HUB International Announces Fourth Quarter and Full Year 2006 Results

 

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 Add Title:  HUB International Announces Fourth Quarter and Full Year 2006 Results
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 Location:  Chicago
 Date:    2007-02-26  
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HUB International Limited (NYSE:HBG) (TSX:HBG) announced strong growth in revenue, net earnings and operating cash flows for the fourth quarter and year ended December 31, 2006.

Fourth quarter 2006 revenue of $136.6 million represented a $22.6 million, or 20%, increase over fourth quarter 2005 revenue of $114.1 million. Fourth quarter 2006 net earnings of $11.0 million represented a $5.3 million, or 92%, increase over fourth quarter 2005 net earnings of $5.7 million. Fourth quarter 2006 diluted earnings per share of $0.27 represented a $0.10, or 59%, increase over fourth quarter 2005 diluted earnings per share of $0.17.

Net earnings include a number of items that can distort comparisons between periods. A reconciliation of these items to a normalized net earnings amount is included in exhibits attached to this press release. Considering these items, normalized fourth quarter 2006 net earnings of $13.1 million represented a $2.1 million, or 19%, increase over normalized fourth quarter 2005 net earnings of $10.9 million. Normalized diluted earnings per share were $0.32 for both the fourth quarter 2006 and 2005.

Full year 2006 revenue of $543.9 million represented a $101.3 million, or 23%, increase over 2005 revenue of $442.6 million. Full year 2006 net earnings of $50.9 million represented a $25.2 million, or 98%, increase over 2005 net earnings of $25.7 million. Full year 2006 diluted earnings per share of $1.35 represented a $0.59, or 78%, increase over 2005 diluted earnings per share of $0.76.

Adjusted for the same items referred to above, normalized full year 2006 net earnings of $60.6 million represented an $11.1 million, or 22%, increase over normalized 2005 net earnings of $49.5 million. Normalized full year 2006 diluted earnings per share of $1.61 represented a $0.20, or 14%, increase over normalized 2005 diluted earnings per share of $1.41.

"Our results for the fourth quarter and for full year 2006 continue to demonstrate the effectiveness of our business model, the strength of our sales culture and the tremendous ability of our people to deliver sustainable growth, even in declining rate environments," said Martin P. Hughes, chairman and chief executive officer. "We remain focused on completing our geographic footprint in North America, specifically in the southeastern and southwestern United States, through additional acquisitions. We will also continue to drive organic growth and prudently manage our cost structure to allow for annual operating margin expansion of 50 to 150 basis points as we believe these items are all essential to maximizing long-term shareholder value."

Fourth Quarter 2006 Performance Review

Quarterly total revenue growth of 20% included organic growth of 3.5%, despite most HUBs operating in declining rate environments. Commission income growth of 21% included organic growth of 4.6%, while contingent commissions and volume overrides declined 31% on both a total and organic basis due to the timing of a 2005 acquisition-related contingent commission. Excluding the impact of foreign exchange, organic growth on commission income was 3.7%. Organic growth is a non-GAAP measurement that describes internal revenue growth from current operations owned at least one year.

For U.S.-based HUBs, quarterly revenue of $101.0 million represented a $19.6 million, or 24%, increase from fourth quarter 2005 revenue of $81.4 million. The 24% revenue growth included organic growth on commission income of 4.4% and organic growth on total revenue of 2.6%.

For Canadian-based HUBs, quarterly revenue of $35.1 million represented a $2.7 million, or 8%, increase from fourth quarter 2005 revenue of $32.4 million. The 8% revenue growth included organic growth on commission income of 5.1% and organic growth on total revenue of 4.8%. Excluding the impact of foreign exchange, organic growth on commission income was 2.1%.

Quarterly employee cash compensation of $75.5 million represented a $10.5 million, or 16%, increase from fourth quarter 2005 employee cash compensation of $65.0 million. As a percentage of quarterly revenue, 2006 quarterly employee cash compensation improved 170 basis points to 55.3% from 57.0% for the same period in 2005.

Quarterly selling, occupancy and administration expense of $27.3 million represented a $4.9 million, or 22%, increase from fourth quarter 2005 selling, occupancy and administration expense of $22.3 million. As a percentage of quarterly revenue, 2006 quarterly selling, occupancy and administration expense increased to 20.0% from 19.6% for the same period in 2005.

On a combined basis, quarterly employee cash compensation and selling, occupancy and administration expense improved 140 basis points to 75.2% of revenue from 76.6% of revenue in the prior year.

Quarterly intangible asset amortization expense of $6.4 million represented a $3.7 million, or 137%, increase over fourth quarter 2005 intangible asset amortization expense of $2.7 million. This increase is primarily attributable to the impact of acquisitions and a refinement in our amortization methodology for customer relationship and non-competition covenants intangible assets accounted for as a change in accounting estimate.

