USI Paid $125M For Acquisitions In ?04

By Mark E. Ruquet

NU Online News Service, March 28, 4:10 p.m.EST?U.S.I. Holdings Corp. reported it paid more than $125million for four acquisitions in 2004, and will pay more than $123million for its purchase of Summit Global Partners that itcompleted earlier this year.[@@]

In its 10-K filing today, the Briarcliff Manor, N.Y., basedinsurance brokerage firm also revealed that it paid more than $1million in separation money to a top executive.

For its 2004 purchases USI reported it paid $44.6 million forBertholon-Rowland Corp.; $38.6 million for Dodge, Warren &Peters Insurance Services; $30.6 million for Future PlanningAssociates; and $11.4 million for Benefit Partners of America,Inc.

The company said it expects the acquisitions to add more than$70.5 million in revenues in the first full year of ownership.

USI also revealed that its $123.9 million purchase of SummitGlobal consists of $69.3 million in cash, $26.5 million in commonstock and $28 million in assumed liabilities.

The firm received a $90 million increase in its existing termloan. The increase was used to fund a portion of the Summitpurchase, according to the filing.

The resignation of Thomas E. O'Neil, senior vice president andchief operating officer last month, will cost USI $1.5 million inseparation payment expense. The company said it would take theexpense in the first quarter of 2005.

USI delayed the filing of its 10-K while it worked through theaccounting of three discontinued operations it planned torelinquish. The discontinued operations resulted in USI taking a$9.5 million impairment charge in the fourth quarter. However, thedelay in filing did not result in any material changes to USI'sreported earnings.

The company reported revenues of $407.2 million for 2004 and netincome of $8.3 million, or 17 cents a share.

The firm said it has sold two of the three discontinuedoperations--its Ocala, Fla. office to Brown & Brown for morethan $2 million, and Strategic Management Group to its managementteam for more than $1 million. It reported that it expects thesales to be completed during the first half of 2005.

On the litigation front, USI said it has received subpoenas fromthe attorneys general of New York, Connecticut, and Florida and an"investigative demand" from the Department of Justice in SouthCarolina.

The requests center around "allegations of bid rigging, tyingarrangements and other fraudulent or unlawful businesspractices."

It has also received requests for information from "a number ofstate departments of insurance," but gave no additional details asto how many or which states are involved.

USI said it is cooperating with investigators and has obtainedoutside counsel to assist with answering question and performing aninternal review.