Canadian Underwriter

Hub earnings up almost 200% in 2002

March 6, 2003   by Canadian Underwriter

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Broker consolidator Hub International Ltd. (TSX, NYSE: HBG) reports a 194% increase in net earnings for the year ending December 31, 2002. Last year, earnings grew to US$29.4 million from US$10 million in 2001. Diluted earnings per share grew 112% to US$1.05 from US$0.50 the year prior.
The company brought in US$2.6 million from the sale of its Old Lyme underwriting units, and US$88.1 million in proceeds from a U.S. IPO.
For the fourth quarter 2002, the company saw net earnings rise 182% to US$8.3 million, or US$0.26 per share, versus US$3.0 million, or US$0.14 per share, in the fourth quarter 2001.
Revenue was up for the year to US$220 million, from US$154 million in 2001, while the fourth quarter saw revenue of US$64 million, versus US$53 million for the same period a year prior. This represents record revenue for both the full year and fourth quarter.
In Canada, revenues were up 9% for the year, to $86 million, while in the U.S, revenue grew 78% to $134 million. U.S. subsidiaries now account for 61% of Hub’s revenue.
Hub chairman Martin P. Hughes notes that acquisitions played a large part in the increase, while organic commission growth improved to 13% from 5% in 2001. Further acquisition growth is planned for the U.S., where the company hopes to reach 15 subsidiary “hubs” over the next five years. Organic commission growth was 13% in both Canada and the U.S. last year.
“Clearly, 2002 was a very strong year for Hub, both financially and operationally,” Hughes says. “We achieved strong growth from the brokerages acquired in 2001 and we added new brokerages to our family in 2002. We increased our importance to both underwriters and clients, including the middle-market companies that are our primary targets and the smaller brokerages that are serviced by our wholesale operations.”
The company confirms its earlier earnings guidance for 2003 of US$1.08-$1.17 per share. It is issuing a quarterly dividend of US$0.05 per share on outstanding common shares payable on April 30, 2003.

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