Hub International Limited

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Hub International Limited

55 East Jackson Boulevard
Chicago, Illinois 60604-4187
Telephone: (312) 922-5000
Toll Free: (877) 402-6601
Fax: (312) 922-5358
Web site:

Private Company
Incorporated: 1998 as The Hub Group Limited
Employees: 3,820
Sales: $543.9 million (2006)
NAIC: 524210 Insurance Agencies and Brokerages








Hub International Limited is a leading North American insurance brokerage focused principally on mid-sized commercial clients but also active in the personal insurance sector as well. Among the products and services Hub offers its customers are property and casualty insurance, life and health insurance, employee benefits, and risk management. Originally founded in 1998 through the merger of 11 Canadian insurance brokerages, Hub has expanded rapidly through acquisitions of and mergers with around 135 insurance brokerages, pushing revenue to nearly $550 million by 2006. Though the company has been one of the leading consolidators of the highly fragmented North American insurance brokerage industry, it has adopted a decentralized organizational structure. The corporate headquarters oversees a network of regional or specialty brokerages known as hubs that in turn manage smaller brokerages. By mid-2007, Hub International had established more than a dozen hubs in the United States, located across the country, as well as five Canadian hubs based in Ontario, Quebec, and British Columbia. A publicly traded firm since 1999, Hub was taken private in June 2007 through a $1.91 billion buyout engineered by the private-equity firm Apax Partners and the principal investment unit of Morgan Stanley.


In the late 1990s brokerage consolidators were emerging in both the United States and Canada, within an insurance industry that was becoming increasingly competitive. These consolidators were typically publicly traded corporations that acquired and consolidated small and medium-sized independent brokerages with the intention of improving their competitive positions and increasing their shares of the market.

In Hubs case, it was Richard A. Gulliver who guided the company onto this very path. Active in the insurance business since 1977, Gulliver eventually took over the small insurance brokerage that his father had established in Leamington, Ontario. By the late 1990s, he had transformed that company into a larger, Toronto-based brokerage called The Hub Group (Ontario) Inc. He met up with V. Prem Watsa, the head of the insurance holding company Fairfax Financial Holdings Limited, also based in Toronto. Watsa was interested in establishing a public brokerage consolidator, and he proposed providing the financial backing to enable Gulliver to take his company down that path. Thus, in November 1998, Gullivers brokerage merged with ten other Canadian brokerages to form The Hub Group Limited. The other brokerages were Barton Insurance Brokers Limited (Chilliwack, British Columbia); Brokerage Underwriting Services Inc. (London, Ontario); Ezzard-Eberts Commercial Insurance Brokers Inc. (Kamloops, British Columbia); Gifford Associates Insurance Brokers (Nepean, Ontario); Halton-Caird Insurance Brokers Limited (Oakville, Ontario); I.C. Financial Services Inc. (Brampton, Ontario); Martin Assurance & Gestion de Risques Inc. (Montreal); Mitchell McConnell Insurance Ltd. (St. John, New Brunswick); MPA Financial Inc. (Toronto); and Rose, Horne & Stevenson Insurance Brokers Inc. (Kamloops, British Columbia).

Watsas Fairfax backed up the formation of Hub by agreeing to acquire a 45 percent stake in the company for an investment of CAD 54 million. Fairfax closed on its investment in January 1999, the same month that the company raised CAD 38.3 million through a private placement of its stock. One month later, Hub completed an initial public offering (IPO) of its common stock on the Toronto Stock Exchange, raising an additional CAD 11.7 million. Gulliver served as the companys first president and CEO, while John C. Varnell, a Fairfax executive, was named chairman. Hubs initial focus was on middle-market commercial accounts.

From its initial network of brokers, which had generated a combined CAD 61.1 million ($39.3 million) in revenue, Hub began scouting for acquisition targets. The strategy was to seek out top-performing entrepreneur-based brokerages and offer them capital backing to grow while allowing them to continue operating autonomously. In 1999 alone, Hub acquired more than 40 brokerages in Canada, which with the original 11 were organized within four operating hubs. Revenues increased to CAD 85.2 million ($54.1 million) in that first full year, while net earnings totaled CAD 5.9 million ($3.7 million).


