Hub International Reports Fourth Quarter and 2005 Results

 

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 Location:  Chicago
 Date:    2006-03-01  
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 --Hub International Limited (NYSE:HBG)(TSX:HBG):

-- Revenue increases 12% in fourth quarter, 25% for year

-- Organic growth of 2% in quarter, 6% for year

Hub International Limited (NYSE:HBG)(TSX:HBG) today reported a 75% increase in net earnings from continuing operations for the fourth quarter of 2005, as revenue rose 12% for the insurance broker. For the year, net earnings from continuing operations were flat on a 25% increase in revenue. Results for both the quarter and the year include the impact of a compensation charge related to the 2004 Talbot acquisition and other items. On an adjusted basis, as described later in this release, net earnings increased 6% for the quarter and 28% for the year.

The company reported organic growth of 2% in the fourth quarter and 6% for the year. Organic growth is a measure of revenue increases at business units owned at least 12 months. The company also reported improved expense levels. Employee cash compensation and selling, occupancy and administration expenses declined to a combined 77% of revenue in the fourth quarter from 78% a year earlier, and to 74% of revenue for all of 2005 from 75% in 2004.

"2005 was a great year," said Martin P. Hughes, chairman and chief executive officer. "Our investment in Hub's sales culture and the commitment of our people enabled us to post organic growth in the face of declining insurance rates. Our acquisition team continued to excel in identifying and closing attractive opportunities. In addition, we achieved our goal of increasing operating margins, recording a one percentage point improvement for the quarter and the year."

Revenue Growth and Efficiency Drive Earnings Improvement for Quarter

Hub reported fourth quarter revenue of $114.1 million, up 12% from $101.5 million in the same period of 2004. U.S. revenue rose 16% to $81.5 million, while Canadian revenue increased 4% to $32.6 million. Hub's organic growth of 2% in the fourth quarter reflected the impact of 1% growth in the United States and 4% organic growth in Canada. Adjusted for foreign exchange effects, organic growth was 1%, while organic growth of core commissions was flat.

Employee cash compensation expense increased 13% to $65.0 million from $57.5 million a year earlier, representing approximately 57% of revenue in both periods. Selling, occupancy and administration expense rose just 4% to $22.3 million from $21.5 million, declining to 20% of revenue from 21% a year ago.

Interest expense increased 69% to just under $3.0 million from $1.8 million in the fourth quarter of 2004, due largely to rising interest rates. The company's effective tax rate of 51% was down from 59% a year earlier. Both years' tax rates were affected by the Talbot charge, which is not deductible for tax purposes. Excluding the impact of this charge, the company's effective tax rate increased to 35% from 31%. The lower than normal tax rate in the fourth quarter of 2004 was due to the recognition of tax benefits on the utilization of certain tax losses.

Adjusted Earnings Increase 6% for Quarter

For the fourth quarter, net earnings from continuing operations rose 75% to $5.9 million, or $0.19 per diluted share, from $3.4 million, or $0.11 per diluted share, a year ago. The Talbot charge, which includes compensation to more than 70 employees of the business acquired in 2004, is one of several charges and benefits that can make comparisons more complex. As shown in the following table, a comparison of fourth quarter financial results, adjusted to reflect certain items, indicates net earnings of $10.9 million, or $0.32 per share, for the fourth quarter of 2005, up 6% from $10.3 million, or $0.31 per diluted share, a year earlier.


Results described are Q4 2005 Q4 2004 Q4 2005 Q4 2004
net of income tax ($000) ($000) (Per (Per
Diluted Diluted
Share) Share)
------------------------------------------------
Net Earnings Reported
under GAAP $5,711 $3,884 $0.17 $0.12
Impact of Compensation
for Talbot
Earnout 5,225 7,499 0.15 0.23
Impact of Gain on
Disposition of Assets
of Certain Brokerages - (93) - -
Impact of Foreign
Exchange (164) (499) - (0.02)
Impact of Discontinued
Operations 160 (520) - (0.02)
------------------------------------------------
Net Earnings Adjusted
for Above Items $10,932 $10,271 $0.32 $0.31
------------------------------------------------
------------------------------------------------


Acquisitions and Sales Culture Drive Revenue Growth for Full Year

For the full year ended December 31, 2005, Hub's revenue increased 25% to $442.6 million from $355.1 million. U.S. revenue increased 33% to $310.3 million while Canadian revenue grew 9% to $132.3 million. Hub's organic growth of 6% for the year included 3% organic growth in the United States and 11% organic growth in Canada. Adjusted for foreign exchange effects, organic growth was 3%, while organic growth of core commissions was 1%.

