Tian Ruixiang Holdings Ltd (NASDAQ: TIRX)

Tian Ruixiang Holdings Ltd., commonly referred to as TIRX, operates in the insurance industry as a holding company incorporated in the Cayman Islands. Its primary business activities are carried out by its variable interest entity, Zhejiang Tianruixiang Insurance Broker Co., Ltd. (TRX ZJ), which is based in China. TRX ZJ markets and sells a range of insurance products, including property and casualty, life, and health insurance, to both institutional and individual customers in China.

The company generates revenue primarily through commissions from insurance products sold to customers. In the fiscal year 2023, commissions from property and casualty insurance products accounted for 92.6% of total commissions, while commissions from life insurance products accounted for 0.1%. TRX ZJ also generates revenue from risk management services, which it provided to institutional customers until November 2022.

TRX ZJ has established a significant presence in the Chinese insurance market, with over 30 insurance companies partnering with the company to distribute their products. The company's customers include institutional customers, such as corporations and financial institutions, as well as individual customers. TRX ZJ's competitive advantages include its extensive distribution network, its relationships with insurance companies, and its ability to provide premium services to customers.

TIRX competes with other insurance brokers, including state-owned and private companies, to distribute insurance products to customers. Its competitors include Huize Holding Limited, Fanhua Inc., Minya insurance brokerage Co., Ltd, Marsh & Mclennan Companies, Inc., Aon Corporation, Willis Group Holdings Limited, and Jiangtai Insurance Broker Co., Ltd.

TRX ZJ's customers are primarily located in China, with a smaller number of customers located in other countries. The company's revenue is subject to both quarterly and annual fluctuations as a result of the seasonality of its business, the timing of policy renewals, and the net effect of new and lost business. The company's income is generally highest in the first quarter of each year, when life insurance companies offer more attractive incentives to insurance intermediaries and sales agents to boost sales.

TIRX relies on a combination of trademark, copyright, and trade secret laws, as well as confidentiality agreements with employees, sales agents, contractors, and others to protect its brand, trade names, trademarks, trade secrets, and other intellectual property rights. The company has completed registration of trademarks for each of "TRX" and "Needbao" in two categories in China.

The insurance industry in the PRC is highly regulated, with the National Financial Regulatory Administration (NFRA) serving as the principal regulatory authority. The NFRA has extensive authority to supervise insurance companies and insurance intermediaries operating in the PRC, including conducting on-site examinations and off-site surveillance, authorizing banking institutions, insurance institutions, financial holding companies, and others, and setting up mechanisms connecting administrative law enforcement with criminal justice.

The principal regulation governing insurance brokers is the Provisions on the Supervision and Administration of Insurance Brokers, or the POSAIB, promulgated by the CIRC on February 1, 2018 and effective May 1, 2018. Under this regulation, insurance brokers shall have the professional ability required for engaging in insurance brokerage business, and insurance brokerage practitioners shall have the qualification requirements prescribed by the CIRC.