Hilb Rogal & Hobbs Company, the world’s 10th largest insurance and risk management intermediary, has issued an announcement indicating that its third quarter operating earnings would be lower than expected, and revising its full year estimates accordingly.
The company indicated that it expects Q3 operating earnings per share to be $0.54 to $0.55, compared to $0.53 in the same period a year ago. The lowered expectations are “primarily due to reduced organic revenue growth,” said the company.
“For the full year 2003, HRH expects organic revenue growth to be in the 5% to 7% range, instead of the previously anticipated 9% to 11% range, and operating earnings per share to be at the lower end of the company’s long-term goal of 15% to 20% annual growth,” the announcement continued. “In addition, HRH continues to expect the annual operating profit margin to improve between 1.0% and 1.5% during 2003. Lower than expected organic revenue growth resulted from both industry trends and company specific issues.”
It added that “Hobbs, which successfully completed its earn-out at the end of the second quarter, experienced a decrease in net new business during the third quarter, the effects of softening in property insurance rates and a shortfall in executive benefit revenues–a business that was affected by proposed federal legislation and macroeconomic uncertainties. HRH’s revenue was impacted by moderating premium increases, program redesigns and current economic conditions. In addition, for any given quarter, revenues will vary based on the timing of net new business, policy renewals and billings.”
Chairman and CEO Martin L. (Mell) Vaughan, III, commented “The results at Hobbs reflected market conditions in certain lines of business as well as a post earn-out slump, a temporary situation now largely behind us. We have virtually completed the planning process for integrating Hobbs and HRH, and will announce and launch the plan over the next 30 days. We are as excited as ever with the potential synergies between Hobbs and HRH, and the talented leadership committed to bringing those to life.”
He concluded that “For the rest of the year, in addition to the organizational strengthening associated with the integration of Hobbs, our top priority is the successful rollout of our new sales and sales management program which combines the best of the Hobbs and HRH models. Our strategy is to enter 2004 with the full complement of our expertise, products and carrier relationships available throughout the HRH network, and the sales culture to deliver those goods and services to a growing share of the market.”
HRH will release financial results for the third quarter of 2003 after the market close on October 20, 2003.
Topics Profit Loss
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