Hub buys Chubb personal lines brokerage business

Hub International Limited (TSX: HBG) and The Chubb Corporation (NYSE: CB) recently entered into an agreement for Hub to acquire Chubb’s personal lines insurance brokerage business, Personal Lines Insurance Brokerage, Inc. (PLI). The transaction is expected to close within 60 days, subject to customary closing conditions. Terms were not announced, although Hub indicated that valuation is within its targeted range for acquisitions.
The acquisition will increase Hub’s personal lines business to approximately 20% of consolidated revenue. PLI generated 2004 revenue of approximately $27 million from its 18 offices in the U.S. In the same year, Hub generated approximately $25 million in personal lines revenue in the U.S. and $70 million on a consolidated basis, including Canada.
“The high-net-worth individuals targeted by PLI include many of the same middle-market business owners and executives we serve in our commercial insurance operations,” Martin P. Hughes, Hub International chairman and chief executive officer, says. “This is a very important market for Hub and one we can serve more fully through the acquisition.”
Jim Kane and Kathleen Zortman, who currently lead PLI management, will oversee Hub’s personal lines practice in the U.S. as president and chief operating officer, U.S. Personal Lines, respectively. Their leadership role will include working with all personal lines specialists at Hub’s regional offices. Kane will join Hub’s Executive Committee.
“The acquisition will create potential for margin improvement in personal lines as PLI offices are integrated with Hub’s regional operations,” Hughes adds. Hub and PLI offices share overlapping regions for approximately 54% of PLI’s revenue base, leading to consolidation and other cost-saving opportunities. Beyond the overlapping regions, PLI has offices in Florida, Georgia, North Carolina and Texas, all areas targeted by Hub for expansion.