HRH Sees More Takeovers After Acquisition Of Hobbs
Hilb, Rogal and Hamilton Company, which announced this month that it will buy Hobbs Group in a deal worth over $240 million, says they are not through in the "acquisition game."
The Richmond, Va.based HRH, which advertises itself as the 10th-largest brokerage worldwide, will be acquiring Atlanta-based Hobbs, adding 27 offices in 15 states to its current 80 offices in 22 states. Timothy J. Korman, HRHs executive vice president for finance and administration, said Hobbs is the 17th-largest insurance broker in the country, handling some $1.7 billion in insurance premiums.
To make the deal work, HRH said it would pay a combination of cash and stock that could be worth $244 million. Completion of the deal is expected by July 1.
As part of the deal, HRH will assume $55 million in debt. Part of the payment is based on Hobbs attaining certain financial performance goals over the next two years, which HRH executives said they "would be very surprised" if Hobbs did not meet. For 2001, Hobbs reported revenues of $95.2 million, and HRH said it expects "strong organic growth in 2002 and beyond."
However, the acquisition will not interrupt HRHs acquisition strategy or require the firm to make a secondary stock offering to complete the deal, according to Andrew L. Rogal, chairman and chief executive officer of HRH.
Martin L. Vaughn III, HRHs president and chief operating officer, added that the firm is in a position to continue to make more acquisitions as well as pay off the debt it is assuming.
"We are not out of the acquisition game," Mr. Rogal said.
In a conference call, Mr. Rogal said the acquisition would allow the broker to enter new markets serving upper-middle-market and top-tier clients, which HRH defines as companies generating at least $50,000 in commission and fee revenue. Hobbs provides property-casualty insurance, risk management, executive compensation and employee benefits services. Besides bringing new markets to HRH, the deal would also add employee and executive benefit services to its portfolio, the broker said.
Mr. Rogal said the acquisition, as part of the firms five-year acquisition strategy, allows HRH to enter markets more quickly than if it tried building the business itself from scratch.
Mr. Vaughn said Hobbs opens the door to new lines. Of special interest is their executive benefit deferred compensation program, he said, which he cited as a rapid growth area for the firm.
There are no consolidations being contemplated in the near term, Mr. Rogal said. He said Thomas A. Golub will remain president and chief executive officer of Hobbs. Mr. Golub will join HRH as executive vice president and serve on the board of directors, becoming a partner in the firm, Mr. Rogal noted.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, May 27 2002. Copyright 2002 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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