Hub Completes Acquisition Of 3 Brokers

Hub International Limited said it has closed on its $80 million acquisition of the three insurance brokerages of Citizens Financial Group Inc. (CFG).

As part of the transaction, Hub also entered into a previously announced strategic alliance with CFG, pursuant to which Hub and CFG will leverage their insurance and banking expertise to provide expanded products, services and support to clients.

The three firms–Citizens Clair Insurance Group, based in Norristown, Pa.; Brewer & Lord, based in Norwell, Mass.; and Feitelberg Insurance, based in Fall River, Mass.–had combined revenue of approximately $45 million in 2005 and operate from 19 offices in Pennsylvania, Massachusetts and Rhode Island.

Hub said it expects to pay $80 million in cash for the deal and additional fees (an earn-out payment based on profitability) that would amount to $3 million over three years that can be paid in cash or a combination of cash and common shares.

The Chicago-based insurance broker said it financed the acquisition largely through a new credit facility entered into with The Bank of Montreal.

Meanwhile, in a separate transaction the firm said it would issue a total of 745,765 common shares to approximately 70 employees of Talbot insurance brokerage in the second of three earn-out payments related to the July 2004 acquisition of that firm.

Hub said the common shares fulfill an earn-out payment obligation of more than $19 million for the Talbot transaction. The company has the option to make the payments in either cash, common shares or a combination of both. Hub's first payment of $16.4 million was made in cash in September 2005.

The third and final payment is scheduled for March 2007. Hub said it would prefer to make the payment in common shares, but no decision has been reached.

Hub indicated the total earn-out payments–based on profitability of the Talbot operations–is likely to be approximately $56 million.