Insurance broker USI Holdings Corp. reported net income increased 156 percent in the third quarter of this year, fueled by $5.7 million in acquisition revenue in the quarter.
The Briarcliff Manor, N.Y.-based firm reported net income in the quarter rose $2.95 million, from $1.89 million, or 3 cents a share, to $4.84 million, or 8 cents a share. Revenues increased more than 3 percent, or $4.43 million, from $127 million to $132 million.
For the nine months, net income was up over 300 percent, or $15.35 million, from $4.47 million, or 8 cents a share, to $19.83 million, or 34 cents a share. Revenues were up 8 percent, or $30 million, from $372 million to $402 million.
David L. Eslick, chairman, president and chief executive officer of the firm, told an analysts call that the results were achieved despite a $1 million reduction in operating income in its worksite marketing operation.
He said the company continues to grow its employee benefits side of the business, increasing its call center operation from 20 to 250 people, increasing the number of consultants, and focusing on the firm's mid-market opportunity.
"That key area of investment and driving down into admitted, emerging market is where we are seeing major growth opportunities for us in the future," he said.
Robert S. Schneider, chief financial officer, said during the third quarter USI's revenue from acquired firms accounted for $5.7 million in revenue. For the nine months, revenue from acquisitions amounts to $24 million.
Organic growth for the firm fell 1.6 percent in the quarter, primarily from the impact of the soft market, difficulties in California, and enrollment timing in the employee benefit business, said Mr. Schneider. Excluding California, organic growth would have risen 2.1 percent.
Mr. Eslick noted that there is very intense price competition, especially in California, and that improvements are expected in 2007 as the market stabilizes in California. He indicated there may be additional improvements throughout the rest of the country next year.
He called property insurance in the Southeast "challenging," but added that the benign hurricane season is producing some improved capacity in Florida.
On the issue of the possible purchase of the firm by a private equity firm, announced in late October, Mr. Eslick said he could not comment on it further.
In a filing with the Securities and Exchange Commission, USI said it has formed a special committee to deal with the private equity firm seeking to purchase the company.
Ronald E. Frieden, chairman of the special committee, will receive $75,000 annually for his services. William L. Atwell, Thomas A. Hayes and Robert F. Wright, the other members of the committee, will receive $50,000. They will also receive $1,500 for each meeting of the special committee.
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