Full Year 2006 Performance Review

Annual total revenue growth of 23% included organic growth of 4.9%, despite most HUBs operating in declining rate environments the entire year. Commission income growth of 24% included organic growth of 4.9%, while contingent commissions and volume overrides increased 11% with negative organic growth of 0.7%. Excluding the impact of foreign exchange, organic growth on commission income was 2.8%.

For U.S.-based HUBs, annual revenue of $393.4 million represented an $83.7 million, or 27%, increase from 2005 annual revenue of $309.7 million. The 27% revenue growth included organic growth on commission income of 2.8% and organic growth on total revenue of 2.4%. Annual contingent commissions and volume overrides of $33.9 million increased $3.1 million, or 10%, from 2005 despite experiencing negative organic growth of 4.7% due primarily to the aforementioned contingent commission timing matter.

For Canadian-based HUBs, annual revenue of $148.1 million represented a $16.7 million, or 13%, increase from 2005 annual revenue of $131.4 million. The 13% revenue growth included organic growth on commission income of 9.8% and organic growth on total revenue of 10.3%. Excluding the impact of foreign exchange, organic growth on commission income was 2.8%. Annual contingent commissions and volume overrides of $10.8 million increased $1.2 million, or 12%, from 2005, both in total and organically.

Annual employee cash compensation of $296.0 million represented a $49.7 million, or 20%, increase from 2005 annual employee cash compensation of $246.3 million. As a percentage of annual revenue, 2006 annual employee cash compensation improved 120 basis points to 54.4% from 55.6% for 2005.

Annual selling, occupancy and administration expense of $101.1 million represented an $18.2 million, or 22%, increase from 2005 annual selling, occupancy and administration expense of $82.8 million. As a percentage of annual revenue, 2006 annual selling, occupancy and administration expense improved to 18.6% from 18.7% for 2005.

On a combined basis, annual employee cash compensation and selling, occupancy and administration expense improved 140 basis points to 73.0% of revenue from 74.4% of revenue in the prior year.

Annual intangible asset amortization expense of $20.3 million represented an $11.9 million, or 142%, increase from the 2005 annual intangible asset amortization expense of $8.4 million. This increase is primarily attributable to the impact of acquisitions and a refinement in our amortization method for customer relationship and non-competition covenants intangible assets accounted for as a change in accounting estimate.

    Fourth Quarter and Full Year Highlights

    --  The Company accelerated its penetration of the transportation
        insurance market by acquiring Kaufman and Kaufman, a $9
        million revenue brokerage based in Salt Lake City in October
        2006. That acquisition was followed by the announcement in
        December 2006 of the entry into a letter of intent relating to
        the acquisition of Vermont-based Coburn Insurance Agency, a $9
        million revenue brokerage. The combined strength of these
        operations, operating as HUB International Transportation
        Insurance, will provide increased accessibility to insurance
        markets and will position HUB as the provider of choice for
        transportation risks across the U.S. and Canada.

    --  Quarterly earnings before interest, taxes, depreciation and
        amortization (EBITDA) margin of 24.8% improved 130 basis
        points from 23.5% for the same period in 2005. Annual EBITDA
        margin of 27.1% improved 140 basis points from 25.7 for full
        year 2005. EBITDA margin calculations exclude all Talbot
        earnout compensation and all other non-cash share-based
        compensation.

    --  Cash flows from operations were $14.6 million and $86.6
        million for the fourth quarter and full year 2006,
        respectively. Cash and cash equivalents as of December 31,
        2006 were $99.2 million, an increase of $29.1 million from
        December 31, 2005.

    --  Annual capital expenditures of $10.6 million represented 1.9%
        of total revenue, an increase from the 1.8% experienced in
        2005. Management expects 2007 capital expenditures to be
        approximately 2% of total revenue.

    --  The full year 2006 effective tax rate, excluding the effects
        of the Talbot earnout expenses, was approximately 36%.

    --  Debt-to-capitalization ratio declined to 18.0% as of December
        31, 2006 from 29.4% as of December 31, 2005. The Company's
        revolving credit facilities remain fully available.

    Expansion Continues in Soft Rate Environment

"We continue to make good progress in driving positive organic growth despite having the majority of our revenue derived from markets where rates have declined versus 2005," Hughes said. "To offset these declines, our sales efforts have been focused both on writing new business and improving our already strong client retention percentage while concurrently driving down our compensation and other expense percentages. Our employees are committed to growth through excellent client service and new sales generation, both of which were clearly visible in 2006."

The Talbot Earnout

HUB discloses the impact of the earnout portion related to the 2004 Talbot acquisition in order to give investors increased insight into HUB's results of operations and the effective cost of the Talbot acquisition.

Total consideration paid to acquire Talbot includes both $90 million of cash paid to Safeco Corporation and the issuance of HUB common shares, or comparable amounts of cash, to approximately 70 Talbot executives. The total consideration is within HUB's target range of paying 5-7 times EBITDA for acquired brokerages.

