Hub International Increases Quarterly Revenue and Net Margin; Broker Posts 6% Organic Growth as Rates Moderate(1)

 

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 Add Title:  Hub International Increases Quarterly Revenue and Net Margin; Broker Posts 6% Organic Growth as Rates Moderate
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 Location:  Chicago
 Date:    2004-07-29  
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 Hub International Limited (NYSE:HBG)(TSX:HBG):

 

  •  

  • 2Q revenue increases 11% while net earnings increase 15%

     

     

  • First half revenue increases 13% while net earnings increase 12%

     

     

  • Company posts 6% organic growth for quarter, 9% YTD

     

     

  • Full-year earnings guidance updated

     

 

Hub International Limited (NYSE:HBG)(TSX:HBG) reported today that strong organic growth and operating efficiencies led to higher revenue, net earnings and margins in the second quarter ended June 30, 2004.

Revenue increased 11% to $82.2 million from $74.2 million a year earlier, bolstered by an organic growth rate--comparable to same store sales--of 6% along with the contribution of recently acquired units, including Bush, Cotton & Scott. Net earnings increased 15% to $11.6 million, or $0.35 per diluted share, versus $10.1 million, or $0.31 per diluted share, in the same period of 2003.

"Second quarter improvements were particularly strong in comparison to more recent quarters, considering that rate increases continued to moderate and we obtained only a one percentage point benefit from a stronger Canadian dollar," said Martin P. Hughes, chairman and chief executive officer. "We are encouraged by the overall performance of our operating units."

In reviewing second quarter results, Hughes noted that commission income increased 11% to $77.0 million from $69.4 million, while contingent commissions and volume overrides--additional payments made by insurers on the basis of profitability and volume--increased 5% to $3.0 million from $2.9 million. Other income, including fees, increased 22% to $2.2 million from $1.8 million a year ago.

In the United States, second quarter revenue increased 14% to $50.7 million from $44.7 million, including organic growth of 4%. Commissions increased 13% to $46.8 million from $41.3 million, while contingent commissions and volume overrides remained constant at $2.2 million. Other income, including fees for risk management services, investment income and other items increased 43% to $1.7 million from $1.2 million in 2003.

Canadian revenue increased 7% to $31.5 million in the second quarter of 2004 from $29.5 million in the same period of 2003, including a three percentage point impact from foreign exchange rate increases. Organic growth was a strong 9%, or 6% when foreign exchange impacts are eliminated. Commissions increased 7% to $30.1 million from $28.1 million, while contingent commissions and volume overrides increased 22% to $0.8 million from $0.7 million. Other income decreased 17% to $0.6 million from $0.7 million in 2003.

Cash compensation increased 6% to $42.1 million from $39.9 million, while non-cash stock based compensation grew 35% to $1.7 million from $1.3 million in the second quarter of 2003. As a percentage of revenue, cash compensation expense decreased to 51% from 54% a year earlier, benefiting from both expense control and previously reported changes in Hub's management bonus plan. The increase of non-cash stock based compensation expense reflects amortization of restricted share units granted in the first quarter of 2004 as part of the change in the company's management bonus plan. Selling, occupancy and administration expenses increased 17% to $16.1 million, or 20% of revenue, from $13.8 million, or 19% of revenue, a year earlier.

Hub's pre-tax income increased 19% to $18.6 million, or 23% of revenue, from $15.6 million, or 21% of revenue, a year earlier, while the company's effective income tax rate increased to 38% from 35% for 2003. The most recent tax rate of 38% is in line with the company's previous guidance of 36% to 39%.

As a result, net earnings increased 15% to $11.6 million or $0.35 per diluted share, from $10.1 million, or $0.31 per diluted share, in the second quarter of 2003. Foreign exchange impacts added less than $0.01 per diluted share to net earnings in the second quarter, while the company benefited from a gain of approximately $0.02 per diluted share on the sale of two smaller operations in Canada. Weighted average diluted shares outstanding grew 3% to 34.9 million shares from 33.9 million shares, primarily due to the issuance of restricted share units in the first quarter of 2004.

