Hub International Limited said it is buying Chubb's Personal Lines Insurance Brokerage, Inc., which focuses on high-net-worth clients.
Terms of the deal were not released, but Hub indicated that the valuation is within its target range for acquisitions. PLI generated 2004 revenue of approximately $27 million, the companies said.
According to W. Kirk James, chief corporate development officer for Chicago-based Hub, the insurance broker has said the valuation falls between five to seven times EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization).
Both Hub and Warren, N.J.-based insurer Chubb said they expect the deal to be completed within 60 days, subject to customary closing conditions.
Headquartered in Warren, N.J., Chubb was founded in 1982, is licensed in all 50 states, serves approximately 44,000 clients and has 18 offices throughout the country.
Hub said its personal lines business generated $27 million in revenue in the U.S. and $70 million total including Canada. For the year, Hub's total revenue in 2004 was $239 million, based primarily on commercial insurance business.
Mr. James said the acquisition will bring a more focused strategy in personal lines business than Hub has had in the past, especially in the United States, where the line has lagged behind Canada in the company's business. The acquisition, he noted, would broaden the products and markets available in the personal lines area.
According to Hub's statement, the acquisition will make Hub one of the largest personal lines brokers in the U.S.
"The acquisition of PLI will add great depth and talent to our personal lines practice in the United States and we are very excited by the opportunities created through the transaction," said Martin P. Hughes, Hub's chairman and chief executive officer.
"The high-net-worth individuals targeted by PLI include many of the same middle-market business owners and executives we serve in our commercial insurance operations. This is a very important market for Hub and one we can serve more fully through the acquisition," Mr. Hughes added.
Jim Kane and Kathleen Zortman, who currently lead PLI management, will oversee Hub's personal lines practice in the United States. Mr. Kane will be named president and Ms. Zortman will be named chief operating officer, U.S. Personal Lines. Mr. Kane will join Hub's Executive Committee.
The broker said that Hub and PLI offices share overlapping regions in approximately 54 percent of PLI's revenue base. This will lead to consolidation and other cost-saving opportunities, the broker said.
Beyond the overlapping regions, PLI has offices in Florida, Georgia, North Carolina and Texas, all areas targeted by Hub for expansion.
Mr. James said there are 220 employees with PLI, and their future will be determined as part of the integration and consolidation strategy.
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