As the executives participating in this earnout were not shareholders of Talbot prior to the sale, the earnout compensation they receive under the terms of the acquisition agreement is recorded as compensation expense. This compensation expense, which is not deductible for tax purposes, will be charged to earnings through the first quarter of 2007 and will affect year-over-year earnings comparisons through 2008, making it difficult for investors to analyze HUB's results in comparison to prior years and industry peers.

HUB has the option to pay the earnout to the executives in cash, HUB common shares or a combination thereof. The first Talbot earnout payment of $16.4 million was paid in cash in September 2005. The second payment of $19.0 million was paid in March 2006 in HUB common shares. HUB anticipates that the third and final payment due on March 31, 2007 of approximately $22 million will be made in cash.

The estimated total charge to earnings for the Talbot earnout, including expense recorded to date, will be $57.3 million, recorded as follows:

    --  2004 $14.4 million (actual)

    --  2005 $28.7 million (actual)

    --  2006 $12.2 million (actual)

    --  2007 $2.0 million (estimate)

    Conference Call and Webcast

HUB will discuss its financial results and outlook on a conference call scheduled for Monday, February 26, 2007 at 2:00 p.m. (EST), 1:00 p.m. (CST). The call is being webcast by Thompson/CCBN and can be accessed at HUB's web site at www.HUBinternational.com. The webcast is also being distributed through the Thomson StreetEvents Network to both institutional and individual investors. Individual investors can listen to the call at www.fulldisclosure.com, Thomson/CCBN's individual investor portal, powered by StreetEvents. Institutional investors can also access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

Headquartered in Chicago, IL, HUB International Limited is a leading North American insurance brokerage that provides a broad array of property and casualty, reinsurance, life and health, employee benefits, investment and risk management products and services through offices located in the United States and Canada.

Important Additional Information will be Filed with Securities Regulators:

HUB will file a copy of the Arrangement Agreement with the Securities and Exchange Commission and Canadian securities regulators. In connection with the proposed transaction, HUB will file a proxy statement with the Securities and Exchange Commission and Canadian securities regulators. INVESTORS AND SECURITY HOLDERS ARE ADVISED TO READ THE PROXY STATEMENT WHEN IT BECOMES AVAILABLE, BECAUSE IT WILL CONTAIN IMPORTANT INFORMATION ABOUT THE ARRANGEMENT AND THE PARTIES THERETO.

Investors and security holders may obtain a free copy of the Arrangement Agreement and proxy statement (when available) and other documents filed by HUB at the Securities and Exchange Commission's Web site at http://www.sec.gov and at the Canadian securities regulators Web site at http://www.sedar.com. The proxy statement and such other documents may also be obtained for free from HUB by directing such request to Investor Relations, HUB International Limited, 55 East Jackson Boulevard, Chicago, IL 60604, telephone: (877) 402-6601.

HUB and its directors, executive officers and other members of its management and employees may be deemed to be participants in the solicitation of proxies from HUB's shareholders in connection with the proposed transaction. Information concerning the interests of HUB's management who are participating in the solicitation, which may be different than those of HUB shareholders generally, is set forth in HUB's proxy statements and Annual Reports on Form 10-K, filed with the Securities and Exchange Commission, and in the proxy statement relating to the transaction when it becomes available.

Forward Looking Statements:

This press release may contain "forward-looking statements" as defined in Section 21E of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), that reflect our current expectations regarding our future growth, results of operations, cash flows, performance and business prospects, and opportunities, as well as assumptions made by, and information currently available to, our management. We have used words such as "anticipate," "believe," "expect," "intend," "plan," "project," "will continue," "will likely result," and similar expressions to indicate forward-looking statements. However, these words are not the exclusive means of identifying these forward-looking statements. These statements are based on information currently available to us and are subject to various risks, uncertainties, and other factors that could cause our actual growth, results of operations, financial condition, cash flows, performance and business prospects, and opportunities to differ materially from those expressed in, or implied by, these statements, including, but not limited to: risks associated with implementing our business strategies, identifying and consummating acquisitions, successfully integrating acquired businesses, attaining greater market share, resolution of regulatory issues and litigation, including those related to compensation arrangements with insurance carriers, the possibility that the receipt of contingent compensation from insurance carriers could be prohibited, developing and implementing effective information technology systems, recruiting and retaining qualified employees, fluctuations in the demand for insurance products, fluctuations in the premiums charged by insurance carriers, with corresponding fluctuations in our premium-based revenue, fluctuations in foreign currency exchange rates, any loss of services of key executive officers, industry consolidation, increased competition in the industry, the actual costs of resolution of contingent liabilities, the passage of new federal, state or provincial legislation subjecting our business to regulation in the jurisdictions in which we operate, and those risks discussed in our Annual Report on Form 10-K, particularly under the caption "Risk Factors," filed with the Securities and Exchange Commission and the Canadian securities commissions. These uncertainties and other factors also include, but are not limited to, risks associated with the transaction, including the occurrence of any event, change or other circumstances that could give rise to the termination of the Arrangement Agreement, the inability to complete the transaction due to the failure to obtain shareholder approval or the failure to satisfy other conditions to completion of the transaction, including the expiration of the waiting period under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, the failure to obtain the necessary debt financing arrangements set forth in commitment letters received in connection with the transaction, risks that the proposed transaction disrupts current plans and operations and the potential difficulties in employee retention as a result of the transaction. Many of the factors that will determine the outcome of the subject matter of this press release are beyond HUB's ability to control or predict. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Except as otherwise expressly required by securities laws, we undertake no obligation to update or publicly announce the revision of any of the forward-looking statements contained herein to reflect new information, future events, developments or changed circumstances or for any other reason.

