Broker networks raise earnings

Three of the public-traded broker consolidator networks, Equisure Financial Network (TSE:EFN), Hi-Alta Capital Inc. (TSE:HIA), and Vector Intermediaries Inc. (VSE:VTE), have reported stronger earnings and revenue growth for the third quarter of 2000.

Equisure, which also announced the successful closure of the bid by financial services group ING to acquire all of the networks outstanding shares, lifted revenue by 40% to $60.7 million (September 1999: $43.2 million) for the first three quarters of last year. Net income for the nine month reporting period was up marginally from $2.78 million from the same period in 1999 to $2.88 million, which translated into earnings of 13 a share (1999: 13) despite a 6% dilution of the issued share base representing 1.2 million shares (which were created as a result of the closure of the ING purchase of the company) that boosted the total number of outstanding shares to 22.1 million. The network’s earnings for the third quarter amounted to 36 a share, of which 23 a share came about from gains made on sale of discontinued operations. Equisure’s assets at the end of September 2000 stood at $261.5 million, showing a 16% rise on the $225.3 million from the corresponding period the year prior.

Hi-Alta’s commission revenue for the third quarter of 2000 rose by 26% to $14.58 million (September 1999: $11.54 million) which resulted in a 75% gain in net earnings to $485,640 from the previous year’s comparable quarter result of $277,019. The network states that, “despite depressed prices in commercial insurance, Hi-Alta’s insurance operating margins have improved from 14% in the first quarter to 19% at the end of the nine months”. The network says it will look at acquisitional growth in rural markets in the current year. Hi-Alta also began selling registered retirement saving plans toward the end of the 2000 financial year.

Vector’s revenue for the third quarter of last year came in marginally lower at $3.42 million than that of the comparable period the year prior. However, as a result of restructuring savings, the network was able to reduce its net loss significantly to 5 a share compared with 9 a share from the previous year. Furthermore, the network’s share base was significantly diluted during the course of the year as a result of issuing shares to pay for finance charges relating to existing subordinated debentures held against the company. The number of outstanding shares in issue rose from the previous year’s 9.25 million to 20.28 million at the end of September 2000. Management believes that the network has once again achieved operational stability following its restructuring over the past year, and will now continue to look at possible acquisitional growth prospects. The network is also convinced that the Internet will begin playing a key role in the selling of insurance products, and as such, plans to further develop the use of its Auto Insurance Estimator.