Hub Completes Two Acquisitions

By Mark E. Ruquet

NU Online News Service, July 2, 10:57 a.m.EDT?Chicago broker Hub International Limited has completedits acquisition of the Safeco Corp. brokerage Talbot FinancialCorp. and a White Plains, N.Y.-based wholesaler as well.

Hub announced the plans to purchase Talbot Financial in thefirst quarter (see NU, March 22, page 13). It is thecompany's largest acquisition this year, with projected revenues of$100 million.

Hub purchased Talbot from Safeco insurance for $90 million incash. The Albuquerque, N.M.-based Talbot will be a regional "hub"for the firm covering the Southwest and Western regions.

Talbot is primarily a property-casualty business, distributinginsurance and investment products through independent agents,broker/dealers and financial institutions. The firm's sales ofannuities and other financial products account for approximately 10percent of revenue.

The acquisition, Hub said, was accomplished through its purchaseof a 70 percent interest in Satellite Acquisition Corporation, acorporation formed by Randy Talbot and senior management at Talbot.The proceeds from the investment were used to purchase the firmfrom Safeco.

Hub said it would purchase the remaining 30 percent interestfrom Talbot management over the next three years. Hub said it hasthe right to use both restricted and unrestricted shares of itsstock in the purchase.

Hub said the deal would be recorded as a compensation expenseand would result in the reduction of some earnings. It expects thenet expense for non-cash stock-based compensation to Talbot, basedon 2003 earnings, will be approximately $16 million in 2004; $8million in 2005; and $2 million in 2006.

If Talbot management exceeds specific performance goals, Hubsaid, the total compensation impact would increase by $2.10 foreach additional dollar of EBITA (earnings before interest, taxesand amortization) that Talbot generates.

This week, Hub also announced the acquisition of B. & D.A.Weisburger, Inc. of White Plains, N.Y., by its New York-basedwholesale insurance division, Program Brokerage Corp.

Terms of the deal involved an undisclosed amount of cash and Hubstock.

Family owned since its founding in 1915, Weisburger offers pestcontrol and lawn care coverage programs to other agents and brokersas well as retail clients. The firm, with annual revenues ofapproximately $3 million, will remain in White Plains.

Michael A. Weisburger, president and majority owner of thebusiness, will become a vice president at PBC, reporting to Marc I.Cohen, PBC President, Hub said.