Hub International to Sell Units

Chicago-based Hub International Limited (Hub) announced an agreement to sell its underwriting subsidiaries, Old Lyme Insurance Company of Rhode Island Inc. and Old Lyme Insurance Company, Ltd. (Old Lyme) to Fairfax Inc. (Fairfax) of Toronto.

Fairfax is a subsidiary of Fairfax Financial Holdings Limited, Hub’s largest shareholder.

Hub, through its Kaye Group Inc. (Kaye) subsidiaries, including its underwriting manager, Program Brokerage Corporation (PBC), will continue both to manage Old Lyme and to operate Kaye’s Claims Administration Corporation unit (CAC), which is not being sold. Both Old Lyme and CAC have been managed by Kaye subsidiaries since they were formed over 20 years ago. Old Lyme has consistently maintained a combined loss and expense ratio superior to property and casualty industry norms.

The sale, for Old Lyme’s book value as of Dec. 31, 2001, approximately $42,000,000, represents no gain or loss to Hub, which will use the proceeds to pay down debt.

Hub chairman and CEO Martin P. Hughes explained that the sale of Old Lyme aligns Hub’s underwriting arrangement with that of other major public brokers: participation in underwriting opportunities by affiliations or contingency agreements rather than through direct ownership of insurance companies. Hughes said that the company’s mission is to serve its clients primarily as a broker in the insurance marketplace He added that Hub’s continuing management of the insurance companies will help retain underwriting as an important component of the company’s client service capabilities.

The sale is not expected to affect Old Lyme’s ongoing commitment to participating, as underwriters, in Hub’s affinity group program business.