Cash compensation expense increased 26% to $246.3 million, including a $1.6 million severance charge for third quarter staff reductions. As a percentage of revenue, cash compensation increased slightly to 56% of revenue from 55% in 2004. Excluding the third-quarter severance charges, the ratio was 55% in both years. Selling, occupancy and administration expense grew 15% to $82.8 million, declining to 19% of revenue from 20% a year ago.

"We are committed to continued expense management and strategies to improve productivity in 2006," Hughes noted. "Execution in these two important areas should contribute to the achievement of our goal of improving operating margins by 50 to 150 basis points for the year," added Hughes.

Higher borrowings to finance acquisitions and higher interest rates led to a 44% increase in interest expense to $10.7 million. The company's effective tax rate of 55% increased from 44% in 2004, reflecting a full four quarters of the non-tax deductible Talbot charge in 2005. The Talbot charge only affected the second half of 2004, following the July 1 acquisition date. Excluding the impact of this charge, the company's effective tax rate increased to 36% from 33%.

Net earnings from continuing operations were flat with the prior year while diluted earnings per share from continuing operations were $0.76, down from $0.79 per diluted share in 2004. The primary source of the decline in diluted earnings per share from continuing operations was the Talbot charge, although this was one of several items that can make comparisons more complex. As shown in the following table, a comparison of financial results, adjusted to reflect certain items, indicates net earnings of $49.5 million, or $1.41 per diluted share, in 2005, up 28% from $38.7 million, or $1.16 per diluted share, in 2004.


Results described Year ended Year ended Year ended Year ended
are net of income 12/31/2005 12/31/2004 12/31/2005 12/31/2004
tax ($000) ($000) (Per (Per
Diluted Diluted
Share) Share)
------------------------------------------------

Net Earnings Reported
under GAAP $25,718 $26,244 $0.76 $0.80
Impact of Compensation
for Talbot
Earnout 28,716 14,388 0.78 0.41
Impact of Severance
Costs 1,004 - 0.03 -
Impact of Gain on
Forgiveness of Debt (2,925) - (0.08) -
Impact of Write-off of
Trademarks - 1,656 - 0.05
Impact of Gain on
Disposition of Assets
of Certain Brokerages (1,914) (1,112) (0.05) (0.03)
Loss on Foreign
Exchange Forward
Contract 354 - 0.01 -
Impact of Foreign
Exchange Gains (1,475) (1,972) (0.04) (0.06)
Impact of Discontinued
Operations 29 (461) - (0.01)
------------------------------------------------
Net Earnings Adjusted
for Above Items $49,507 $38,743 $1.41 $1.16
------------------------------------------------
------------------------------------------------


Hub ended 2005 with cash and equivalents of $70.1 million, down 29% from $98.2 million at the close of 2004, due to both acquisition activity and the company's decision to pay cash for the Talbot earn out in the third quarter. During 2005, the company completed fifteen acquisitions with annualized revenue of $45.9 million.

"Our acquisition team continues to pursue attractive brokerages and we anticipate further expansion through acquisitions in 2006," Hughes said. "While our strong cash flow is generally sufficient for most acquisition funding, we will continue to investigate and evaluate all avenues for expansion capital."

Subordinated Convertible Debentures

Included in long-term debt is $35 million of 8.5% subordinated convertible debentures, due June 28, 2007, to certain subsidiaries of Fairfax Financial Holdings Limited. Hub can require conversion of these debentures into Hub common shares after June 28, 2006, at an exchange rate of CDN$17.00 per share, if Hub's weighted average closing price per share on the Toronto Stock Exchange is at least CDN$19.00 over a period of 20 consecutive trading days. If converted, Fairfax would have owned approximately 31% of Hub's outstanding shares at December 31, 2005.

