,808          2,602             381     Amounts due from related parties  207,595         25,337           3,712     Other current assets                5,224          6,015             881      Total current assets            1,876,883      1,727,499         253,080       Non-current assets:     Property, plant, and      equipment, net                    72,538        108,318          15,869     Goodwill                           37,888        535,911          78,511     Intangible assets                  53,518         81,485          11,938     Deferred tax assets                 4,836          3,801             557     Investment in affiliates              427         86,701          12,701     Other non-current assets              425          2,250             330     Total assets                    2,046,515      2,545,965         372,986                                    CNINSURE INC.          Unaudited Condensed Consolidated Balance Sheets-(Continued)                                 (In thousands)                                         As of          As of          As of                                     December 31,   December 31,   December 31,                                        2008(2)         2009           2009                                     (As adjusted)                                          RMB            RMB            US$     LIABILITIES AND SHAREHOLDERS' EQUITY:     Current liabilities:     Accounts payable                    59,867         72,716         10,653     Insurance premium payables           4,200          1,957            287     Other payables and accrued expenses 73,712        182,139         26,684     Accrued payroll                     15,336         24,152          3,538     Income tax payable                  26,140         37,410          5,480     Amounts due to related parties      10,967         19,274          2,824     Total current liabilities          190,222        337,648         49,466      Non-current liabilities:     Other tax liabilities                1,871          2,537            372     Deferred tax liabilities             8,351         19,075          2,794     Total liabilities                  200,444        359,260         52,632      Common stock                         7,036          7,036          1,031     Additional paid-in capital       1,666,723      1,604,774        235,101     Statutory reserves                  71,237        103,877         15,218     Retained earnings                   80,462        348,663         51,079     Accumulated other comprehensive      loss                              (73,810)       (72,542)       (10,628)     Total CNinsure Inc.      shareholders' equity            1,751,648      1,991,808        291,801      Noncontrolling Interests(2)         94,423        194,897         28,553     Total shareholders' equity       1,846,071      2,186,705        320,354     Total liabilities and      shareholders' equity            2,046,515      2,545,965        372,986                                    CNINSURE INC.           Unaudited Condensed Consolidated Statements of Operations        (In thousands, except for shares and per share and per ADS data)                                              For The Three Months Ended                                                     December 31,                                          2008(3)        2009          2009                                      (As Adjusted)                                            RMB           RMB           US$     Net revenues:     Commissions and fees                 281,266      355,217         52,040     Other service fees                       155          278             40     Total net revenues                   281,421      355,495         52,080     Operating costs and expenses:     Commissions and fees                (145,861)    (177,180)       (25,957)     Selling expenses                      (6,222)     (15,342)        (2,248)     General and administrative      expenses                            (78,768)     (52,809)        (7,736)     Total operating costs and      expenses                           (230,851)    (245,331)       (35,941)     Net income from operations            50,570      110,164         16,139     Other income, net:       Gain on disposal of a        subsidiary                            525           --             --       Investment income                       --           --             --       Interest income                     11,414        7,195          1,054       Interest expense                       (29)          --             --       Others, net                           (155)         371             54       Changes in fair value of        contingent consideration        payables                               --           --             --     Net income before income taxes        62,325      117,730         17,247     Income tax expense                   (17,648)     (28,328)        (4,150)     Share of income of affiliated      companies                               135          811            119     Net income                            44,812       90,213         13,216                                              For The Twelve Months Ended                                                    December 31,                                          2008(3)       2009           2009                                      (As Adjusted)                                            RMB          RMB            US$     Net revenues:     Commissions and fees                 843,107    1,154,090        169,075     Other service fees                       855          761            112     Total net revenues                   843,962    1,154,851        169,187     Operating costs and expenses:     Commissions and fees                (436,803)    (579,911)       (84,957)     Selling expenses                     (17,328)     (49,498)        (7,252)     General and administrative      expenses                           (180,031)    (199,246)       (29,190)     Total operating costs and      expenses                           (634,162)    (828,655)      (121,399)     Net income from operations           209,800      326,196         47,788     Other income, net:       Gain on disposal of a        Subsidiary                            525           --             --       Investment income                       --       18,905          2,770       Interest income                     47,967       33,299          4,878       Interest expense                       (95)          (4)            (1)       Others, net                            (28)       1,408            206       Changes in fair value of        contingent consideration        payables                               --       (5,946)          (871)     Net income before income taxes       258,169      373,858         54,770     Income tax expense                   (62,438)     (95,618)       (14,008)     Share of income of affiliated      companies                               135          774            114     Net income                           195,866      279,014         40,876                                    CNINSURE INC.     