Canadian Underwriter

Hub reports 71% earnings rise in first quarter

April 27, 2005   by Canadian Underwriter

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Chicago-based broker network Hub International Ltd. (NYSE, TSX: HBG) says its net earnings rose 71% in the first quarter of 2005 to reach US$16.5 million, or US$0.47 per share. This compares to earnings of US$9.6 million, or US$0.29 per share reported in first-quarter 2004.
Revenue was up 53% over the same period to US$121.7 million from $79.3 million.
Core commissions rose 44% to US$89.0 million in the first quarter (Q1 2004: US$61.6 million), including 4% organic growth. Contingent commissions and volume overrides rose 94% to US$29.2 million (Q1 2004: US$15.0 million), with about US$8.7 million of this as a result of acquisitions. Other income rose 31% to US$3.6 million, including organic growth of 6%.
U.S. operations, which accounted for 72% of first-quarter revenue, saw revenue jump 79% to US$87.1 million in the first quarter of 2005, largely the result of key acquisitions in mid-2004.
Canadian operations, which accounted for 28% of revenue, saw revenues rise 13% in the first quarter to US$34.6 million, with 18% organic growth. The stronger Canadian dollar contributed eight percentage points to organic growth.
“We’re off to a solid start in a very challenging environment,” says Hub chairman and CEO Martin P. Hughes. “Premium rates continue to decline, accompanied by increased capacity and more competition from smaller, regional brokers. At the same time, we are beginning to see signs that customers are responding to lower rates by restoring coverage that was bypassed during the harder rate environment.”
Hub will pay a dividend of US$0.06 per share on outstanding common shares to shareholders of record as at June 15, 2005.

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