HUB INTERNATIONAL LIMITED
Consolidated Organic Revenue Growth (unaudited)
For the three months and twelve months ended December 31, 2006 and
 2005
(in thousands of U.S. dollars, except percentages)




                                 Increase     Net
                                (Decrease)  Adjust-
             Revenue for the       2006      ments            Organic
                Three Months        vs.       For             Growth
            Ended December 31,     2005     (Acqui-          Excluding
            ------------------- ---------- sitions)           Foreign
                                              And    Organic Currency
                                            Dispo-   Growth   Changes
              2006      2005       (%)      sitions    (%)      (%)
            --------- --------- ---------- --------- ------- ---------
HUB
Consolidated
------------
Commission
 Income     $128,983  $106,636         21% $(17,456)    4.6%      3.7%
Contingent
 Commissions
 and Volume
 Overrides
 income        3,217     4,660        -31%      (13)  -31.2%    -31.2%
Other Income   4,441     2,782         60%   (1,138)   18.7%     17.7%
            --------- ---------            ---------
 Total      $136,641  $114,078         20% $(18,607)    3.5%      2.6%
            ========= =========            =========

U.S.
------------
Commission
 Income     $ 94,515  $ 74,939         26% $(16,308)    4.4%      N/A
Contingent
 Commissions
 and Volume
 Overrides
 income        3,140     4,442        -29%      (13)  -29.6%      N/A
Other Income   3,330     2,035         64%   (1,117)    8.8%      N/A
            --------- ---------            ---------
 Total      $100,985  $ 81,416         24% $(17,438)    2.6%      N/A
            ========= =========            =========

Canada
------------
Commission
 Income     $ 34,460  $ 31,697          9% $ (1,148)    5.1%      2.1%
Contingent
 Commissions
 and Volume
 Overrides
 income           66       218        -70%        -   -69.9%    -69.9%
Other Income     579       467         24%      (21)   19.2%     12.2%
            --------- ---------            ---------
 Total      $ 35,105  $ 32,382          8% $ (1,169)    4.8%      1.8%
            ========= =========            =========

Head Office
------------
 Total      $    551  $    280
            ========= =========



                                 Increase     Net
                                (Decrease)  Adjust-
             Revenue for the       2006     ments             Organic
               Twelve Months        vs.       For             Growth
             Ended December 31,    2005     (Acqui-          Excluding
            ------------------- ---------- sitions)           Foreign
                                              And    Organic Currency
                                            Dispo-   Growth   Changes
              2006      2005       (%)      sitions    (%)      (%)
            --------- --------- ---------- --------- ------- ---------
HUB
Consolidated
------------
Commission
 Income     $483,245  $389,907         24% $(73,500)    4.9%      2.8%
Contingent
 Commissions
 and Volume
 Overrides    44,722    40,454         11%   (4,531)   -0.7%     -2.5%
Other Income  15,934    12,195         31%     (981)   24.9%     22.8%
            --------- ---------            ---------
Total       $543,901  $442,556         23% $(79,012)    4.9%      2.8%
            ========= =========            =========

U.S.
------------
Commission
 Income     $348,270  $269,828         29% $(70,674)    2.8%      N/A
Contingent
 Commissions
 and Volume
 Overrides    33,881    30,811         10%   (4,531)   -4.7%      N/A
Other Income  11,252     9,071         24%     (957)   15.4%      N/A
            --------- ---------            ---------
Total       $393,403  $309,710         27% $(76,162)    2.4%      N/A
            ========= =========            =========

Canada
------------
Commission
 Income     $134,967  $120,079         12% $ (2,826)    9.8%      2.8%
Contingent
 Commissions
 and Volume
 Overrides    10,821     9,643         12%        -    12.2%      4.6%
Other Income   2,347     1,702         38%      (24)   36.5%     23.7%
            --------- ---------            ---------
Total       $148,135  $131,424         13% $ (2,850)   10.3%      3.2%
            ========= =========            =========

Head Office
------------
 Total      $  2,363  $  1,422
            ========= =========



