Canadian Underwriter

Hub earnings up 80% in Q1 2003

May 2, 2003   by Canadian Underwriter

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Broker network Hub International Limited (NYSE, TSX: HBG) reports growth in both revenue and earnings, on the back of growth in Canada and rising contingent commissions, for the first quarter ending March 31, 2003.
For the quarter, revenue was up 39% to US$68.9 million, from US$49.5 million in the first quarter last year. During the same period, net earnings bloomed 80% to US$8.9 million, or US$0.28 per share, from US$4.9 million, or US$0.21 per share, in the first quarter last year.
General expenses were down to 19% or revenue for the quarter, from 22% in 2002, while compensation expenses dropped to 54% of revenue from 56% a year prior.
The network’s Canadian operations became a smaller portion of its overall revenue due to U.S. acquisition growth, however, it experienced 18% organic growth in commission income. Total revenue was up 22% to US$23.6 million in the first quarter this year from US$19.4 million a year earlier. “Our Canadian operations benefited from our continued access to insurance markets, helping us pick up some market share from other firms that were not as capable of meeting client needs,” Hub chairman and CEO Martin P. Hughes notes.
Contingent commissions were a big boost to U.S. operations, up 74% for the quarter. In total, revenue was up 50% to US$45.3 million versus US$30.1 million in the first quarter 2002. “The strength of contingent commissions and volume overrides reflected enhanced relationships with insurance companies, sharply higher premium rates, better loss experience for insurance carriers in 2002 versus 2001 and, in some cases, earlier payment of these annual commissions by insurers.” Hughes says.
The company still anticipates 2003 earnings per share of US$1.08-$1.17 up from US$1.06 in 2002. A first quarter dividend of US$0.05 will be paid on common shares.

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