USI Reports 4Q Net Profit Rose 144%

After a tough year that saw adjustments in its business, including layoffs and the sale of unprofitable business, USI Holdings Corp. reported that 2005 fourth-quarter net income increased 144 percent over 2004, helped by its acquisition strategy and organic growth.

"We made some pretty tough calls in 2005, and developed so-called noise, but we feel we were right and critical in really establishing future opportunities and success," said David L. Eslick, chairman, president and chief executive officer, during an analyst's conference call today.

For the fourth quarter, net income turned around by $10.8 million, going from a loss of $7.5 million (a loss of 15 cents a share) to net profit of $3.3 million (6 cents a share). Revenues increased 23 percent to $136 million.

For 2005, net income was off 6 percent to $7.8 million, or 14 cents a share. Revenues rose 26 percent to $508 million--bolstered by acquisitions that contributed $26.2 million in revenue in the fourth quarter and $103 million for the year, according to the Briarcliff Manor, N.Y.-based insurance brokerage.

Adjusted organic growth grew by two-tenths of a percent for the quarter, or $200,000. The firm's growth in its benefit business grew by more than 7 percent, while property-casualty organic growth showed a loss of less than 7 percent. For the year, adjusted organic growth grew by 1 percent.

Responding to a question from analysts, Mr. Eslick said that the company's organic p-c loss could not be compared to other brokers because their benefit and p-c numbers are lumped together, unlike USI, which decided to break the figures down.

He said the firm sees great opportunity going into 2006, with plenty of opportunity to continue growth through acquisition.

During the conference call, it was noted by USI executives that organic growth does not include commissions and fees from acquired firms that have been a part of the firm for less than a year. The major future contributor to USI's earnings is Summit Global Partners of Dallas.

Summit Global--which was purchased for approximately $124 million in a stock and cash deal, plus the assumption of debt--will begin reporting organic growth to USI's earnings in February of 2006, a year after the deal was completed.

"We have been very pleased with our acquisitions and continue to be pleased with them going forward," said Mr. Eslick.