Notes:
  We define organic revenue growth as the net increase in revenue as
   the result of (1) new client accounts, (2) retention and expansion
   of existing client accounts, and (3) the impact of changes in
   insurance premium rates. Organic revenue growth excludes the net
   increase in revenue attributable to net business acquisitions and
   dispositions during the preceding 12-month period. Organic revenue
   growth is a non-GAAP measure and should not be considered an
   alternative to any measure of performance or liquidity promulgated
   under Canadian or U.S. GAAP. We believe that organic revenue growth
   is a particularly meaningful indicator of our financial and
   operational performance, the effectiveness of our sales
   initiatives, the long-term sustainability of our profits, and the
   demand for our products and services.
HUB INTERNATIONAL LIMITED
Consolidated Statements of Earnings Data (unaudited)
For the three months and twelve months ended December 31, 2006 and
 2005
(in thousands of U.S. dollars, except per share amounts)


                                  For the Three Months ended December
                                                   31,
                                  ------------------------------------
                                             % of              % of
                                             Total             Total
                                    2006     Revenue  2005     Revenue
                                  ------------------------------------

REVENUE:
Commission income                 $128,983      95% $106,636      94%
Contingent commissions and volume
 overrides                           3,217       2%    4,660       4%
Other                                4,441       3%    2,782       2%
                                  ---------         ---------
          Total revenue            136,641     100%  114,078     100%
                                  ---------         ---------

EXPENSES:
Compensation (1)                    79,486      58%   72,126      63%
Selling, occupancy, and
 administration                     27,264      20%   22,342      20%
Intangible asset amortization        6,418       5%    2,706       2%
Depreciation                         2,680       2%    2,336       2%
Interest expense                     2,544       2%    2,974       3%
(Gain) on disposal of
 subsidiaries, property and
equipment, and other assets           (167)      0%     (286)      0%
(Gain) on forgiveness of debt            -       0%        -       0%
Loss on foreign exchange forward
 contract                                -       0%        -       0%
                                  ---------         ---------
                                   118,225      87%  102,198      90%
                                  ---------         ---------

NET EARNINGS FROM CONTINUING
 OPERATIONS BEFORE
PROVISION FOR INCOME TAXES          18,416      13%   11,880      10%
                                  ---------         ---------

PROVISION (BENEFIT) FOR INCOME
 TAXES:
Current                              8,024       6%    5,709       5%
Future                                (599)     -1%      300       0%
                                  ---------         ---------
 Total provision for income taxes    7,425       5%    6,009       5%
                                  ---------         ---------

NET EARNINGS FROM CONTINUING
 OPERATIONS                         10,991       8%    5,871       5%
NET LOSS FROM DISCONTINUED
 OPERATIONS, net of taxes                -       0%     (160)      0%
                                  ---------         ---------
NET EARNINGS                        10,991       8%    5,711       5%
                                  ---------         ---------
Interest on subordinated
 convertible debentures                  -       0%        -       0%
Dividends in lieu on restricted
 share units                            29       0%       25       0%
                                  ---------         ---------
DILUTED NET EARNINGS              $ 11,020       8% $  5,736       5%
                                  =========         =========

EARNINGS PER SHARE - BASIC:
Net earnings from continuing
 operations                       $   0.28          $   0.19
Net earnings loss from
 discontinued operations                 -                 -
                                  ---------         ---------
Net earnings                      $   0.28          $   0.19
                                  =========         =========

EARNINGS PER SHARE - DILUTED:
Net earnings from continuing
 operations                       $   0.27          $   0.17
Net earnings loss from
 discontinued operations                 -                 -
                                  ---------         ---------
Net earnings                      $   0.27          $   0.17
                                  =========         =========

WEIGHTED AVERAGE SHARES
 OUTSTANDING:
Basic                               39,450            30,825
                                  =========         =========
Diluted                             40,907            34,182
                                  =========         =========


(1) COMPENSATION INCLUDES:
Employee cash compensation        $ 75,544      55% $ 65,017      57%
Talbot earnout compensation          2,269       2%    5,225       5%
Other non-cash share-based
 compensation                        1,673       1%    1,884       1%
                                  --------- ------- --------- -------
                                  $ 79,486      58% $ 72,126      63%
                                  ========= ======= ========= =======


                                  For the Twelve Months ended December
                                                   31,
                                  ------------------------------------
                                             % of              % of
                                             Total             Total
                                    2006     Revenue  2005     Revenue
                                  ------------------------------------

REVENUE:
Commission income                 $483,245      89% $389,907       88%
Contingent commissions and volume
 overrides                          44,722       8%   40,454        9%
Other                               15,934       3%   12,195        3%
                                  ---------         ---------
          Total revenue            543,901     100%  442,556      100%
                                  ---------         ---------

EXPENSES:
Compensation (1)                   314,690      58%  282,163       64%
Selling, occupancy, and
 administration                    101,057      19%   82,843       19%
Intangible asset amortization       20,272       4%    8,363        2%
Depreciation                         9,692       2%    8,714        2%
Interest expense                    12,250       1%   10,656        2%
(Gain) on disposal of
 subsidiaries, property and
equipment, and other assets           (644)      0%   (2,943)      -1%
(Gain) on forgiveness of debt            -       0%   (4,500)      -1%
Loss on foreign exchange forward
 contract                                -       0%      555        0%
                                  ---------         ---------
                                   457,317      84%  385,851       87%
                                  ---------         ---------

