Hub Reports Earnings Up Over 190%
By Mark E. Ruquet
NU Online News Service, March 6, 12:30 p.m. EST?The hard market and a strong sales culture helped propel insurance broker Hub International’s reported net income for 2002 up 194 percent over 2001.
For the year, the Chicago?based broker reported net income rose $19.4 million from $10 million in 2001 to $29.4 million in 2002. This translated into earnings per share of $1.06 for 2002 compared to 50 cents per share in 2001.
Revenues for the year rose 43 percent, or $66 million, from $154 million in 2001 to $220 million.
Fourth-quarter revenues were up 182 percent, or $5.4 million, going from $3 million, or 14 cents a share, in 2001 to $8.34 million, or 26 cents a share, in 2002. Revenues increased 20 percent, or $10.7 million, going from $53 million in 2001 to $63.63 million in 2002.
The firm also announced it would pay a quarterly dividend of 5 cents per share on common shares on April 30 to shareholders of record as of April 15.
The firm said its strong revenue growth for the year was also affected by two nonrecurring items: the sale of its Old Lyme insurance subsidiary, which realized a gain of $2.6 million for Hub; and the raising of $88.1 million in net proceeds from the sale of 6.9 million shares of common stock in its initial public offering.
Martin Hughes, the firm’s chairman and chief executive officer, said Hub would continue its acquisition strategy for growth. At the same time, he said, the company is well positioned as a risk management advisor to middle market accounts to profit from its clients’ continuing need for such services in any economic conditions.
He added that he believed the current hard market would continue through 2004 because carriers need to reach combined ratio levels in the low 90′s in order to become profitable, something carriers have not done in a long time.
The added pressures of review by rating companies and regulators, he said, are compounding insurers’ need to push for more profitable underwriting.
“It is not a situation that will be cleaned up soon,” Mr. Hughes observed. “It’s not a pretty picture for risk bearers, which we are not one of.”