Revenue and Earnings Grow in First Half

For the first half of 2004, revenue increased 13% to $161.6 million from $143.0 million in 2003, benefiting from a 9% organic growth rate and the contribution of acquired operations. Foreign exchange benefits added about three percentage points of the first-half increase in revenue. Net earnings increased 12% to $21.2 million, or $0.64 per diluted share, versus $19.0 million, or $0.59 per diluted share in the first half of 2003. During the first quarter, the company recognized a non-cash charge of $2.6 million (pre-tax) or approximately $0.05 net per diluted share, as the company wrote off trademarks as part of a corporate branding initiative.

Commission income increased 12% to $138.6 million from $124.0 million, while contingent commissions and volume overrides--additional payments made by insurers on the basis of profitability and volume --increased 18% to $18.1 million from $15.3 million. Other income, including fees for risk management services, investment income and other items, increased 30% to $4.9 million from $3.8 million a year ago.

In the United States, first-half revenue increased 11% to $99.5 million from $90.0 million, including organic growth of 4%. Commissions increased 10% to $83.9 million from $76.3 million, while contingent commissions and volume overrides increased 8% to $11.8 million from $11.0 million. Other income increased 40% to $3.7 million from $2.7 million in 2003.

Canadian revenue increased 17% to $62.1 million in the first half of 2004 from $53.1 million in the same period of 2003, with an organic growth rate of 18%. Approximately nine percentage points of the first-half growth in Canadian revenue resulted from strengthening of the Canadian dollar against the U.S. dollar. Commissions increased 15% to $54.7 million from $47.7 million, while contingent commissions and volume overrides increased 46% to $6.2 million from $4.3 million. Other income increased 7% to $1.2 million from $1.1 million in 2003.

Six-month cash compensation expense increased 8% to $82.8 million from $76.9 million, while non-cash stock based compensation grew 49% to $3.3 million from $2.2 million in the first six months of 2003. As a percentage of revenue, cash compensation expense decreased to 51% from 54% a year earlier, reflecting the benefits of higher contingent commissions, which do not have payroll cost associated with them, and changes to the company's management bonus plan. Selling, occupancy and administration expenses increased 18% to $31.6 million, or 20% of revenue, from $26.9 million, or 19% of revenue, a year earlier.

Hub's pre-tax income increased 12% to $33.5 million, or 21% of revenue, from $29.9 million, or 21% of revenue, a year earlier, while the company's effective tax rate remained relatively unchanged at 36.6% versus 36.4% for the first six months of 2003. As a result, net earnings increased 12% to $21.2 million, or $0.64 per diluted share, from $19.0 million or $0.59 per diluted share, in 2003. The weighted average number of diluted shares outstanding grew 3% to 34.7 million shares from 33.6 million shares, similar to the second quarter 2004 increase.

Talbot Acquisition Expands Revenue Base, Reduces GAAP Earnings Expectations

Hub has made substantial progress in expanding its U.S. footprint during 2004, announcing two major acquisitions that increase the company's penetration of the Southwest and Western United States. As previously reported, the second quarter acquisition of Seattle-based Bush, Cotton & Scott, L.L.C., adds approximately $9 million to Hub's annual revenue base and is expected to be accretive to earnings.

On July 1, 2004, Hub completed the largest acquisition in its history, closing on the purchase of Talbot Financial Corporation, based in Albuquerque, New Mexico, from Safeco Corporation. Talbot adds approximately $100 million to Hub's revenue base on an annualized basis and brings a skilled management team to continue the company's growth.

"Talbot has strong concentration of middle market clients in the West, Southwest and Mountain States, which is similar to the rest of Hub's U.S. operations, and many of their key insurer relationships are also important insurers for Hub," Hughes said. "The management team is committed to building revenue and closing the gap between Talbot's and Hub's profitability levels. Based on results for the first six months of 2004, it is anticipated that Talbot's combined cash compensation, selling, occupancy, administration and depreciation costs will be in the range of 78%-80% of revenue for the year. In 2003, the comparable percentage for Hub was 76.5%."

Hughes noted that Talbot's margins are higher in the first half of the year than in the second half, due to the benefits of contingent commissions and volume overrides--which have no payroll cost offset--in the first and second quarters.

"Talbot has talented staff, strong customer relationships and the potential to build its efficiency and profit margins as a part of Hub," Hughes said. "We are very enthusiastic about this acquisition."

