Hub Drops Out Of Near North Purchase
On Aug. 15, Hub International Ltd. said it has dropped out of negotiations to purchase Near North National Group.
Hub had previously announced a proposal to purchase the troubled insurance firm on July 25.
"Although we had strong interest in this acquisition, we were unable to negotiate terms that match our investment discipline and suit our structural objectives," said Martin P. Hughes, Hubs chairman and chief executive officer, in a statement. "Hub continues to pursue other acquisitions and we believe ample opportunities exist to acquire high quality brokerage firms."
A Near North spokesperson would only say the firm was "very disappointed" with Hubs decision.
Near North has been in trouble ever since the indictment of its founder and head, Michael Segal, on charges of allegedly embezzling more than $20 million from a premium trust fund account over an 11-year period. In May, the firm was indicted on racketeering and mail fraud charges stemming from Mr. Segals alleged actions.
During an analysts conference call in July, Mr. Hughes confirmed rumors that Near North has lost a number of key employees and accounts since the indictments. The most recent defection was William C. Bartholomay, who left his post as president of Near North to join Willis Group.
For the second quarter, Hub reported net income of $10.6 million, compared to $11.5 million for second-quarter 2002. According to Hubs July 31 earnings announcement, factors contributing to the 8 percent decline included revenue and expense timing shifts, as well as the fact that a one-time gain was reported from the sale of two agencies in 2002.
Revenues in the quarter rose 29 per-cent, or $16.9 million, from $57.3 million in 2002 to $74.2 million in the period.
Both Near North and Hub are headquartered in Chicago.
Reproduced from National Underwriter Property & Casualty/Risk & Benefits Management Edition, August 25, 2003. Copyright 2003 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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