Thank you for standing by for CNinsure's third quarter 2013 earnings conference call. [Operator Instructions] For your information, this conference call is now being broadcasted live over the internet. Webcast replay will be available within three hours after the conference is finished. Please visit CNinsure's IR website at ir.cninsure.net, under the Events and Webcasts section. Today's conference is being recorded. If you have any objections, you may disconnect at this time. I would now like to turn the meeting over to your host for today's conference, Ms. Oasis Qiu, CNinsure's Investor Relations Officer.

Good morning everyone. Welcome to our third quarter 2013 earnings conference call. The earnings results were released earlier today and are available on our IR website as well as on newswire. Before we continue, please note that the discussion today will contain forward-looking statements made under the Safe Harbor provisions of the US Private Securities Litigation Reform Act of 1995. The accuracy of these statements may be impacted by a number of business risks and uncertainties that could cause our actual results to differ materially from those projected or anticipated. Such risks and uncertainties include but are not limited to those outlined in our filings with the SEC, including our registration statement on Form 20-F. We do not undertake any obligation to update these forward-looking statements except as required under applicable law. Joining us today is our Chief Executive Officer, Mr. Chunlin Wang, and Chief Financial Officer, Mr. Peng Ge. They will walk you through our financial and operating performance in the third quarter 2013, and take your questions after the prepared remarks. Now I will turn the call over to Mr. Wang.

[Interpreted]. Hello everyone. Thank you for joining us on the call. On today's agenda, our CFO, Mr. Peng Ge, and I will discuss the operational and financial highlights for the third quarter 2013, and share with you our business outlook. We will take your questions after this. China's insurance industry grew 10.0% year over year. Total gross premiums in the third quarter 2013 were [limited], [thanks for a] notable recovery in the near term, while P&C insurance market maintained strong growth momentum with premiums up 15.7% from the year-ago quarter. Fierce competition in auto insurance sector continued into the third quarter. Life insurance market remained in growth territory with a 4.5% year-over-year growth in premium, in spite of some improvements in [indiscernible]. Our total net revenues for the third quarter reached RMB430 million, up 6.9% from the year-ago quarter, exceeding our previous guidance of 5%. Gross margin showed a slight decrease year over year, but began [picking] up sequentially. Though operating income recorded a slight decline from the year-ago quarter, the magnitude of the decline has narrowed significantly as compared to the last six quarters. [Bottom line] reported a strong growth of 26%, reversing the downward trend in the past two years. The results show signs that we're on track to deliver sequential improvements in both top line and bottom line. Now looking at our three major business lines, let's start with P&C insurance business. Driven by sales volume growth and the slight increase in commission rates, our P&C business segment showed stable revenue growth of 9.3% year over year in the third quarter, of which brokerage business grew 126.8%, representing very strong growth momentum. We are also excited to see a rebound in our P&C gross margin both year over year and quarter, mainly attributable to the strength on…

Thanks, Mr. Wang. I'm pleased to report our financial results for the third quarter 2013. The numbers I will refer to will be in RMB, unless otherwise indicated. Total net revenues for the third quarter 2013 were RMB430.6 million, up 6.9% from the year-ago quarter. Total operating costs and expenses for the third quarter 2013 were RMB428.8 million, up 7.2% from the year-ago quarter. Commissions and fees expenses for the third quarter 2013 were RMB317.3 million, up 7.8% from the year-ago quarter. Selling expenses for the third quarter 2013 were RMB27.3 million, up 40.6% from the year-ago quarter. General and administrative expenses for the third quarter 2013 were RMB84.2 million, down 2.6% from the year-ago quarter. The decrease for the third quarter 2013 was primarily due to a decrease in share-based compensation expenses. As a result of the foregoing factors, operating income for the third quarter 2013 were RMB1.8 million, down 39.1% from the year-ago quarter. Operating margin was 0.4% for the third quarter of 2013, compared to 0.7% from the year-ago quarter. Interest income for the third quarter 2013 was RMB20.7 million, down 18.2% from the year-ago quarter. Income tax expenses for the third quarter of 2013 was RMB4.7 million, down 62.8% from the year-ago quarter. Net income attributable to the company's shareholders was RMB29 million for the third quarter 2013, up 26% from the year-ago-quarter. Basic and diluted net income per ADS were both RMB0.58 for the third quarter 2013, up 26.5% and 26.6%, respectively, from the year-ago quarter. Adjusted EBITDA was RMB28 million for the third quarter of 2013, down 10.2% from the year-ago quarter. Adjusted EBITDA margin was 6.5% for the third quarter of 2013 compared to 7.7% for the year-ago quarter. As of September 30, 2013, the company had RMB2.3 billion in cash and cash equivalents. CNinsure expects its total net revenues to grow by approximately 5% for the fourth quarter of 2013 compared to the corresponding period of 2012. This forecast reflects CNinsure's current view which is subject to change. Thank you.

We are ready for questions.