Although Talbot is expected to grow and build its efficiency, the accounting treatment for the Talbot acquisition will yield a negative effect on Hub's GAAP earnings, the effective tax rate and non-cash stock based compensation expense through 2007. This negative impact results from the structure of the transaction, Hughes noted.

Hub invested $90 million to purchase all of the common shares of Satellite Acquisition Corporation, a corporation formed by senior management at Talbot. In turn, Satellite purchased 100% of Talbot from Safeco for $90 million in cash. Hub will purchase Talbot management's special shares of Satellite over the next three years, using a combination of both restricted and unrestricted common shares of Hub. Payments will be made September 30, 2005, March 31, 2006 and March 31, 2007 and will be based upon Talbot's earnings for the twelve month periods ending December 31, 2004, 2005 and 2006, respectively.

Because Talbot's management team did not have an ownership stake in Talbot prior to the transaction, the common stock issued to them by Hub is recorded as a charge to earnings in the form of non-cash stock based compensation expense. In a more traditional acquisition structure, the management team would exchange its own equity for Hub shares and the transaction would not impact the income statement.

Hub previously disclosed an amount of $26 million as the minimum anticipated non-cash stock based compensation to be paid out over a three-year period to Talbot management, with indications that the actual amount could rise beyond the $40 million range if profitability goals are attained. Based on Talbot's financial performance through the first half of 2004 and further improvements anticipated through 2006, the company anticipates earn out payments could possibly reach the $45-$50 million range.

"Although increased non-cash stock based compensation expense will reduce Hub's reported earnings under GAAP, such increases will also reflect a growing revenue and earnings base for Talbot," Hughes said. "In addition, higher earn out payments reduce the relative cost of the acquisition on an earnings-multiple basis," Hughes added. "Our acquisition discipline is to purchase companies at a 5-7 multiple of EBITDA (earnings before interest, taxes, depreciation and amortization) and this acquisition meets that standard. Consequently, we are confident this investment will be highly rewarding."

(Please see more detailed insights regarding the Talbot acquisition in the supplemental table attached to this earnings release.)

Hub Updates Outlook and Guidance for 2004

Reflecting the expected impact of Talbot, Bush Cotton & Scott, other recent acquisitions and divestitures, and financial performance through the first half, Hub updated its earnings guidance for 2004 to a range of $0.80 - $0.84 per diluted share. This updated guidance compares with prior guidance of $1.13-$1.17 per diluted share and 2003 reported earnings of $1.14 per diluted share.

                                                   GUIDANCE REFLECTING
IMPACT OF TALBOT
----------------------------------------------------------------------
Diluted EPS Guidance Excluding Talbot $1.13-$1.17
----------------------------------------------------------------------
EPS impact of Talbot earnings (July - December '04)
excluding non-cash stock based compensation $0.03-$0.05
----------------------------------------------------------------------
Non-cash stock based compensation ($0.36)-($0.38)
----------------------------------------------------------------------
Updated 2004 Hub Diluted EPS Guidance $0.80-.$0.84
----------------------------------------------------------------------

"We are maintaining our underlying forecast for the full year, while conservatively increasing our guidance $0.03 to $0.05 per diluted share for the impact of Talbot, excluding the impact of non-cash stock based compensation," Hughes said. "Rates have moderated in the United States and softened more rapidly than expected in Canada. In addition, we are now beginning to integrate the largest acquisition in our history. At the same time, we expect Talbot's operations to be accretive in the second half of this year, excluding the impact of non-cash stock based compensation and we are achieving good results across North America. Looking forward, we expect that Talbot's operations will be more accretive (excluding non-cash stock based compensation) to our earnings on a full year basis, as Talbot historically has generated a disproportionate amount of its earnings in the first half of the year. Based on historical patterns and actual results for Hub and Talbot for the first six months of 2004, we estimate that Talbot's operations would have added approximately $0.17 - $0.21 to our diluted EPS for 2004, excluding any impact of non-cash stock based compensation, if we had owned Talbot for the entire year.

Conference Call and Webcast Scheduled

Hub International will discuss financial results and updated guidance on a conference call scheduled for 9:30 a.m. (CT), 10:30 a.m. (ET) today, July 29, 2004. This call is being webcast by Thompson/CCBN and can be accessed at Hub International'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 access the call via Thomson's password-protected event management site, StreetEvents (www.streetevents.com).