Outlook Includes Continued Rate Softness

Looking at the industry environment for 2006, Hughes said he anticipates an easing of rate reductions as the year unfolds.

"We don't see rates declining much further or a significant firming in the near future, partly because ample capital is flowing into the market after the 2005 hurricane season," Hughes said. "At the same time, we are encouraged by the ongoing development of our internal sales culture and by our ability to complete and integrate acquisitions. We anticipate further improvement in both areas in 2006. We also anticipate that contingent commissions could decline this year due to loss experience for insurers in 2005."

The Talbot Charge

Hub discloses the impact of compensation related to the 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 cash paid to Safeco Corporation and the issuance of Hub 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 (earnings before interest, taxes, depreciation and amortization, a non-GAAP measure) 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 purchase 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 earnings comparisons through 2007, making it difficult for investors to analyze the company's results in comparison to prior years and industry peers.

Hub has the option to pay the executives with cash or shares. The first Talbot earnout payment in the amount of $16.4 million was paid in cash on September 1, 2005. Management expects future payments to be made in common shares; however, the choice of cash or shares will depend on circumstances at the time of payment.

In 2005, Hub recorded $28.7 million of compensation for Talbot, based on a total estimated earnout liability of approximately $56 million. The amount of this compensation may vary from quarter to quarter, reflecting profitability of Talbot. Based on the current expected earnout the estimated charge to earnings will be:

2004 $14.4 million (actual)
2005 $28.7 million (actual)
2006 $10.9 million
2007 $1.9 million

Conference Call and Webcast

Hub International will discuss its financial results and outlook on a conference call scheduled for 9:30 a.m. (CT), 10:30 a.m. (ET) today, March 1, 2006. 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 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, 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 that 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, exchange rates, resolution of regulatory issues, including those related to compensation arrangements with insurance companies, the actual costs of resolution of contingent liabilities 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 (unaudited)
For the three months and twelve months ended December 31, 2005
(in thousands of U.S. dollars, except percentages)


Net
Revenue Adjustments
------------------- Total For Organic
Fourth quarter Total Growth (Acquisitions) Growth
2005 2004 Change ($) (%) And Disposals (%)
----------------------------------------------------------
Total
-----
Commission
Income $106,636 $97,118 $9,518 10% $(8,738) 1%
Contingent
Commissions
and Volume
Overrides 4,660 1,765 2,895 164% (2,010) 50%
Other Income 2,782 2,592 190 7% 234 16%
----------------------------------------------------------
Total $114,078 $101,475 $12,603 12% $(10,514) 2%
----------------------------------------------------------

US
--
Commission
Income $74,939 $66,714 $8,225 12% $(8,833) -1%
Contingent
Commissions
and Volume
Overrides 4,442 1,427 3,015 211% (2,010) 71%
Other Income 2,110 2,017 93 5% 234 16%
----------------------------------------------------------
Total $81,491 $70,158 $11,333 16% $(10,609) 1%
----------------------------------------------------------

Canada
------
Commission
Income $31,697 $30,404 $1,293 4% $95 5%
Contingent
Commissions
and Volume
Overrides 218 338 (120) -36% - -36%
Other Income 672 575 97 17% - 17%
----------------------------------------------------------
Total $32,587 $31,317 $1,270 4% $95 4%
----------------------------------------------------------



Net
Revenue Adjustments
------------------- Total For Organic
Twelve months Total Growth (Acquisitions) Growth
2005 2004 Change ($) (%) And Disposals (%)
----------------------------------------------------------
Total
-----
Commission
Income $389,907 $323,150 $66,757 21% $(55,487) 3%
Contingent
Commissions
and Volume
Overrides 40,454 21,705 18,749 86% (11,547) 33%
Other Income 12,195 10,226 1,969 19% (210) 17%
----------------------------------------------------------
Total $442,556 $355,081 $87,475 25% $(67,244) 6%
----------------------------------------------------------

