Hub Quarterly Profits Up

Chicago-based insurance broker Hub International Limited reported net income increased by close to half as it prepares to become a private company.

Hub reported net income in the first quarter increased 46 percent, or $7.8 million, to $24.8 million from the same period last year. Earnings per share rose 14 cents to 60 cents a share. Revenues increased 28 percent, or $38 million, to $172 million.

The broker said organic revenue growth stood at 7.2 percent despite the challenges faced in a market with softening prices.

Martin P. Hughes, chairman and chief executive officer, said during an analyst's conference call today that despite “a pretty strong headwind” from a soft market where rates are down 5-to-10 percent, the firm performed well.

Lawrence Lineker, vice president and chief sales officer, said there was nothing special about the numbers other than a solid business approach that saw an 11 percent increase in accounts sold. He said rate deterioration appeared to be no worse than it had been in the third and fourth quarter of last year.

Mr. Hughes said the firm is still on track to go private with a private-equity buyout by Apax Partners and Morgan Stanley Principal Investments. The deal is tentatively scheduled to close on June 5.

The period for other investors to make bids is officially over, he said. Any new bidder seeking to acquire Hub before the deal is completed would be subject to a $53 million break-up fee. The per share price is set at $41.50 or a total of more than $1.8 billion.

The firm also completed the earn-out compensation (a fee for the book's profits) to Talbot Financial, which Hub purchased from Safeco in 2004, with a final payment of $21.8 million.

Hub announced it would pay a quarterly dividend of 7 cents a share on June 30 to shareholders of record as of June 15. However, if the acquisition is completed prior to June 15, no dividend would be paid.