Okay. Thank you. We will now begin the question and answer session. [Operator Instructions] Thank you. Our first question comes from the line of [Alfred Ho] from [Hoke Incorporated]. Please go ahead. [Alfred Ho] – [Hoke Incorporated]: Yes. Congratulations on winning the insurance industry awards again. I think that's very commendable. I'm trying to understand the increase in productivity from the CNpad, and I see that you have about 2,000 units and about 50,000 agents. So about 4% of your agents have the pad. And yet it seems like that accommodated about 29% of your revenues from the P&C sector, if I understood that right, you said you made RMB90 million out of about RMB320 million in total P&C revenues. Could you explain a little bit more how those numbers are figured and what the increase in productivity is for an agent that has the CNpad? Thank you.

Great question. [Chinese language spoken]

[Interpreted] CNpad was put into operations starting at the end of the first quarter and early second quarter, and then start to roll out the CNpad and the system gradually in our categories. We have done this in a gradual process and we haven't really started any massive rollout, because we think the technology and also the system operation [indiscernible] for improvement in those technology and operations. And we'd like to close by the RMB90 million contributed by CNpad is [indiscernible] premiums instead of revenues. And then -- and we don't sell 2,200 units CNpad in the past nine months but like to emphasize that most of the sales happened in September. And some of them may not start to contribute payments yet, so it doesn't -- it's not really makes sense to calculate the per unit productivity based on this number. And we have made a major breakthrough in the design for CNpad. Previously we only have CNpad that supports the sales of auto insurance, but now we have already completed a design for CNpad that enables the sales of wealth management products and some simple life insurance products. And we believe that this will make -- increase the attractiveness of CNpad to our agents. And we have started [indiscernible] now this new CNpad in [Xiandong] and we expect to complete -- we expect to roll it out nationwide by the end of this year. And we are encouraged, and this is -- I mean this accomplishment is not made easily as we really have made a lot of innovations and overcome a lot of difficulties during this process. And I would like to clarify again, the RMB90 million is the premiums in the past nine months. And in terms of the percentage of the contribution from CNpad in the third quarter, it accounts for about 2% to 3% of total net revenues in the third quarter. Right now the average per unit productivity is about 40,000 [indiscernible]. And we actually expect that figure to decline over time in the next few months as we accelerate the sales, because it takes time for the CNpad to fully [indiscernible] contribution. But we believe that after one year's time, the per unit productivity should increase. Our current focus is to [indiscernible] the impact to our sales agents, but starting from second quarter next year, our focus will be shifted towards accelerating the use -- I mean to make sure that our agents make good use of CNpad. Thank you. [Alfred Ho] – [Hoke Incorporated]: All right. Thank you.

Thank you. And our next question comes from the line of [Mike Rind] of [MJR Capital]. Please go ahead. [Mike Rind] – [MJR Capital]: Thanks for taking my question. I have two. One is just a follow-up to the last question and then a question of my own. Did I catch you right, did you say that the CNpad is -- productivity is 40,000 of premium per month?

[Chinese language spoken]

[Interpreted] Yes, 40,000 premium per month per CNpad. [Mike Rind] – [MJR Capital]: Right. So that would be for three months about $262 million? So that means a fair amount of the units that had kind of rolled out kind of rolled out towards the end of the quarter?

[Chinese language spoken]

[Interpreted] Could you say the number again? [Mike Rind] – [MJR Capital]: Yes. So you said 40,000 in premiums per unit per month. Forty thousand times 2,190 units for three months is about $263 million. So given you only did 90 million in premium, does that mean that most of the units got rolled out towards the end of the quarter?

[Chinese language spoken]

[Interpreted] Actually we sell 1,300 units CNpads in September in one month. [Mike Rind] – [MJR Capital]: Okay.

[Interpreted] [indiscernible] per unit productivity is actually for CNpad that have been in operation for two months. Right now about 50% of the 2,200 units of CNpad are actively used. So there's a difference between the total sales number and the number that are in active use. [Mike Rind] – [MJR Capital]: Right, thank you. My question was around income from affiliates. It is, you know, now a more material number to the earnings of CNinsure, and I was wondering if you could give us some more detail on what is in income from affiliates. I assume that's equity method accounting for the consumer finance business, the research and wealth management business, and the asset management business. Are there any other businesses in there?

[Chinese language spoken]

[Interpreted] The income from affiliate mainly comes from CFSG the company that we own about 20% equity interest. So we'll record a portion of their net income as our investment income. [Mike Rind] – [MJR Capital]: Right. And given that CFSG is now a material portion of your income, can you give us revenues and income from CFSG for the last, you know, four quarters?

[Chinese language spoken]

[Interpreted] Based on the accounting principles, we can only own about 20% equity interest in this company. We cannot really consolidate their revenues in our P&L and we can only recognize investment income from their contribution. But if you're interested, they have an official website, I think you can take a look at their website for more information. But because they are not public company yet, probably most of the information available from this website are operational related. [Mike Rind] – [MJR Capital]: Just for clarification, I'm not questioning at all the accounting for it. And, you know, I understand that you're not consolidating it because of the accounting rules associated with that. I just was wondering if you could provide us the revenue and income given that it's now a material part of earnings, so we could get a better sense as to how the business has been performing, how revenues have been growing and how profit has been growing.