US
--
Commission
Income $269,828 $210,481 $59,347 28% $(58,507) 0%
Contingent
Commissions
and Volume
Overrides 30,811 14,864 15,947 107% (11,869) 27%
Other Income 9,631 7,957 1,674 21% (281) 18%
----------------------------------------------------------
Total $310,270 $233,302 $76,968 33% $(70,657) 3%
----------------------------------------------------------

Canada
------
Commission
Income $120,079 $112,669 $7,410 7% $3,020 9%
Contingent
Commissions
and Volume
Overrides 9,643 6,841 2,802 41% 322 46%
Other Income 2,564 2,269 295 13% 71 16%
----------------------------------------------------------
Total $132,286 $121,779 $10,507 9% $3,413 11%
----------------------------------------------------------


Notes: 1. Organic growth is a non-GAAP measure.
2. Total and Canadian organic growth rates above include the
impact of changes in foreign currency.



HUB INTERNATIONAL LIMITED
Consolidated Statements of Earnings Data (unaudited)
For the three months and twelve months ended
December 31, 2005 and 2004
(in thousands of U.S. dollars, except per share amounts)

Fourth quarter Twelve months
------------------ ------------------
2005 2004 2005 2004
------------------ ------------------
Revenue
Commission income $106,636 $97,118 $389,907 $323,150
Contingent commissions and
volume overrides 4,660 1,765 40,454 21,705
Other 2,782 2,592 12,195 10,226
------------------ ------------------
114,078 101,475 442,556 355,081
------------------ ------------------

Expenses
Employee cash compensation 65,017 57,462 246,263 195,706
Selling, occupancy and
administration 22,342 21,452 82,843 71,948
Depreciation 2,336 1,975 8,714 7,242
Interest expense 2,974 1,756 10,656 7,406
Intangible asset amortization 2,706 1,841 8,363 5,458
Compensation for Talbot earnout 5,225 7,499 28,716 14,388
Other non-cash stock based
compensation 1,884 1,730 7,184 6,502
Gain on disposal of
subsidiaries, property,
equipment and other assets (286) (378) (2,943) (1,923)
Loss on foreign exchange
forward contract - - 555 -
Gain on forgiveness of debt - - (4,500) -
Loss on write-off of trademarks - - - 2,587
------------------ ------------------
102,198 93,337 385,851 309,314
------------------ ------------------

Net earnings from continuing
operations before income taxes 11,880 8,138 56,705 45,767
------------------ ------------------

Provision for income tax expense
Current 5,709 3,004 29,791 19,784
Future 300 1,770 1,167 200
------------------ ------------------
6,009 4,774 30,958 19,984
------------------ ------------------
Net earnings from continuing
operations 5,871 3,364 25,747 25,783
Net earnings (loss) from
discontinued operations (160) 520 (29) 461
------------------ ------------------
Net earnings 5,711 3,884 25,718 26,244

Interest on subordinated
convertible debentures - - 1,900 1,900
Dividends in lieu on restricted
share units 25 6 102 95
------------------ ------------------
Diluted net earnings 5,736 3,890 27,720 28,239
------------------ ------------------
------------------ ------------------

Basic earnings per share
Continuing operations $0.19 $0.11 $0.84 $0.85
Discontinued operations - 0.02 - 0.02
------------------ ------------------
Total operations $0.19 $0.13 $0.84 $0.87
------------------ ------------------

Diluted earnings per share
Continuing operations $0.17 $0.10 $0.76 $0.79
Discontinued operations - 0.02 - 0.01
------------------ ------------------
Total operations $0.17 $0.12 $0.76 $0.80
------------------ ------------------

Weighted average shares
outstanding
- Basic (000's) 30,825 30,336 30,561 30,246
Weighted average shares
outstanding
- Diluted (000's) 34,182 33,169 36,619 35,305



