Hub maintains earnings/revenue surge

Broker consolidator Hub International Ltd. (TSX: HBG) increased net earnings by 194% to US$29.4 million for the year ending December 2002. Fully diluted earnings rose by 112% to US$1.05 a share from US$0.50 a share the year before.

The company’s revenue for 2002 came in at US$220 million compared with the US$154 million reported for the year prior. In Canada, revenues were up 9% for the year to $86 million, while in the U.S, revenue grew 78% year-on-year to $134 million. U.S. subsidiaries now account for 61% of Hub’s revenue. Hub chairman Martin P. Hughes notes that acquisitions played a large part in the revenue increase, while organic commission growth improved to 13% for 2002 from 5% in 2001. Further acquisition growth is planned for the U.S., where the company hopes to reach 15 subsidiary “hubs” over the next five years. Organic commission growth was 13% in both Canada and the U.S. last year.

The fourth quarter saw revenue of US$64 million, versus US$53 million for the same period a year prior. For the fourth quarter 2002, the company raised net earnings by 182% to US$8.3 million, or US$0.26 a share, versus US$3.0 million, or US$0.14 a share for the same period in 2001.

The broker consolidator recently acquired the assets of H&H Insurance Services of Chetwynd, BC. H&H produces annual revenues of US$320,000 (Cdn$475,000) largely in auto and personal insurance. This purchase is the third Hub has made in 2003.

During 2002, the broker consolidator raised US$2.6 million from the sale of its Old Lyme underwriting units, and US$88.1 million in proceeds from a U.S. IPO. “Clearly, 2002 was a very strong year for Hub, both financially and operationally,” Hughes says. “We achieved strong growth from the brokerages acquired in 2001 and we added new brokerages to our family in 2002. We increased our importance to both underwriters and clients, including the middle-market companies that are our primary targets and the smaller brokerages that are serviced by our wholesale operations.” Hub is issuing a quarterly dividend of US$0.05 per share on outstanding common shares payable at the end of April this year.