HUB Upbeat On Loss; Talks On Near North

By Mark E. Ruquet

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

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

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

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

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

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

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 the first half of 2002 to 59 cents a share in 2003. Revenues rose 34 percent, or $36.3 million, from $106.8 million to $143 million.

Concerning the acquisition of troubled Chicago insurance broker Near North, Hub's Chairman and Chief Executive Officer Martin P. Hughes, said in an analyst's conference call today, that the acquisition would strengthen Hub by expanding its existing footprint in major cities, including New York, Chicago, and Los Angeles, and allow it to enter markets it has an interest in. but no presence, such as Las Vegas.

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

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

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

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

While not disclosing the current worth of the company, only to say 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 for ways to keep key people on board.

Hub announced that it declared a quarterly dividend of 5 cents per shareon shares of outstanding common stock on Sept. 30 to shareholders of record as of Sept. 15.

The firm also announced it has filed a shelf registration statement for an offering of up to $140 million in equity and debt securities. The financing would be used for acquisitions and to help cover the sale of
employee owned shares. The company said it anticipates the sale of 2 million shares or less than 22 percent of employee holdings.

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HUB Upbeat On Loss; Talks On Near North

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