Chicago-based brokerage Hub International Ltd. reported a 31 percent increase in revenue and 26 percent growth of net earnings for the third quarter, due to both organic growth of 11 percent and the impact of acquisitions. Diluted earnings per share increased 16 percent to 22 cents from 19 cents in the prior year third quarter.
Shares of the company went up 16 cents, or 1.04 percent, to $15.56 on volume of 38,900.
“We achieved strong organic growth in most of our regional hubs during the quarter,” said Martin Hughes, Hub chairman and CEO. “In Canada, we posted organic growth of 24 percent — a solid 10 percent growth rate after removing the impact of foreign currency exchange. In the United States, organic growth was a disappointing 1 percent, but that seemingly low level was skewed by a sharp decline in a single financial institutions product line. Absent that individual product impact, U.S. organic growth would have been approximately 11 percent.
“One of our financial institutions products — creditor-placed insurance — suffered from the convergence of several external factors. Due in part to poor economic conditions, many banks tightened their credit practices, leading to an acceleration of policy cancellations. Although policy cancellations are a normal component of this product line, the pace of policy cancellations in the third quarter accelerated abnormally, leading to a significant drop in revenue and profit for this product line.”
Hughes noted that Hub has not lost any of its financial institution relationships for this product line, but also noted that the change in bank credit practices will impact this line of business through the fourth quarter of 2003 and into the first quarter of 2004, after which it is expected to return to its historically profitable level.
The company’s board of directors also declared a quarterly dividend of 5 cents per share on the outstanding common shares of the company, payable Dec. 30, 2003, to shareholders of record as of Dec. 15, 2003.
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