HUB Upbeat On Loss; Talks On Near North

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By Mark E. Ruquet

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NU Online News Service, July 31, 3:47 p.m. EDT? Hub International Ltd. today said it posted a second quarterdecline because last year's results for the period were boosted byone-time sales and expenses and revenue timing shifts.

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The Chicago-based insurance broker reported net profit dropped 8percent or $890,000 for the second quarter of 2003, going from$11.5 million in the second quarter of 2002 to $10.6 million thisquarter.

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The firm said the decrease was due to a combination of thereporting of the one-time sale of two insurance agencies for $2.6million in 2002; the receipt of $2.1 million of contingentcommissions in the second quarter of 2002, which were received inthe first quarter of 2003; and $1.3 million of compensation expensein the second quarter 2003 that did not occur in 2002.

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Taking those expenses out, Hub said, net profit would have beenup 78 percent, or $6.9 million. Earnings per share for the quarterwould have increased 7 cents, as opposed to the reported loss of 10cents a share.

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Hub reported earnings per share dropped in the second quarterfrom 41 cents to 31 cents a share.

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Revenues in the quarter rose 29 percent, or $16.9 million, from$57.3 million in 2002 to $74.2 million in the period.

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For the six months, net profit rose 16 percent, or $2.7 million,from $17.3 million in 2002 to $20 million this period. However,earnings per share dropped 4 cents, going from 63 cents for thefirst half of 2002 to 59 cents a share in 2003. Revenues rose 34percent, or $36.3 million, from $106.8 million to $143 million.

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Concerning the acquisition of troubled Chicago insurance brokerNear North, Hub's Chairman and Chief Executive Officer Martin P.Hughes, said in an analyst's conference call today, that theacquisition would strengthen Hub by expanding its existingfootprint in major cities, including New York, Chicago, and LosAngeles, and allow it to enter markets it has an interest in. butno presence, such as Las Vegas.

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Mr. Hughes confirmed reported rumors that since the firm wasindicted on charges of mail fraud and racketeering in June it haslost a substantial number of accounts and important employees.

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He said Frontenac Company LLC, a Chicago-based private equityfirm, which had signed an agreement to purchase assets of the firm,has pulled out of its deal.

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Bruce Gurhart, president, U.S, operations director for Hub, saidduring the conference call that Near North's business, "has beenchallenged with the charges against them."

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Mr. Hughes said, "the bottom line is we like this deal and areanxious to conclude it as soon as possible." He added that Hubwould hold a news conference to share details of the deal as soonas it is concluded.

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While not disclosing the current worth of the company, only tosay it is smaller than what has been reported in the past, Mr.Hughes said it would be an all cash deal, but would be looking forways to keep key people on board.

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Hub announced that it declared a quarterly dividend of 5 centsper shareon shares of outstanding common stock on Sept. 30 toshareholders of record as of Sept. 15.

The firm also announced it has filed a shelf registration statementfor an offering of up to $140 million in equity and debtsecurities. The financing would be used for acquisitions and tohelp cover the sale of
employee owned shares. The company said it anticipates the sale of2 million shares or less than 22 percent of employeeholdings.

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