The most significant acquisition of 1999 occurred not in Canada but in the United States. In October of that year Hub acquired the 65-year-old Mack and Parker, Inc., a Chicago-based brokerage that both served as the companys entry point into the United States and became its hub in the Midwest. Martin P. Hughes, who had served as Mack and Parkers president, was subsequently named chairman and CEO of The Hub Group in December 1999. Gulliver remained Hubs president while also adding the title of chief operating officer.

Among the 18 brokerages in Canada and the United States acquired in 2000, the most noteworthy was a south-of-the-border entity. With the purchase of Boston-based C. J. McCarthy Insurance Agency, Inc., which had annual revenues of CAD 18 million, Hub gained its first presence in Massachusetts and the base for what would later be called its New England hub. As part of an ongoing effort to diversify its offerings beyond property and casualty insurance, Hub established a centralized life and financial services marketing company called Hub Financial Inc. In September 2000 the company changed its name to Hub International Limited. Net earnings that year jumped more than 50 percent, to CAD 9.7 million, while revenues surged 76 percent, reaching CAD 150.3 million ($95.2 million).


Hub International will be the leading sales organization in the insurance brokerage industry. We will be the first choice of customers, employees and investors, offering them their best value-added opportunity over the long term. We will conduct ourselves ethically and promote diversity and development.

Having built up a sizable brokerage network in Canada, Hub anticipated that the bulk of its future growth would occur in the United States. To facilitate the pursuit of U.S. deals, the firm moved its headquarters to Chicago in early 2001. (Though technically still a Canadian company, Hub nevertheless also began reporting its financial results in U.S. dollars, rather than Canadian dollars.) Later in the year, Hub completed three significant acquisitions, all in the United States. In May the company bought J.P. Flanagan Corporation, a Chicago brokerage with revenues of $8.5 million that had developed a national practice selling liability insurance primarily to lawyers. In its largest purchase to that time, Hub in June 2001 acquired Kaye Group Inc., a New York-based firm that at the time ranked as the 29th largest broker in the United States. Kaye, founded in 1952, was eventually established as Hubs Northeast hub, and the firms president, Bruce D. Guthart, was named president of Hubs U.S. operations. Acquiring Kaye cost Hub $130.4 million. The third major deal of 2001 came in July with the purchase of Burnham Insurance Group, Inc., which ranked as the 68th largest broker in the United States. Based in Battle Creek, Michigan, Burnham provided Hub with an enlarged presence in the Midwest. Burnham had also developed a successful specialty program offering financial institutions a range of risk-management and fee-income-producing products. As a result of these U.S. acquisitions, the $154 million in revenues reported by Hub in 2001 was divided almost equally between its Canadian and U.S. operations.

Seeking not only to garner funds to pay down debt but also to heighten its profile and broaden its base of shareholders, Hub in June 2002 completed an IPO of stock in the United States, securing a listing on the New York Stock Exchange. This IPO raised a net $88.1 million. The company maintained its listing on the Toronto Stock Exchange as well. Two of the eight brokerage acquisitions completed that year were particularly noteworthy. The acquisition of the Los Angeles firm Hooper, Hayes & Associates, Inc., provided the base for a California hub, the companys fifth in the United States. In addition, Hub purchased the property/casualty insurance and employee benefits lines of Fifth Third Bancorp, expanding its presence in the Midwest, particularly in Michigan, and also gaining key offices in Indianapolis and Evansville, Indiana. This deal represented a reversal of what had been a hot trend, banks buying insurance agencies. It had become apparent by this time that the synergies promised from the combination of banking and insurance operations were not materializing, and Fifth Third was one of the first banks to reverse course and jettison its insurance unit.

By the end of 2002, Hub International ranked as the third largest broker in Canada and the 16th largest in the United States. The revenue breakdown had shifted further toward the United States, where 61 percent of the $201 million in revenue originated in 2002. In a relatively quiet 2003, during which the company purchased nine brokerages with combined annual sales of $8 million, Hub entered into negotiations to buy the brokerage operations of Near North National Group, a Chicago firm with 2002 revenues of around $120 million, but pulled out of the talks when satisfactory terms could not be secured.