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

This press release may contain forward-looking statements which reflect our current views with respect to future events and financial performance. These forward-looking statements relate, among other things, to our plans and objectives for future operations and are subject to uncertainties and other factors that could cause actual results to differ materially from such statements. These uncertainties and other factors include, but are not limited to, risks associated with implementing our business strategies, identifying and consummating acquisitions, integrating acquired brokerages, attaining greater market share, developing and implementing effective information technology systems, recruiting and retaining qualified employees, fluctuations in the premiums charged by insurance companies with corresponding fluctuations in our premium-based revenue, any loss of services of key executives, industry consolidation, increased competition in the industry, fluctuations in the demand for insurance products and the passage of new legislation subjecting our business to regulation in jurisdictions where we operate. We caution readers not to place undue reliance on these forward-looking statements, which speak only as of the date of this press release. Additional information regarding these risks and other factors that could cause Hub International's actual results to differ materially from our expectations is contained in the company's filings with the Securities and Exchange Commission and the Canadian securities commissions. Except as otherwise required by federal securities laws, Hub International undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.

HUB INTERNATIONAL LIMITED
Consolidated Organic Growth
For the three months and six months ended June 30, 2004
(in thousands of U.S. dollars, except percentages)

Net
Revenue Adjustments
------------------ Total For Organic
Second quarter Total Growth (Acquisitions) Growth
2004 2003 Change ($) (%) And Disposals (%)
----------------------------------------------------------
Total
------------
Commission
Income $76,960 $69,442 $7,518 11% $(3,418) 6%
Contingent
Commissions
and Volume
Overrides 3,038 2,889 149 5% (64) 3%
Other Income 2,233 1,824 409 22% (299) 6%
----------------------------------------------------------
Total $82,231 $74,155 $8,076 11% $(3,781) 6%
----------------------------------------------------------

USA
------------
Commission
Income $46,843 $41,307 $5,536 13% $(3,892) 4%
Contingent
Commissions
and Volume
Overrides 2,189 2,195 (6) 0% (64) -3%
Other Income 1,670 1,170 500 43% (318) 16%
----------------------------------------------------------
Total $50,702 $44,672 $6,030 14% $(4,274) 4%
----------------------------------------------------------

Canada
------------
Commission
Income $30,117 $28,135 $1,982 7% $474 9%
Contingent
Commissions
and Volume
Overrides 849 694 155 22% - 22%
Other Income 563 654 (91) -17% 19 -11%
----------------------------------------------------------
Total $31,529 $29,483 $2,046 7% $493 9%
----------------------------------------------------------



Net
Revenue Adjustments
------------------ Total For Organic
First six months Total Growth (Acquisitions) Growth
2004 2003 Change ($) (%) And Disposals (%)
----------------------------------------------------------
Total
------------
Commission
Income $138,589 $123,983 $14,606 12% $(4,704) 8%
Contingent
Commissions
and Volume
Overrides 18,075 15,266 2,809 18% (65) 18%
Other Income 4,916 3,783 1,133 30% (681) 12%
----------------------------------------------------------
Total $161,580 $143,032 $18,548 13% $(5,450) 9%
----------------------------------------------------------

USA
------------
Commission
Income $83,935 $76,293 $7,642 10% $(5,091) 3%
Contingent
Commissions
and Volume
Overrides 11,832 10,995 837 8% (65) 7%
Other Income 3,719 2,663 1,056 40% (695) 14%
----------------------------------------------------------
Total $99,486 $89,951 $9,535 11% $(5,851) 4%
----------------------------------------------------------

Canada
------------
Commission
Income $54,654 $47,690 $6,964 15% $387 15%
Contingent
Commissions
and Volume
Overrides 6,243 4,271 1,972 46% - 46%
Other Income 1,197 1,120 77 7% 14 8%
----------------------------------------------------------
Total $62,094 $53,081 $9,013 17% $401 18%
----------------------------------------------------------


HUB INTERNATIONAL LIMITED
Consolidated Statements of Earnings
For the three months and six months ended June 30, 2004 and 2003
(in thousands of U.S. dollars, except per share amounts)

