Hub International Limited (NYSE:HBG)(TSX:HBG):
-- Purchase Marks Entry Into Reinsurance Brokerage
-- THB to Become "Specialty Hub"
Hub International Limited (NYSE:HBG)(TSX:HBG) announced today that it has entered the reinsurance brokerage market through the acquisition of THB Intermediaries, Inc. ("THB"), formed in Los Angeles more than twenty years ago, for cash and common stock. Terms of the agreement were not disclosed.
THB, which has annual revenue of approximately $6 million, is one of a small number of facultative reinsurance brokers in the United States. Facultative reinsurance brokers work with insurance companies to place portions of the insurers' risks with reinsurance underwriters.
As the reinsurance market is fundamentally different from the retail and wholesale brokerage businesses at Hub International, THB will operate as a "specialty hub." The Hub International acquisition strategy focuses primarily on regional hubs that provide a broad array of products and services and serve as the base for further expansion within a region. In unique instances, the company classifies a business unit as a specialty hub when the unit addresses a unique market segment, rather than serving as a regional expansion platform.
"The acquisition of THB expands our total service range and reach in the insurance brokerage business and is an important extension of our acquisition strategy," said Martin P. Hughes, Hub International chairman and chief executive officer. "The reinsurance brokerage business has consolidated dramatically in recent years, and THB was one of the few attractive reinsurance brokers remaining."
THB operates with 32 employees out of four offices in New York, Los Angeles, Chicago and Dallas. The company president, Richard Di Clemente, will continue to lead as president of the new hub.
"We know and respect the people and culture at Hub International, and we are excited about the opportunity to grow as part of the organization," he said.
THB shareholders received restricted common shares in Hub International as a portion of the acquisition payment. When making larger acquisitions, Hub uses restricted shares as a means of aligning the interests of sellers with the interests of shareholders.
The growth strategy of Hub International includes an active acquisition program to expand its footprint across the United States. In most cases, this strategy includes acquisition of regional hubs that become the base for further expansion within a region. At the same time, Hughes noted, THB represents a rare opportunity to expand into a new and largely consolidated national market.
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.