Fanhua Profits Nearly Double While Revenue Drops More Than One-third
Fanhua Inc. (Nasdaq: FANH), which provides insurance and financial services in China, reported after the market closed Monday that its revenue fell 37 percent to $134.4 million in this year's first quarter compared with a year ago because of a steep decline in its property and casualty insurance sector.
Despite the drop in revenue, however, the Guangzhou-based company said net income attributable to shareholders nearly doubled to $20.8 million, or 32 cents per American depositary share, from $11.1 million, or 18 cents per share, a year earlier. The increase in earnings came primarily from gains in interest and investment income and the positive results of affiliates.
Fanhua closed Monday at $28.87 per ADS, up 96 cents per share. Shares in the company spiked initially in after-hours trading Monday but were down 37 cents per share by the evening.
"The performance of our core business, life insurance business, was in line with our expectation," said Chunlin Wang, chairman and chief executive officer of Fanhua. "Our total life insurance premiums grew by 40.1% from a year ago, outpacing industry growth, primarily owing to strong year-over-year growth of 186.5% in renewal life insurance premiums during the quarter," he continued. Overall, the life insurance segment generated $107.3 million in this year's first three months.
The decline in overall revenue was driven mostly by an 86 percent drop in sales from the company property and casualty business. Revenue in that sector fell to $14.7 million compared with revenue of $104.5 million last year. The company said the decrease stemmed primarily from the disposal of equity interests of various entities in October and the transition of its business from a commission-based model towards a platform business model.
Fanhua said it expects operating income of at least $15.9 million in the second quarter this year. The company reported operating income from continuing operations of $14.4 million in the first quarter.
In addition, Fanhua said its board of directors has approved an annual dividend payout this year of $1 per ADS, or 5 cents per ordinary share. The company said its first dividend payment would be 25 cents per ADS payable on or about June 10 to shareholders of record as of May 30.