HUB INTERNATIONAL LIMITED
Consolidated Balance Sheet Information (unaudited)
As of December 31, 2005 and December 31, 2004
(in thousands of U.S. dollars)
2005 2004
----------- -----------
Assets
Current assets:
Cash and cash equivalents $70,118 $98,204
Trust cash 113,349 71,718
Accounts and other receivables 230,654 162,841
Income taxes receivable 6,001 6,208
Future income taxes 4,971 3,901
Prepaid expenses 6,436 5,835
----------- -----------
Total current assets 431,529 348,707

Goodwill 421,158 376,676
Other intangible assets 105,007 88,842
Property and equipment 28,160 27,907
Future income taxes 4,528 4,368
Other assets 10,971 11,035
----------- -----------
Total assets $1,001,353 $857,535
----------- -----------
----------- -----------

Liabilities and Shareholders' Equity
Current liabilities:
Accounts payable and accrued liabilities $384,174 $271,843
Income taxes payable 4,344 2,273
Future income taxes 359 34
Current portion long-term debt and capital
leases 4,910 5,195
----------- -----------
Total current liabilities 393,787 279,345

Long-term debt and capital leases 135,363 146,602
Subordinated convertible debentures 35,000 35,000
Future income taxes 17,277 14,805
----------- -----------
Total liabilities 581,427 475,752
----------- -----------

Commitments and contingencies

Shareholders' equity
Share capital 270,199 259,617
Contributed surplus 16,989 12,681
Cumulative translation account 31,893 26,983
Retained earnings 100,845 82,502
----------- -----------
Total shareholders' equity 419,926 381,783
----------- -----------
Total liabilities and shareholders' equity $1,001,353 $857,535
----------- -----------
----------- -----------



HUB INTERNATIONAL LIMITED
Consolidated Cash Flow Information (unaudited)
For the three months and twelve months ended
December 31, 2005 and 2004
(in thousands of U.S. dollars)

Fourth quarter Twelve months
---------------- ----------------
2005 2004 2005 2004
---------------- ----------------
Operating activities
Net earnings $5,711 $3,884 $25,718 $26,244
Items not affecting cash:
Amortization and depreciation 5,113 3,886 17,342 12,786
Gain on disposal of subsidiaries,
property, equipment and other
assets (290) (340) (2,913) (1,880)
Compensation for Talbot earnout 5,225 7,499 28,716 14,388
Other non-cash stock based
compensation 1,884 1,730 7,184 6,502
Gain on forgiveness of debt - - (4,500) -
Loss on write-off of trademarks - - - 2,587
Future income taxes 425 1,700 1,271 130
Non-cash working capital items
Trust cash (48,152) (5,206) (34,219) (3,351)
Accounts and other receivables (62,628)(21,342) (33,451) 16,024
Prepaid expenses 1,890 2,645 (259) (1,303)
Accounts payable and accrued
liabilities 99,078 34,827 54,739 (12,024)
Compensation for Talbot earnout -
paid - - (16,434) -
Other assets 129 128 515 512
Income taxes 1,231 (1,617) 2,304 (2,646)
---------------- ----------------
Net cash flows from operating
activities 9,616 27,794 46,013 57,969
---------------- ----------------

Investing activities
Property and equipment - purchases (3,268) (2,197) (7,982) (7,293)
Property and equipment - proceeds
on sale 6 15 26 159
Purchase of subsidiaries, net of
cash received (47,727) (3,907) (66,145)(94,307)
Sale of subsidiaries 265 1,085 5,127 7,454
Other assets (41) 298 5,068 687
---------------- ----------------
Net cash flows used for investing
activities (50,765) (4,706) (63,906)(93,300)
---------------- ----------------

Financing activities
Long-term debt and capital leases -
advances - - 10,000 65,000
Long-term debt and capital leases -
repayments (11,436) (3,130) (18,907)(11,326)
Proceeds from exercise of stock
options 2,241 17 4,542 497
Dividends paid (1,845) (1,528) (7,375) (6,098)
Share capital - issued for cash,
net of issue costs 1 - 15 -
Net cash flows (used for) / from ---------------- ----------------
financing activities (11,039) (4,641) (11,725) 48,073
---------------- ----------------

