Virginia-based Hilb, Rogal and Hamilton Company reported record financial results for the first quarter ended March 31, 2003.
For the first quarter, total revenues were $142.0 million, compared with $99.9 million a year ago, an increase of 42.2 percent. Commissions and fees rose 42.4 percent to $140.5 million during the quarter, compared with $98.6 million during the same period last year, driven by acquisitions – primarily the addition of Hobbs Group, LLC on July 1, 2002 -, new business, higher non-standard commissions, which are more heavily concentrated in the first quarter, and a continued firm rate environment.
Organic growth, defined as the change in commissions and fees before the effect of acquisitions and divestitures, for the first quarter was 11.2 percent. The company believes that while 2003 organic growth may vary on a quarterly basis, the full year’s organic growth is likely to be in the range of 9 percent to 11 percent.
Net income for the quarter was $18.1 million, or $0.51 per share, compared with $19.1 million, or $0.60 per share, a year ago. Excluding a one-time retirement benefit charge in 2003, non-operating losses and the cumulative effect of a 2002 revenue recognition accounting change, net income increased 40.3 percent to $21.3 million, or $0.60 per share, compared with $15.2 million, or $0.48 per share, a year ago.
Effective Jan. 1, 2002, the company changed to an accrual basis from a cash basis for recognizing commissions on premiums billed and collected directly by insurance companies for middle-market property and casualty business. The cumulative effect of the accounting change was a one-time addition to net income for the quarter ended March 31, 2002 of $3.9 million, or $0.12 per share.
The operating margin for the first quarter was 28.7 percent, compared with 28.1 percent for the year-ago quarter. The increase reflects higher non-standard commissions and the impact of HRH’s Best Practices program. Continued incremental margin improvement remains one of HRH’s key financial objectives.
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