NET EARNINGS FROM CONTINUING
 OPERATIONS BEFORE
PROVISION FOR INCOME TAXES          86,584      16%   56,705       13%
                                  ---------         ---------

PROVISION (BENEFIT) FOR INCOME
 TAXES:
Current                             36,701       7%   29,791        7%
Future                              (1,048)      0%    1,167        0%
                                  ---------         ---------
 Total provision for income taxes   35,653       7%   30,958        7%
                                  ---------         ---------

NET EARNINGS FROM CONTINUING
 OPERATIONS                         50,931       9%   25,747        6%
NET LOSS FROM DISCONTINUED

 OPERATIONS, net of taxes                -       0%      (29)       0%
                                  ---------         ---------
NET EARNINGS                        50,931       9%   25,718        6%
                                  ---------         ---------
Interest on subordinated
 convertible debentures                117       0%    1,900        0%
Dividends in lieu on restricted
 share units                           950       1%      102        0%
                                  ---------         ---------
DILUTED NET EARNINGS              $ 51,998      10% $ 27,720        6%
                                  =========         =========

EARNINGS PER SHARE - BASIC:
Net earnings from continuing
 operations                       $   1.41          $   0.84
Net earnings loss from
 discontinued operations                 -                 -
                                  ---------         ---------
Net earnings                      $   1.41          $   0.84
                                  =========         =========

EARNINGS PER SHARE - DILUTED:
Net earnings from continuing
 operations                       $   1.35          $   0.76
Net earnings loss from
 discontinued operations                 -                 -
                                  ---------         ---------
Net earnings                      $   1.35          $   0.76
                                  =========         =========

WEIGHTED AVERAGE SHARES
 OUTSTANDING:
Basic                               36,054            30,561
                                  =========         =========
Diluted                             38,523            36,619
                                  =========         =========


(1) COMPENSATION INCLUDES:
Employee cash compensation        $295,951      54% $246,263       56%
Talbot earnout compensation         12,176       2%   28,716        6%
Other non-cash share-based
 compensation                        6,563       2%    7,184        2%
                                  --------- ------- --------- --------
                                  $314,690      58% $282,163       64%
                                  ========= ======= ========= ========
HUB INTERNATIONAL LIMITED
Consolidated Balance Sheet Information (unaudited)
As of December 31, 2006 and 2005
(in thousands of U.S. dollars)

                                                 2006         2005
                                              ----------- ------------
                   ASSETS
CURRENT ASSETS:
 Cash and cash equivalents                    $   99,213  $    70,118
 Trust cash                                      112,188      113,349
 Accounts and other receivables, net             283,415      230,654
 Income taxes receivable                           3,009        6,001
 Future income taxes                               6,598        4,971
 Prepaid expenses                                  8,212        6,436
                                              ----------- ------------
  Total current assets                           512,635      431,529
GOODWILL                                         529,955      421,158
OTHER INTANGIBLE ASSETS, net                     152,455      105,007
PROPERTY AND EQUIPMENT, net                       30,682       28,160
FUTURE INCOME TAXES                               14,154        4,528
OTHER ASSETS                                      13,344       10,971
                                              ----------- ------------
TOTAL ASSETS                                  $1,253,225  $ 1,001,353
                                              =========== ============

    LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
 Accounts payable and accrued liabilities     $  413,102  $   384,174
 Income taxes payable                              8,878        4,344
 Current portion of long-term debt and
  capital leases                                   3,296        4,910
 Future income taxes                                  50          359
                                              ----------- ------------
  Total current liabilities                      425,326      393,787
LONG-TERM DEBT AND CAPITAL LEASES                141,338      135,363
SUBORDINATED CONVERTIBLE DEBENTURES                    -       35,000
FUTURE INCOME TAXES                               27,345       17,277
                                              ----------- ------------
TOTAL LIABILITIES                                594,009      581,427
                                              ----------- ------------

COMMITMENTS AND CONTINGENCIES

SHAREHOLDERS' EQUITY:
 Share capital                                   464,175      270,199
 Contributed surplus                              22,469       16,989
 Cumulative translation account                   31,093       31,893
 Retained earnings                               141,479      100,845
                                              ----------- ------------
  Total shareholders' equity                     659,216      419,926
                                              ----------- ------------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY    $1,253,225  $ 1,001,353
                                              =========== ============
HUB INTERNATIONAL LIMITED
Consolidated Cash Flow Information (unaudited)
For the three months and twelve months ended December 31, 2006 and
 2005
(in thousands of U.S. dollars)