Effect of exchange rate changes on
cash and cash equivalents (137) 1,649 1,532 3,410
---------------- ----------------
Change in cash and cash equivalents (52,325) 20,096 (28,086) 16,152
Cash and cash equivalents -
Beginning of year 122,443 78,108 98,204 82,052
---------------- ----------------
Cash and cash equivalents - End of
year $70,118 $98,204 $70,118 $98,204
---------------- ----------------
---------------- ----------------



HUB INTERNATIONAL LIMITED
Compensation for Talbot Earnout and Other Non-Cash Stock
Based Compensation (unaudited)
For the three months and twelve months ended
December 31, 2005 and 2004
(in thousands of U.S. dollars)

Non-cash stock based compensation, including both compensation for the
Talbot acquisition and other non-cash stock based compensation of
$7,109 and $9,229 for the three months ended December 31, 2005 and
2004, respectively, and of $35,900 and $20,890 for the twelve months
ended December 31, 2005 and 2004, respectively, was expensed with
offsetting credits to contributed surplus, and accounts payable and
accrued liabilities. The Company recognizes the fair value of non-cash
stock based compensation as an expense over the period in which
entitlement to the compensation vests.

Compensation for the Talbot earnout includes both cash and non-cash
stock based compensation and is detailed below.

Total other non-cash stock based compensation for the three months and
twelve months ended December 31, 2005 and 2004 is comprised of the
following:

Fourth quarter Twelve months
---------------- ----------------
2005 2004 2005 2004
---------------- ----------------
Other non-cash stock based
compensation:
Stock options granted June 2002 $ - $484 $843 $1,955
Stock options granted February
2003 85 116 366 445
Stock based compensation granted
for 2003 bonuses 992 572 3,264 2,368
Restricted share units 660 433 2,545 1,609
Common shares for acquisitions 147 125 166 125
---------------- ----------------
Total other non-cash stock based
compensation $1,884 $1,730 $7,184 $6,502
---------------- ----------------
---------------- ----------------

Compensation for the Talbot earnout for the three months and twelve
months ended December 31, 2005 and 2004 is comprised of the following:

Fourth quarter Twelve months
---------------- ----------------
2005 2004 2005 2004
---------------- ----------------
Cash compensation $ - $3,456 $9,800 $6,634
Non-cash stock based compensation 5,225 4,043 18,916 7,754
---------------- ----------------
Total compensation for the Talbot
earnout $5,225 $7,499 $28,716 $14,388
---------------- ----------------
---------------- ----------------


The Company estimates other non-cash stock based compensation expense
for 2006 through 2011 will be:

Year ended December 31, 2006 2007 2008 2009 2010 2011
----------------------- ----------------------------------------------
Stock based
compensation granted
for 2003 bonuses $2,137 $2,046 $2,046 $2,046 $1,990 $ -
Restricted share
units 2,911 2,945 2,944 1,048 423 106
Common shares for
acquisitions 18 5 - - - -
----------------------------------------------
Total other non-cash
stock based
compensation $5,066 $4,996 $4,990 $3,094 $2,413 $106
----------------------------------------------
----------------------------------------------

The Company estimates the compensation for the Talbot earnout for 2006
through 2011 will be:


Year ended December 31, 2006 2007 2008 2009 2010 2011
----------------------- ----------------------------------------------
Cash compensation $ - $ - $- $- $- $-
Non-cash stock based
compensation 10,888 1,854 - - - -
----------------------------------------------
Total compensation
for the Talbot
earnout $10,888 $1,854 $- $- $- $-
----------------------------------------------
----------------------------------------------

In total, as of December 31, 2005 we had issued and outstanding
approximately 1.1 million stock options at a weighted average exercise
price of $15.39. Our closing share price on the New York Stock
Exchange was $25.80 on December 30, 2005.


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CONTACT:
Hub International Limited
W. Kirk James, 312-279-4881
Media Contact
email: Kirk.james@hubinternational.com
or
Heather Schneider, 312-279-4683
Media Contact
email: Heather.schneider@hubinternational.com
or
Rosenbaum Advisors, Inc.
Michael Rosenbaum, 847-749-1010
Investor Contact
email: michael@rosenbaumadvisors.com
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 SOURCE :   Hub International Limited