HRH Income Up 34%

By Mark E. Ruquet

NU Online News Service, April 23, 9:15 a.m.EDT?Hilb Rogal & Hobbs brokerage reported net incomeincreased 34 percent, fueled by changes in its sales structure,better service and prospecting of large accounts, and therebounding of organic growth, executives said.[@@]

In the first quarter ending March 31, net income increased $6.14million, going from $18.1 million, or 51 cents a share, to $24.2million, or 67 cents a share. Revenues increased 11 percent, or$16.24 million, going from $142 million to $158.2 million.

Speaking during an investor's conference call, Martin L. "Mell"Vaughan III, the firm's chairman and chief executive officer, saidthat the first-quarter earnings per share growth was below thefirm's long-term expectations. The results reflect changes the firmis making in its operating model. He said because of these changes,both to save costs and to enhance revenue, it will be difficult tomake year-to-year comparisons, but the benefit of the changes willbe seen in the coming quarters.

Organic growth rebounded, he noted, coming in at 5.1 percent.However, he added, the firm was expects to see that growth improveeven more in the future.

The Richmond, Va.-based firm said it is still investigatingadditional acquisitions, aiming to purchase firms with annualizedrevenues between $30 million and $60 million. He said the low costof capital is promoting heavy competition while at the same time,more agencies appear to be deciding it is time to merge orsell.

"The competition for acquisitions is heavy; however, thepipeline is as full as we have seen in recent years," said Mr.Vaughan. "We will continue to be very disciplined and veryselective [in our choices]."

On the overall view of the insurance market, Mr. Vaughan saidproperty premium prices continue to decline while casualtycontinues to show modest increases.

Robert B. Lockhart, president and chief operating officer, saidthe price softening the firm is seeing is opening up opportunitiesfor new business. New business is improving the firm's ability tonegotiate for increases on commission with underwriters or insulatethe firm "on the downside," he said.