Broker consolidators in acquisition mode

Two broker network consolidators, Hi-Alta and The Hub Group, have reported strong showings in the second quarter 2000, capitalizing on new acquisitions. Hi-Alta Capital Inc. (TSE: HIA) saw commission revenue jump almost 18%, to $9.95 million for the three-month period ending June this year, compared with the $8.84 million reported for the same quarter in 1999. While net income dropped from $137,381 in 1999 to $115,880 for the same period this year, earnings increased from 21 to 23 a share.

The company, which operates the Western Insurance Network (WIN) of insurance brokerages in B.C., Alberta and Saskatchewan, reports improved results compared to the first quarter, traditionally the weakest quarter of the year for brokers. “We expect Hi-Alta Capital to continue to improve its operating margins in the third quarter,” adds president and CEO Scott Tannas. Hi-Alta expects “added value” to come from its WIN operations in the future, with the second quarter launch of financial services sales at the majority of its brokerages. Four acquisitions announced at the start of the year were also finalized in the second quarter, including Shackleton Insurance, Prairie Agencies, Eldon Ray Insurance and Scottsville Insurance. Wilson Krochak & Broadbent Agencies was also added to the company’s roster.

Another consolidator, The Hub Group, attributes its second quarter results to increased revenues from acquisitions. Net earnings in the second quarter of this year were up 70% over the same period last year, from $1.9 million to $3.3 million. Total revenue rose to $36.4 million for the most recent quarter, up from $19.1 million for the second quarter of last year. This translates to earnings of 18 a share compared with 12 a share reported for the same period last year. “The higher revenue and net earnings in the second quarter were due mainly to the positive impact of acquisitions completed during the past twelve months,” the directors state.