Hub International Limited (NYSE:HBG)(TSX:HBG):
-- $16.4 million payout to be distributed to 70 Talbot employees set for September 1, 2005
-- Total three-year earnout anticipated in $52 - $55 million range
Hub International Limited (NYSE:HBG)(TSX:HBG) reported today that the company will make its first earnout payment to be distributed to approximately 70 employees of the acquired Talbot insurance brokerages with cash, rather than common shares. Hub will pay approximately $16.4 million of an anticipated $52 - $55 million, three-year earnout on September 1, 2005.
"Because Hub's current market price is significantly greater than the share price calculated under the Talbot earnout agreement, our company, with board approval, elected to make the first earnout payment in cash," said Martin P. Hughes, chairman and chief executive officer.
The decision to use cash for the first payment to Talbot employees will not affect net earnings for the first nine months of 2005, but will have a small, positive impact on diluted earnings per share. Had the initial payment been made in shares, approximately 856,000 shares would have been issued.
Future payments with respect to the earnout may be made in cash or common shares depending on circumstances at the time. "Our decisions on the form of earnout payments will be specific to each payment period, reflecting our judgment on how to serve the best interests of our shareholders," Hughes said. "Based on our recent share price and interest rates, we believe a cash payment is the right choice for the first installment."
The earnout payments will be recorded as compensation expense whether payment is made in cash or common shares. 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.
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 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, 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.