Hub Says Fourth Quarter Profit Fell 64%
NU Online News Service, Feb. 23, 3:49 p.m. EST?Hub International Ltd. reported lower profit on higher revenue for a fourth-quarter and full-year 2004 earnings decline that it attributed to an acquisition charge.[@@]
Last July the Chicago-based brokerage purchased Talbot Financial in a non-cash, stock-based deal. Management said it has not been impacted by regulatory probes into insurer fee payments to brokers for steering customers.
For full-year 2004, Hub's net income fell 28 percent to $26.2 million, down from $36.5 million in 2003. For the fourth quarter, income fell 64 percent to $3.9 million, down from $10.7 million a year earlier, despite a 33 percent increase in revenue to $104.4 million.
Excluding the acquisition charge, net earnings rose 11 percent for full-year 2004 and 7 percent for the fourth quarter, Hub said.
"We are happy with our results for 2004," said Hub chairman and chief executive officer Martin Hughes. "We're moving in the right direction and we are making progress in each of the corporate initiatives announced around this time last year. We anticipate increased progress in 2005."
Hub posted strong growth in revenue and positive organic growth rates at most regional units. In the United States, revenue grew 35 percent in 2004 to $239 million from $177.2 million thanks to acquisitions. In Canada, revenue grew 12 percent to $121.8 million from $109.1 million.
Regarding the continuing regulatory probes into brokerage practices, Mr. Hughes noted that Hub has received only a few inquiries from customers regarding various industrywide regulatory probes concerning contingent commissions and other payments received from insurance companies.
"It's impossible to prove a negative, but customer and employee hotlines and an inquiry by external legal counsel have not suggested inappropriate activity in our organization," he said. "We will continue to emphasize the importance of ethical behavior and strong customer service in all our dealings with business partners, as that is the key to long-term account retention and value creation for shareholders."
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