View this article online: https://www.insurancejournal.com/news/national/2004/07/30/44510.htm
U.S.I. Holdings Corporation has reported that its revenues for the second quarter increased by $14.1 million, or 16.4 percent, to $100.4 million from $86.3 million last year at the same time.
The revenue increase reflects the impact of acquisitions of $14.7 million, offset by a decline in organic growth of $600,000. Consolidated organic revenue declined 0.7 percent (which excludes the net impact of businesses acquired and/or divested) for the quarter, due to a $3.5 million decrease in contingent commissions and other income, principally due to a timing difference caused by the early receipt of some contingent commissions in the first quarter of 2004.
Revenues for the first six months increased $24.4 million, or 14.4 percnet, to $193.2 million from $168.8 million last year. The revenue increase reflects the impact of acquisitions and organic growth. Consolidated organic revenue growth was 1.6 percent for the first six months of 2004, reflecting organic revenue growth of $6.4 million, or 4.4 percent, in USI’s insurance brokerage segment’s commissions and fees, partially offset by an organic decrease in contingent commissions and a $3.1 million, or 38.2 percent, decrease in specialized benefits segment revenues due to prior year life insurance transactions which resulted in $4.2 million of revenues in 2003.
Income from continuing operations for the quarter ($0.12 on a basic and diluted basis) and six month period ($0.23 and $0.22 on a basic and diluted basis, respectively) ended June 30, 2004 was lower than it was in the comparable periods in 2003, principally due to the impact of the federal income tax provision recorded in 2004.
Income from continuing operations before income tax expense for the quarter increased $2.7 million, or 37.4 percent, to $9.9 million from $7.2 million in the second quarter of 2003. The increase is due primarily to acquisitions and lower interest expense. Income from continuing operations before income tax expense for the first six months increased $6.1 million, or 47.8 percent, to $18.8 million from $12.7 million last year due primarily to the reasons noted above.
At June 30, 2004, USI had cash and cash equivalents on hand of $16.0 million, a decrease of $30.1 million from Dec. 31, 2003. The decrease was due primarily to cash used for acquisitions of over $50 million, offset by cash generated from operations. Based on USI’s current cash position and projected cash flows from operations, its $24.2 million of availability under the revolving credit facility at June 30, 2004, and available net proceeds of $55.5 million upon the settlement of its forward stock sale agreements, USI believes it has sufficient liquidity to fund its working capital requirements, projected capital expenditures, debt payments and to execute on its acquisition strategy on an ongoing basis.
On April 1, 2004, USI acquired Bertholon-Rowland Corporation (“BR”) of New York, NY. Founded in 1944, BR was one of the first brokers to develop insurance programs for professional associations on behalf of their members. The addition of BR to USI’s existing Affinity Group creates one of the largest distributors of lawyers’ professional liability insurance in the U.S.
On May 1, 2004, USI acquired Los Angeles, Calif.-headquartered Dodge, Warren & Peters Insurance Services Inc. (“DWP”). The combination of DWP with USI’s existing Southern California operation creates one of the largest middle market brokers in the region.
On July 1, 2004, USI acquired Matawan, NJ-based Future Planning Associates, Inc. (“FPA”). FPA is an employee benefit-consulting firm that designs, markets and administers voluntary insurance programs via payroll deduction for some of the largest employee groups in the United States. The combination of USI’s existing Specialized Benefits segment with FPA’s voluntary benefit business will create one of the largest single producers of voluntary benefits in the insurance brokerage industry.
“We are pleased with the strong revenue growth, operating earnings growth and acquisition success that we experienced in the second quarter” said David L. Eslick, chairman, president and CEO. Eslick added, “other than timing in contingent income, we continued to experience positive traction in organic revenue growth and margin expansion, which represent the true run rate results of our operations. Additionally, we have closed over $60 million of annualized acquired revenue, but more importantly, these acquisitions have increased our production and management capabilities. We welcome these fine firms and their associates to the USI family. These investments and our operational focus position USI for positive momentum throughout the balance of 2004.”