Hub International Ltd. reported today that revenue growth, core expense discipline and higher-than-anticipated contingent income led to strong earnings for the first quarter 2006.

“We are off to a solid start in 2006, with measurable progress on all fronts,” said Martin P. Hughes, chairman and CEO. “Revenue is up, net earnings are stronger, acquisitions are being integrated smoothly and costs are under control. Our strategies for long-term growth are gaining momentum.”

Revenue for the period ended March 31 rose 12% to $134.1 million from $119.2 million, including both the impact of acquisitions and 3% organic (internal) growth. A stronger Canadian dollar added approximately two percentage points to the organic growth rate. Organic growth, similar to the same-store-sales calculation employed by retailers, measures revenue changes at operations owned at least a year. Hughes noted that average premium rates continue to be lower than in the prior year.

Core commissions, which exclude contingent commissions and other income, increased 15% to $99.9 million from $86.9 million. Contingent commissions rose 7% to $31.2 million from $29.2 million. Of the $2-million increase in contingent commissions, approximately $700,000 represents payments that were received in the second quarter 2005. Contingent commissions represented 23% of first quarter revenue in 2006, down from 24% in the first quarter 2005.

U.S. revenue increased 13% to $96 million from $84.6 million, including 1% organic growth. Core commissions rose 17% to $71.2 million from $61.1 million, while contingent commissions increased 8% to $22.5 million from $21.0 million. In Canada, revenue increased 10% to $38 million from $34.6 million, including organic growth of 9%. A stronger Canadian dollar added six percentage points to the revenue growth in Canada. Core Canadian commissions grew 11% to $28.7 million from $25.8 million, while contingent commissions grew 5% to $8.6 million from $8.2 million.

Expense control contributed to stronger net earnings on both a GAAP and on an adjusted basis, Hughes noted. Cash compensation expense increased 9% to $68.4 million from $62.5 million in the year-earlier quarter, while declining to 51% of revenue from 52% in 2005. Selling, occupancy and administration expense rose 14% to $22.4 million from $19.6 million, rising to 17% of revenue from 16% a year ago.

Combined, these two major cost categories fell 117 basis points as a percentage of revenue from the first quarter 2005. Hub’s stated goal is to reduce these two expense items by a combined 50-150 basis points per year, as a percentage of revenue. Total compensation, rose 4% to $74.7 million from $71.5 million, but declined to 56% of revenue from 60% a year earlier.

Reported net earnings from continuing operations increased 4% to $16.7 million in the first quarter 2006 compared to 2005, while earnings per diluted share from continuing operations increased 2% to $0.47. However, adjusted earnings increased 17% to $20.9 million in the first quarter 2006 from $17.8 million in the first quarter 2005.