In early 2004 Hub restructured its management team to position the company for further growth. Gulliver was charged with leading the firms acquisition efforts, and to enable him to focus on this important area full-time, Guthart was promoted to chief operating officer of Hub International. Gulliver, who retained the title of company president, soon delivered another major deal, the July 2004 purchase of Talbot Financial Corporation, of Albuquerque, New Mexico, an insurance broker generating around $100 million in annual sales from its operations in several states in the Southwest and West. Talbot became Hub Internationals sixth U.S. hub and was later renamed Hub International Southwest Agency. The company further broadened its geographic range and gained its seventh U.S. hub via another 2004 acquisition, that of Bush, Cotton & Scott, LLC, a firm based in Seattle that had developed a dominant position in general insurance and surety bonding for construction firms in Washington. In October 2004 Hub launched a branding strategy whereby all of its operating entities incorporated Hub International into their names. Thus, Kaye was renamed Hub International Northeast, while C. J. McCarthy assumed the moniker Hub International New England. In a similar fashion, Bush, Cotton & Scott was rechristened Hub International Northwest. Net earnings for 2003 totaled $26.2 million on revenues of $329 million.


Eleven Canadian insurance brokerages merge to form The Hub Group Limited, a broker consolidator based in Toronto.
Company is taken public with a listing on the Toronto Stock Exchange; company enters the U.S. market via acquisition of Chicagobased Mack and Parker, Inc.
Company changes its name to Hub International Limited.
Hub shifts its headquarters to Chicago and acquires the New York-based Kaye Group Inc.
With the completion of an IPO in the United States, Hub secures a listing on the New York Stock Exchange.
Talbot Financial Corporation, of Albuquerque, New Mexico, is acquired.
Hub acquires three brokerages from Citizens Financial Group, Inc.
In a $1.91 billion deal, Hub is acquired by the private-equity firm Apax Partners and the principal investment unit of Morgan Stanley.


A string of deals in 2005 and 2006 moved Hub into various areas outside of its core strength in property and casualty insurance. The company entered the reinsurance brokerage market in 2005 through the acquisition of Los Angeles-based THB Intermediates, Inc. THB became one of the firms so-called specialty hubs, which were based on a particular specialty product line rather than a geographic area. Also purchased in 2005 was the personal lines insurance brokerage unit of the Chubb Corporation, which specialized in helping wealthy clients select policies for their cars, jewelry, and antiques and generated annual sales of $27 million. This business became a specialty hub known as Hub International Personal Insurance Limited. In 2006 Hub acquired Kaufman & Kaufman Insurance, based in Salt Lake City, which was the largest independent brokerage in the western United States specializing in transportation-related insurance coverage. Under the Hub umbrella, Kaufman & Kaufman became the foundation for another of the companys specialty hubs, operating under the name Hub International Transportation Services, Inc.

Also in 2006, Hub gained its first regional hub in the southeastern United States by acquiring Fortun Insurance Agency, a $10 million business based in Coral Gables, Florida, that was subsequently renamed Hub International Florida, Inc. In the biggest deal of the year, however, Hub garnered its second bank castoff. Citizens Financial Group, Inc. of Providence, Rhode Island, sold its three insurance agenciesBrewer & Lord (Norwell, Massachusetts), Citizens Clair Insurance Group (Norristown, Pennsylvania), and the Feitelberg Co. (Fall River, Massachusetts)to Hub for around $83 million. This move added three more regional hubs to the company network and agencies that had brought in $45 million in combined revenue in 2005. Simultaneous with this transaction, Hub and Citizens entered into an alliance whereby Citizens began offering Hub insurance products to its customers at all of the branches in its 13-state network.

Hub enjoyed its best year to date in 2006: net earnings of $50.9 million on revenues of $543.9 million, a 23 percent jump from the previous year. In addition, the firms market capitalization passed the $1 billion mark for the first time. Hub was also able to retire some of its debt from the proceeds of a secondary stock offering completed in the second quarter. The company sold 4.6 million shares of stock on the New York Stock Exchange at $26.25 per share, garnering a net $114.9 million.


Already the 12th largest insurance broker in the United States, according to rankings compiled by industry magazine Bests Review, Hub International continued to fill out its network of regional hubs in early 2007. Hibernia Insurance Agency, L.L.C., of Metairie, Louisiana, was acquired from Capital One Financial Corporation in another purchase of a brokerage from a bank. Hibernia was subsequently renamed Hub International Gulf South. Hub next purchased Phoenix-based Milne & BNC Insurance Services and renamed it Hub International Milne.

Then, in a move that surprised a number of observers, Hub agreed to be taken private in a deal announced in February 2007. The private-equity firm Apax Partners and the principal investment unit of Morgan Stanley joined forces to buy out Hub for a total of $1.91 billion in June 2007, paying $41.50 a share, which amounted to a premium of 33 percent over the stocks average closing price for the 90 days preceding the deals announcement. In addition to representing what Hubs managers called a good deal for shareholders, the takeover enabled Hughes, who remained chairman and CEO, and his colleagues to devote all of their time to building the business, rather than on the various obligations that come with running a public company.

