Hub Moves West, Acquires Safeco Subsidiaries

March 16, 2004

In a move it expects will bring in an additional $100 million in annual revenue, Chicago-based brokerage Hub International Ltd. has signed a definitive agreement to invest in a corporation formed by a senior management group of New Mexico-based Talbot Financial Corp., which will in turn purchase Talbot and all of its subsidiaries from Safeco Corp.

The acquisition, to be conducted through the new group known as Satellite Acquisition Corp., will vastly expand Hub’s sales base in the United States, according to a company statement. The acquisition expand the company’s footprint in the Western and Southwestern United States. Completion of the transaction, which is expected before the end of second quarter 2004, is subject to customary conditions, including applicable regulatory approvals.

Talbot CEO David Weymouth said in a statment that Hub’s approach to the insurance brokerage business provides a strong match to his firm’s history of client service and growth.

Hub specializes in broking for mid-sized companies, associations and other buyers. Talbot derives most of its revenues from traditional middle-market commercial lines, personal lines, employee benefits and life insurance. The sale of annuities and other financial products accounts for approximately 10 percent of Talbot’s revenue.

Hughes said the continuing contribution of Talbot’s management team and employees is a critical component of the purchase, as it has been in Hub’s other major acquisitions.

Under the purchase agreement with Satellite Acquisition Corp., Hub will acquire 70 percent of the company. On closing, management of Albuquerque-based Talbot will hold the remaining 30 percent. Hub also will purchase the remaining 30 percent interest from management, using a combination of restricted and unrestricted Hub shares, over the next three calendar years. One hundred percent of the earnings from Talbot will begin to accrue to Hub as of the date of the closing.

Excluding the impact of any additional consideration based on improved operating performance over the next three years, the total value of the acquisition will be approximately $120 million, Hub said in its statement.

Topics Mergers

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