Second quarter First six months
--------------------- ----------------------
2004 2003 2004 2003
--------------------- ----------------------
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Revenue
Commission income $76,960 $69,442 $138,589 $123,983
Contingent commissions
and volume overrides 3,038 2,889 18,075 15,266
Other 2,233 1,824 4,916 3,783
--------------------- ----------------------
82,231 74,155 161,580 143,032
--------------------- ----------------------

Expenses
Compensation 42,114 39,877 82,751 76,889
Selling, occupancy and
administration 16,086 13,808 31,639 26,914
Depreciation 1,730 1,517 3,317 2,911
Interest expense 1,702 1,516 3,362 2,883
Intangible asset
amortization 936 756 1,717 1,557
(Gain)/loss on disposal of
subsidiaries, property,
equipment and other assets (597) 65 (559) 9
Loss on write-off of
trademarks - - 2,587 -
(Gain) on put option
liability - (267) - (240)
Non-cash stock based
compensation 1,701 1,258 3,315 2,220
--------------------- ----------------------
63,672 58,530 128,129 113,143
--------------------- ----------------------

Net earnings before income
taxes 18,559 15,625 33,451 29,889
--------------------- ----------------------

Provision for income tax
expense
Current 4,992 3,604 11,730 9,265
Future 1,976 1,912 507 1,611
--------------------- ----------------------
6,968 5,516 12,237 10,876
--------------------- ----------------------
Net earnings 11,591 10,109 21,214 19,013
Interest on subordinated
convertible debentures 475 472 950 943
Dividends in lieu of
restricted share units 65 40 65 40
--------------------- ----------------------
Diluted net earnings $12,131 $10,621 $22,229 $19,996
--------------------- ----------------------
--------------------- ----------------------

Earnings per share
Basic $0.38 $0.34 $0.70 $0.65
Diluted $0.35 $0.31 $0.64 $0.59

Weighted average shares
outstanding
- Basic (000's) 30,189 29,326 30,102 29,326
Weighted average shares
outstanding
- Diluted (000's) 34,905 33,930 34,711 33,632


HUB INTERNATIONAL LIMITED
Consolidated Balance Sheets
As of June 30, 2004 and December 31, 2003
(in thousands of U.S. dollars)
2004 2003
--------- ---------
(Unaudited)
Assets
Current assets:
Cash and cash equivalents $144,527 $82,052
Trust cash 57,207 54,534
Accounts and other receivables 174,119 163,728
Income taxes receivable 5,634 6,768
Future income taxes 3,452 2,865
Prepaid expenses 7,911 4,449
--------- ---------
Total current assets 392,850 314,396

Goodwill 311,935 305,862
Other intangible assets 46,538 42,903
Property and equipment 23,354 24,181
Future income taxes 6,997 6,458
Other assets 6,784 6,803
--------- ---------
Total assets $788,458 $700,603
--------- ---------
--------- ---------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $226,556 $226,168
Income taxes payable 2,520 3,804
Future income taxes 490 114
Current portion long-term debt and capital leases 2,428 3,362
--------- ---------
Total current liabilities 231,994 233,448

Long-term debt and capital leases 140,467 75,437
Subordinated convertible debentures 35,000 35,000
Future income taxes 14,883 13,928
--------- ---------
Total liabilities 422,344 357,813
--------- ---------

Commitments and Contingencies

Shareholders' equity
Share capital 258,638 254,845
Issuable shares 940 721
Contributed surplus 9,589 4,806
Cumulative translation account 16,420 20,062
Retained earnings 80,527 62,356
--------- ---------
Total shareholders' equity 366,114 342,790
--------- ---------
Total liabilities and shareholders' equity $788,458 $700,603
--------- ---------
--------- ---------


HUB INTERNATIONAL LIMITED
Consolidated Statements of Cash Flows
For the three months and six months ended June 30, 2004 and 2003
(in thousands of U.S. dollars)