Unaudited Condensed Consolidated Statements of Operations-(Continued)        (In thousands, except for shares and per share and per ADS data)                                              For The Three Months Ended                                                    December 31,                                           2008(3)         2009         2009                                        (As Adjusted)                                             RMB            RMB          US$     Less: Net income (loss)      attributable to the      noncontrolling interests               1,076        (3,561)        (522)     Net income attributable to the      Company's shareholders                43,736        93,774       13,738      Net income per share:     Basic                                   0.048         0.103        0.015     Diluted                                 0.048         0.100        0.015      Net income per ADS:     Basic                                   0.959         2.055        0.301     Diluted                                 0.954         1.995        0.292     Shares used in calculating net      income per share and ADS:     Basic                             912,497,726   912,497,726  912,497,726     Diluted                           916,705,322   940,308,935  940,308,935                                              For The Twelve Months Ended                                                      December 31,                                           2008(3)        2009         2009                                        (As Adjusted)                                             RMB           RMB          US$     Less: Net income (loss)      attributable to the      noncontrolling interests               4,129       (21,827)      (3,197)     Net income attributable to the      Company's shareholders               191,737       300,841       44,073      Net income per share:     Basic                                   0.210         0.330        0.048     Diluted                                 0.209         0.324        0.047     Net income per ADS:     Basic                                   4.202         6.594        0.966     Diluted                                 4.180         6.481        0.950     Shares used in calculating net      income per share and ADS:     Basic                             912,497,726   912,497,726  912,497,726     Diluted                           917,335,390   928,312,312  928,312,312                                    CNINSURE INC.   Reconciliations of Non-GAAP Financial Measures to Comparable GAAP Measures                             (In RMB in thousands)                          For The Three Months Ended  For The Three Months Ended                              December 31, 2008         December 31, 2009                          GAAP  Adjustment Non-GAAP  GAAP Adjustment Non-GAAP     Total operating      cost and expenses 230,851  (29,634)   201,217 245,331    --     245,331     General and      administrative      expenses           78,768  (29,634)    49,134  52,809    --      52,809     Net income from      operation          50,570   29,634     80,204 110,164    --     110,164     Net income      attributable      to the      Company's      shareholders       43,736   29,634     73,370  93,774    --      93,774                          For The Twelve Months Ended For The Twelve Months Ended                             December 31, 2008          December 31, 2009                          GAAP  Adjustment Non-GAAP  GAAP  Adjustment Non-GAAP     Total operating      cost and expenses 634,162   (29,634)  604,528 828,655    --     828,655     General and      administrative      expenses          180,031   (29,634)  150,397 199,246    --     199,246     Net income from      operation         209,800    29,634   239,434 326,196    --     326,196     Net income      attributable      to the      Company's      shareholders      191,737    29,634   221,371 300,841    --     300,841       (1) This announcement contains translations of certain Renminbi (RMB)         amounts into U.S. dollars (US$) at specified rates solely for the         convenience of the reader. Unless otherwise noted, all translations         from RMB to U.S. dollars are made at a rate of RMB6.8259 to US$1.00,         the effective noon buying rate as of December 31, 2009 in The City of         New York for cable transfers of RMB as set forth in H.10 weekly         statistical release of the Federal Reserve Board.       (2) Effective from January 1, 2009, the Company adopted Financial         Accounting Standards Board (FASB) Accounting Standards Codification         810 ("ASC 810") Non-controlling Interests, (formerly FASB Statement         ("SFAS") No. 160, Non-controlling Interests in Consolidated Financial         Statements). As a result, the presentation and disclosure requirements         had applied retrospectively for all periods presented, requires         noncontrolling interests to be separately presented as a component of         stockholders' equity on the consolidated balance sheets. The balance         sheet data as of December 31, 2008 was extracted from the Form 20-F         for the year ended December 31, 2008, as adjusted to give the effect         of the adoption of ASC 810.      (3) Amounts were extracted from the current report on Form 6-K filed on         February 25, 2009, as adjusted to give the effect of the adoption of         ASC 810, Non-controlling Interests, (formerly SFAS No. 160). 

SOURCE CNinsure Inc.