                                                    For the Twelve
                              For the Three Months    Months ended
                               ended December 31,     December 31,
                              ----------------------------------------
                                2006      2005       2006      2005
                              --------- --------- ---------- ---------
CASH FLOWS FROM OPERATING
 ACTIVITIES:
 Net earnings                 $ 10,991  $  5,711  $  50,931  $ 25,718
 Items not affecting cash:
  Depreciation and
   amortization expense          9,098     5,113     29,964    17,342
  Gain on disposal of
   subsidiaries, property and
   equipment, and other
   assets                         (167)     (290)      (644)   (2,913)
  Total compensation for
   Talbot earnout                2,269     5,225     12,176    28,716
  Cash paid for Talbot
   earnout                           -         -          -   (16,434)
  Other non-cash share-based
   compensation                  1,673     1,884      6,563     7,184
  Gain on forgiveness of debt        -         -          -    (4,500)
  Loss on write-off of
   trademarks                        -         -          -         -
  Future income taxes             (599)      425     (1,048)    1,271
 Non-cash working capital
  items
  Trust cash                   (25,692)  (48,152)     9,124   (34,219)
  Accounts and other
   receivables, net            (36,642)  (62,628)    (6,089)  (33,451)
  Prepaid expenses               1,940     1,890     (1,555)     (259)
  Accounts payable and
   accrued liabilities          50,791    99,078    (16,107)   54,739
  Other assets                     129       129        516       515
  Income taxes payable             813     1,231      2,778     2,304
                              --------- --------- ---------- ---------
      Net cash flows from
       operating activities     14,604     9,616     86,609    46,013
                              --------- --------- ---------- ---------

CASH FLOWS FROM INVESTING
 ACTIVITIES:
 Business acquisitions, net
  of cash received             (23,764)  (47,727)  (150,070)  (66,145)
 Business dispositions              28       265      1,734     5,127
 Purchase of property and
  equipment                     (2,303)   (3,268)   (10,586)   (7,982)
 Proceeds on the sale of
  property and equipment            81         6         92        26
 Premium financing receipts     15,916         -     23,780         -
 Premium financing
  disbursements                 (8,409)        -    (15,053)        -
 Other                             298       (41)       891     5,068
                              --------- --------- ---------- ---------
      Net cash flows used in
       investing activities    (18,153)  (50,765)  (149,212)  (63,906)
                              --------- --------- ---------- ---------

CASH FLOWS FROM FINANCING
 ACTIVITIES:
 Payments of bank debt            (986)        -    (15,221)        -
 Proceeds from the issuance
  of long-term debt                (15)        -    130,018    10,000
 Payments of long-term debt
  and capital lease
  obligations                   (2,892)  (11,436)  (129,881)  (18,907)
 Proceeds from share issue,
  net of costs                       -         -    114,862        15
 Proceeds from exercise of
  stock options                    817     2,242      1,765     4,542
 Windfall tax benefit              244                  436         -
 Dividends paid                 (2,770)   (1,845)   (10,297)   (7,375)
                              --------- --------- ---------- ---------
      Net cash flows from
       (used in) financing
       activities               (5,602)  (11,039)    91,682   (11,725)
                              --------- --------- ---------- ---------

EFFECT OF FOREIGN CURRENCY
 EXCHANGE RATE CHANGES ON       (1,365)     (137)        16     1,532
                              --------- --------- ---------- ---------
 CASH AND CASH EQUIVALENTS:    (10,516)  (52,325)    29,095   (28,086)
CASH AND CASH EQUIVALENTS -
 beginning of period           109,729   122,443     70,118    98,204
                              --------- --------- ---------- ---------
CASH AND CASH EQUIVALENTS -
 end of period                $ 99,213  $ 70,118  $  99,213  $ 70,118
                              ========= ========= ========== =========
HUB INTERNATIONAL LIMITED
Compensation for Talbot Earnout and Other Non-Cash Share-Based
 Compensation (unaudited)
For the three months and twelve months ended December 31, 2006 and
 2005
(in thousands of U.S. dollars)

Compensation expense recorded in connection with the Talbot earnout
 includes both cash and non-cash share-based compensation. The Talbot
 earnout agreement is, in substance, a performance-based contingent
 compensation agreement, and, thus, the Company has recorded the
 Talbot earnout payments as a charge to compensation expense over the
 period in which the payments are earned. Compensation expense
 incurred in connection with the Talbot earnout is not deductible for
 income tax purposes. The final Talbot earnout payment of
 approximately $21.8 million will be made on March 31, 2007, most
 likely in cash. Compensation expense recorded in connection with the
 Talbot earnout for the three months and twelve months ended December
 31, 2006 and 2005, was as follows:

                   For the Three
                    Months ended    For the Twelve Months
                    December 31,      ended December 31,
                 ------------------------------------------
                   2006     2005     2006         2005
                 -------- -------- --------- --------------
 Cash-based
  compensation
  expense        $ 2,269  $ 2,094  $  9,451  $   17,156
 Non-cash share-
  based
  compensation
  expense              -    3,131     2,725      11,560
                 -------- -------- --------- --------------
  Total Talbot
   earnout
   compensation  $ 2,269  $ 5,225  $ 12,176  $   28,716
                 ======== ======== ========= ==============


