USI Holdings Corp. reported a 62 percent drop in net income for the third quarter, primarily over deductions for discontinued operations related to the sale of seven operations.

Net income fell $3.02 million (7 cents a share), going from $4.9 million (10 cents a share) to $1.89 million (3 cents a share). Income before the deduction for discontinued operations rose 6 percent, from $5.2 million to $5.5 million. Revenues in the period rose $24.3 million, up 24 percent to $127.3 million.

For the first nine months of 2005, net income dropped 72 percent, or $11.3 million, going from $15.8 million (32 cents a share) to $4.5 million (8 cents a share). Income before the deduction for discontinued operations fell 21 percent, or $3.5 million, from $16.2 million to $12.8 million. Revenues grew 27 percent, or $80 million, from $292 million to $372 million.

In a call today for investment analysts, executives for the Briarcliff Manor, N.Y.-based insurance broker said the firm is experiencing high retention rates and seeing growth through acquisitions. However, the firm added, revenues were affected by a combination of the soft market, losses charged to discontinued operations, charges related to integration, the company's improvement plan and litigation costs.

The company continues to see strong growth in its benefit operation, with net commissions and fees increasing 22 percent in the period.

On the general status of the insurance market, David L. Eslick, chairman, president and chief executive officer, said, "Pricing and predicting rates is more of an art than a science."

He said in California, strong competition will remain, driving a soft market there.

Overall, recent hurricanes are expected to cause price increases in property for catastrophe-prone areas, possibly affecting California as well. He said pricing would go from soft to flat or slightly increasing.

Casualty could also see some flattening or slight increases, and professional liability could see some upward pressure. Employee benefits will continue to be strong, he added.

"Overall, we are very bullish about our positioning and execution heading into 2006, and if property-casualty rates just go flat, combined with our continued strength in benefits, it bodes very well for our top line growth," he said.