Second quarter First six months
--------------------- ----------------------
2004 2003 2004 2003
--------------------- ----------------------
(Unaudited)(Unaudited)(Unaudited)(Unaudited)
Operating activities
Net earnings $11,591 $10,109 $21,214 $19,013
Items not affecting
working capital:
Amortization and
depreciation 2,666 2,273 5,034 4,468
(Gain)/loss on disposal of
subsidiaries, property,
equipment and other assets (597) 65 (559) 9
Loss on write-off of
trademarks - - 2,587 -
(Gain) on put option
liability - (267) - (240)
Non-cash stock based
compensation 1,701 1,258 3,315 2,220
Future income taxes 1,976 1,912 507 1,611
Non-cash working capital
items
Trust cash (10,373) (6,154) 30 9,567
Accounts and other
receivables (60,051) (44,801) (8,773) (6,834)
Prepaid expenses (3,520) (2,435) (3,366) (3,724)
Accounts payable and
accrued liabilities 67,209 55,105 (2,925) 4,277
Other assets 128 (2,420) 256 (2,320)
Income taxes (1,566) (4,662) (176) (2,844)
--------------------- ----------------------
Net cash flows from
operating activities 9,164 9,983 17,144 25,203
--------------------- ----------------------

Investing activities
Property and equipment -
purchases (1,465) (1,458) (2,850) (3,036)
Property and equipment -
proceeds on sale 14 20 81 27
Purchase of
subsidiaries, net of
cash received (11,621) (1,161) (11,878) (12,385)
Sale of subsidiaries 3,929 160 3,929 451
Other assets (302) (705) 255 (721)
--------------------- ----------------------
Net cash flows used for
investing activities (9,445) (3,144) (10,463) (15,664)
--------------------- ----------------------

Financing activities
Long-term debt -
advances 65,000 65,000 65,000 65,000
Long-term debt and
capital leases -
repayments (3,680) (50,597) (4,690) (51,313)
Share capital - issued
for cash, net of issue
costs 412 - 480 (32)
Dividends paid (3,043) (3,038) (3,043) (3,038)
--------------------- ----------------------
Net cash flows from
financing activities 58,689 11,365 57,747 10,617
--------------------- ----------------------

Effect of exchange rate
changes on cash and cash
equivalents (1,185) 1,651 (1,953) 2,280
--------------------- ----------------------
Change in cash and cash
equivalents 57,223 19,855 62,475 22,436
Cash and cash equivalents
- Beginning of period 87,304 43,223 82,052 40,642
--------------------- ----------------------
Cash and cash equivalents
- End of period $144,527 $63,078 $144,527 $63,078
--------------------- ----------------------
--------------------- ----------------------

EARNOUT CALCULATION AND EXPENSE

Talbot's management team will receive Hub common stock valued at 2.1 times the value of Talbot's average annual EBITA profitability levels (earnings before interest, taxes and amortization) achieved in the three year period ending December 31, 2006. Payments will be amortized over varying periods, commencing with the acquisition closing date of July 1, 2004. The following table indicates possible ranges of non-cash stock based compensation expense if specific levels of average EBITA are achieved during the three-year period ended December 31, 2006. The table also combines these payments with the cash payment made to Safeco for the Talbot purchase to determine both the total consideration paid for the acquisition and the purchase amount as a multiple of EBITA levels.

The EBITA amounts set forth in the table below are for illustrative purposes only. Actual EBITA achieved by Talbot may be higher or lower than the amounts set forth in the table.

                       3-YEAR      3-YEAR      3-YEAR      3-YEAR
AVERAGE AVERAGE AVERAGE AVERAGE
EBITA OF EBITA OF EBITA OF EBITA OF
$20 MILLION $22 MILLION $24 MILLION $26 MILLION
----------------------------------------------------------------------
Amount paid to Safeco
7/1/2004 $90.0 $90.0 $90.0 $90.0
million million million million
----------------------------------------------------------------------
Non-cash stock based
compensation to
Talbot management $42.0 $46.2 $50.4 $54.6
million million million million
----------------------------------------------------------------------
Total consideration $132.0 $136.2 $140.4 $144.6
million million million million
----------------------------------------------------------------------
Acquisition multiple 6.6 6.3 5.9 5.6
----------------------------------------------------------------------

Note: The specific number of shares to be issued to Talbot management and the specific amount of non-cash stock based compensation expense will vary by reporting period and the average price of Hub common stock at various measurement points. Additional non-cash stock based compensation earned by Talbot management will be accrued and paid according to varying schedules, depending on the period in which it is earned.

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Media Contact:
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Vice President and CFO
email: dpauls@hubinternational.com
or
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Investor Contact:
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email: michael@rosenbaumadvisors.com
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 SOURCE :   Hub International Limited