Hubs management team promised that the firms acquisition spree would continue unabated following the takeover and delivered on this promise. After announcing three fill-in deals in a two-week span, Hub in early August 2007 unveiled an agreement to acquire the Rigg Group, Inc., a leading Texas-based insurance broker with offices in Dallas, Fort Worth, and Houston. This deal represented an opportunity to add to the company fold an important new regional hub in the Southwest. While continuing to pursue such acquisitions, particularly in the southeastern and southwestern United States, Hub International was also expected to step up its efforts to improve its organic growth, an ongoing area of weakness. The vast majority of the companys revenue growth over its history was attributable to its numerous acquisitions, with only a small portion stemming from new business secured by its existing brokerages. Despite its weak track record in this area, Hub had over its short history grown into one of the major players in the North American insurance brokerage industry.

David E. Salamie


Hub Capital Inc. (Canada); Hub Financial Inc. (Canada); Hub International Barton Limited (Canada); Hub International Ontario Limited (Canada); Hub International Québec Limitée (Canada); Hub International TOS Limited (Canada); Hub International Brewer & Lord; Hub International Feitelberg; Hub International Florida, Inc.; Hub International Group Northeast, Inc.; Hub International Gulf South Limited; Hub International Midwest Limited; Hub International Milne; Hub International New England, LLC; Hub International Northwest LLC; Hub International of California Insurance Services, Inc.; Hub International Pennsylvania LLC; Hub International Personal Insurance Limited; Hub International Southwest Agency Limited; Hub International Transportation Services, Inc.; Hub Mountain States; THB Intermediates, Inc.


Marsh & McLennan Companies, Inc.; Aon Corporation; Willis Group Holdings Limited; Arthur J. Gallagher & Co.; Brown & Brown Inc.; Hilb Rogal & Hobs, Co.; USI Holdings Corp.


Aarsteinsen, Barbara, Growth Spurt: Hub International Just Keeps Going and Going and Going ..., Canadian Insurance, June 2003, pp. 22-26.

Ackermann, Matt, Citizens Shift Leads to Sale of Agencies, American Banker, March 2, 2006, p. 1.

Berman, Dennis K., Apax, Morgan Private Equity Arm to Buy Insurance Brokerage Hub, Wall Street Journal, February 26, 2007, p. A3.

Boone, Elisabeth, Hub and Spokes, Rough Notes, January 2004, pp. 11820, 122.

DeCloet, Derek, Understated Hub Deserves More Attention, Globe and Mail, February 2, 2005, p. B13.

Garmhausen, Steve, Hubs a Seller but Says Its Buying Will Continue, American Banker, March 5, 2007, p. 8.

Green, Meg, Aiming High, Bests Review, September 2006, pp. 74-78.

Hub Raises U.S. Stake, Canadian Underwriter, March 2001,p. 9.

Miller, James P., Hubs IPO Leverages Upturn in Insurance, Chicago Tribune, June 19, 2002, p. 1.

Partridge, John, Fairfax to Buy into Brokerage: Allots $45-Million for Hub Group Stake, Globe and Mail, October 1, 1998, p. B5.

Roberts, Sally, Fairfax Backs Canadian Broker: The Hub Seeks Rapid Growth via Acquisitions, Business Insurance, September 6, 1999, p. 1.

________, Hub International OKs Private Buyout, Business Insurance, March 5, 2007, p. 1.

________, Kaye Deal Boosts Hub in U.S., Business Insurance, January 29, 2001, p. 1.

Ruquet, Mark E., Equity Firms to Buy Hub for $1.8 Billion, National UnderwriterProperty and Casualty, March 5, 2007, p. 10.

Sclafane, Susanne, Hub Makes Its Biggest Acquisition: Spends $90 Million for Safecos Talbot Brokerage Unit, National UnderwriterProperty and Casualty, March 22, 2004, p. 13.

Van Zyl, Sean, The Hub Invasion, Canadian Underwriter, November 1, 1999, p. 20.

Yerak, Becky, Insurance Broker Hub OKs Buyout: Purchasers Agree to Pay $1.8 Billion, Chicago Tribune, Business sec., p. 1.