[Chinese language spoken]

[Interpreted] What this company is primarily engaged in the offering of micro-loans, asset management services and management banking services. And their profit is expected to be around RMB100 million for this year and the annual growth rate in the past few years have been [in trend] at around 30% to 50%. As for whether it's necessary for us to disclose any additional details about this company, we will have a discussion with our auditor and our legal counsel to evaluate the possibility. [Mike Rind] – [MJR Capital]: Okay. And we still currently own only 20% of CFSG? And is there any plan to increase that ownership?

[Chinese language spoken]

[Interpreted] It's our wish to increase our shareholding in this company, but I think we need to talk about this with their shareholders and the management to see whether they [indiscernible] the opportunity to open up. [Mike Rind] – [MJR Capital]: Okay. I'd appreciate any more color you can give us on future calls on CFSG, that would be great. And maybe as well, if you could just send me the website address so that I can look at it. Last call and then I'll jump off and let somebody else jump in, you know, we invested in the research, wealth management, asset management business a couple of years ago now, and it was nice to hear that that business is moving along. I was wondering, instead of assets that were structured or -- in the quarter, if you could give us revenues and profits from it and how it's growing.

[You mean the other] company? [Mike Rind] – [MJR Capital]: Yes. As far as the -- what was it called? The joint venture with [Fuyi Investment], it was [Fan Hoo Fuyi Investment Management].

Yes. [Chinese language spoken]

[Interpreted] We have about 19.8% equity interest in that company. And their business model is kind of similar to [Fanafan]. But due to their [short] operating history, they're in operation for only like one-and-a-half years, their net profit has been kind of flattish year over year, but the asset under management had grown very strongly. Last year the asset under management -- the asset under management was about RMB600 million. This year they expect they can achieve RMB1 billion. Thank you. Hello?

Right. Thank you. And our next question comes from the line of [Steve Rischer] from [Landmark Capital]. Please go ahead. [Steve Rischer] – [Landmark Capital]: Yes, hi. Apologize in advance because I'm new to your story. I'm just looking over your balance sheet, and I'm sure you probably got questioned on this many times in the past, but I'm trying to understand why you've had a persistently high cash balance, especially considering that it appears that your tangible book value is above your current stock price on a per share basis. So could you just walk me through the reasoning for the high cash level?

[Chinese language spoken]

[Interpreted] Historically CNinsure has been -- has very strong cash generation capacity. In the past few years, basically our cash inflows was equal to the net income of the company. So over the past couple of years we -- past few years we have accumulated a lot of cash. And then starting from 2010, the Chinese insurance industry has slowed down quite a lot. And also given the uncertainty in the Chinese economic outlook, we have started to hold a more conservative attitude towards the use of cash. And we have [decreased] the previous expansion model, i.e. to expand our sales network through acquisitions. I want to make sure that we have a net cash in hand to protect us for the future uncertainties. And then in addition -- additionally, CNinsure is [transitioning] ourselves from an insurance broker into a comprehensive financial service provider. And in order to do that, actually we need to invest a lot of capital, made a lot of additional capital management. But we believe that those should investments should be very important to build CNinsure's growth for the next few years -- next five years. [Steve Rischer] – [Landmark Capital]: Okay. I understand, you know, obviously every company wants to have a very strong balance sheet. But could you just give me a sense as to what you think your actual sort of cash -- safety cash level will be say two or three years from now? Because I'm looking at this and I see a balance sheet that seems to be over-capitalized, and I understand you obviously want to have a lot of cash to execute your strategic plan. But it seems to me that now would be maybe a good time to put some of that cash to use and return it to the shareholders in the form of preferably maybe a share buyback or maybe even some dividends at some point.

[Chinese language spoken]

[Interpreted] Well, for the capital expenditure, we have actually made our plans. In addition to the investment opportunity that we mentioned just now, we also need to invest certain -- a lot of money to buy back our minority interest of our affiliates. And also we need to invest in CNpad as well as our B2C websites to make sure that we can take full advantage of the current market opportunities to establish our leadership in this area. And also we want to, as I mentioned just now, wish to increase our shareholding in the CFSG and also [new] investments. So we want to make sure that we have enough cash in place. We also need to -- want to make some investments in -- enhance our brand recognition. [Steve Rischer] – [Landmark Capital]: That all makes a lot of sense. But as you said in the beginning of your answer, your business generates a lot of cash annually, right? So your cash continues to build. It just seems to me that with your I guess current stock price and your current market capitalization which is below the net cash value of the business on your -- net cash value on your balance sheet, that at some point it would be a good opportunity for you guys to buy back some shares. The fact that your business has traded for a long period of time now at or below net cash levels means, at least to me, that some investors don't understand your plans for the cash on your balance sheet. So I would encourage you to provide more details, specific details, on your use of that cash going forward.

[Chinese language spoken]

[Interpreted] We care a lot about our shareholders' interests. We have announced a share buyback and executed a share buyback program last year. And we will also consider -- currently consider the possibility of another share buyback. And also we will consider looking more -- details -- disclose more details about our plans and use of the capital. [Steve Rischer] – [Landmark Capital]: Okay. Thank you very much.