Other non-cash share-based compensation expense, excluding the non-
 cash share-based portion of the Talbot earnout, recognized during the
 three months and twelve months ended December 31, 2006 and 2005, was
 as follows:

                   For the Three
                    Months ended    For the Twelve Months
                    December 31,      ended December 31,
                 ------------------------------------------
                   2006     2005      2006        2005
                 -------- -------- ------------------------
 RSUs            $ 1,669  $ 1,652  $  6,544  $   5,809
 Stock options         -       85         -      1,209
 Common shares
  issued in
  connection
  with
  acquisitions         4      147        19       166
                 -------- -------- --------- --------------
  Total other
   non-cash
   share-based
   compensation    1,673    1,884     6,563      7,184
 Tax benefit         506      545     2,166      1,983
                 -------- -------- --------- --------------
  Total other
   non-cash
   share-based
   compensation,
   net of tax    $ 1,167  $ 1,339  $  4,397  $   5,201
                 ======== ======== ========= ==============

Based on share-based awards issued and outstanding as of December 31,
 2006, the Company estimates non-cash share-based compensation expense
 for the years ended December 31, 2007 through 2012 and thereafter, is
 as follows:

                            For the Year ended December 31,
                 -----------------------------------------------------
                                                             2012 and
                   2007     2008     2009     2010    2011  thereafter
                 -------- -------- --------- ------- ------ ----------
 RSUs            $ 6,292  $ 6,144  $  3,920  $3,169  $ 383       $664
 Common shares
  issued in
  connection
  with
  acquisitions         5        -         -       -      -          -
                 -------- -------- --------- ------- ------ ----------
  Total other
   non-cash
   share-based
   compensation  $ 6,297  $ 6,144  $  3,920  $3,169  $ 383       $664
                 ======== ======== ========= ======= ====== ==========
HUB INTERNATIONAL LIMITED
Reconciliation of GAAP Net Earnings and Diluted Net Earnings Per Share
 to Normalized
 Net Earnings and Diluted Earnings Per Share (unaudited)
(in thousands of U.S. dollars, except per share amounts)
----------------------------------------------------------------------

                                For the Three        For the Three
                                 Months ended         Months ended
                               December 31, 2006    December 31, 2005
                              ----------------------------------------
                                        Effect on            Effect on
                                         Diluted              Diluted
                                           Net                  Net
                              Effect on  Earnings  Effect on  Earnings
                                 Net       Per        Net       Per
                               Earnings   Share     Earnings   Share
                              ----------------------------------------
Net Earnings Reported under
 GAAP                         $ 10,991  $   0.27   $  5,711  $   0.17

 Compensation for Talbot
  earnout                        2,269      0.06      5,225      0.15
 Foreign exchange gains, net
  of tax                          (205)    (0.01)      (164)        -
 Discontinued operations, net
  of tax                             -         -        160         -

                              --------- ---------  --------- ---------
Normalized net earnings and
 diluted earnings per share   $ 13,055  $   0.32   $ 10,932  $   0.32
                              --------- ---------  --------- ---------


                                For the Twelve       For the Twelve
                                 Months ended         Months ended
                               December 31, 2006    December 31, 2005
                              ----------------------------------------
                                        Effect on            Effect on
                                         Diluted              Diluted
                                           Net                  Net
                              Effect on  Earnings  Effect on  Earnings
                                 Net       Per        Net       Per
                               Earnings   Share     Earnings   Share
                              ----------------------------------------
Net Earnings Reported under
 GAAP                         $ 50,931  $   1.35   $ 25,718  $   0.76

 Compensation expense for
  Talbot earnout                12,176      0.32     28,716      0.78
 Foreign exchange gains, net
  of tax                        (2,000)    (0.05)    (1,475)    (0.04)
 Gain on disposition of
  subsidiaries, property,
  equipment,
  and other assets, net of
   tax                            (486)    (0.01)    (1,914)    (0.05)
 Severance costs, net of tax         -         -      1,004      0.03
 Loss on foreign exchange
  contract, net of tax               -         -        354      0.01
 Gain on forgiveness debt,
  net of tax                         -         -     (2,925)    (0.08)
 Discontinued operations, net
  of tax                             -         -         29         -

                              --------- ---------  --------- ---------
Normalized net earnings and
 diluted earnings per share   $ 60,621  $   1.61   $ 49,507  $   1.41
                              --------- ---------  --------- ---------
 In the following box below, please add a contact information.
CONTACT:
Media Contact:
W. Kir k James, 312-279-4881
Vice President, Secretary and Chief Corporate Development Officer
Kirk.James@HUBInternational.com
Investors:
John P. Graham, 312-279-4840
Vice President, Chief Financial Officer
John.Graham@HUBInternational.com
 Please, enter the source in the following box.   
 SOURCE :   HUB International Limited