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SECURITIES AND EXCHANGE COMMISSION




FORM 10-K


|                                                   |  |                                                                                              
|-------------------------------------------------- |  | ---------------------------------------------------------------------------------------------
|[X]                                                |  | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934.    
|                                                  
|For the fiscal year ended December 31, 2004
    Or
|                                                  
|[  ]                                               |  | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
    OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number 1-31310


HUB INTERNATIONAL LIMITED




|                                                                   |  |                                     
|------------------------------------------------------------------ |  | ------------------------------------
|Canada                                                             |  | 36-4412416                          
|(State or other jurisdiction of incorporation or
    organization) |  | (I.R.S. Employer Identification No.)
|                                                                  
|55 East Jackson Boulevard, Chicago, IL                             |  | 60604                               
|(Address of principal executive offices)                           |  | (Zip Code)                          

Registrants telephone number, including area code:


(877) 402-6601


Securities registered pursuant to Section 12(b) of the
Act:




Securities registered pursuant to Section 12(g) of the
Act:


|                            |  |                                                   
|--------------------------- |  | --------------------------------------------------
|Title of Each Class         |  | Name of Each Exchange on Which Registered         
|                            |  |                                                   
|Common Shares, no par value |  | New York Stock Exchange
    Toronto Stock Exchange

x o


o


x o






Documents Incorporated by Reference












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HUB INTERNATIONAL LIMITED


TABLE OF CONTENTS


|                                                                                                                                 |  |      |    | 
|-------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                 |  | Page |   
|                                                                                                                                 |  |      |   
|PART I                                                                                                                           |  |      |    | 
|                                                                                                                                
|Item 1. Business                                                                                                                 |  |      | 4  | 
|                                                                                                                                
|Item 2. Properties                                                                                                               |  |      | 17 | 
|                                                                                                                                
|Item 3. Legal
    Proceedings                                                                                                    |  |      | 17 | 
|                                                                                                                                
|Item 4. Submission of Matters
    to a Vote of Security Holders                                                                  |  |      | 18 | 
|                                                                                                                                
|PART II                                                                                                                          |  |      |    | 
|                                                                                                                                
|Item 5. Market for
    Registrants Common Equity, Related Shareholder Matters
    and
    Issuer Purchases of Equity Securities |  |      | 19 | 
|                                                                                                                                
|Item 6. Selected Financial
    Data                                                                                              |  |      | 19 | 
|                                                                                                                                
|Item 7. Managements
    Discussion and Analysis of Financial Condition and Results of
    Operations                            |  |      | 23 | 
|                                                                                                                                
|Item 7A. Quantitative and
    Qualitative Disclosures about Market Risk                                                          |  |      | 42 | 
|                                                                                                                                
|Item 8. Financial Statements
    and Supplementary Data                                                                          |  |      | 43 | 
|                                                                                                                                
|Item 9. Changes in and
    Disagreements with Accountants on Accounting and Financial
    Disclosure                             |  |      | 77 | 
|                                                                                                                                
|Item 9A. Controls and
    Procedures                                                                                             |  |      | 77 | 
|                                                                                                                                
|Item 9B. Other
    Information                                                                                                   |  |      | 77 | 
|                                                                                                                                
|PART III                                                                                                                         |  |      |    | 
|                                                                                                                                
|Item 10. Directors and
    Executive Officers of the Registrant                                                                  |  |      | 77 | 
|                                                                                                                                
|Item 11. Executive
    Compensation                                                                                              |  |      | 78 | 
|                                                                                                                                
|Item 12. Security Ownership of
    Certain Beneficial Owners and Management and
    Related Stockholder Matters                  |  |      | 78 | 
|                                                                                                                                
|Item 13. Certain Relationships
    and Related Transactions                                                                      |  |      | 78 | 
|                                                                                                                                
|Item 14. Principal Accountant
    Fees and Services                                                                              |  |      | 78 | 
|                                                                                                                                
|PART IV                                                                                                                          |  |      |    | 
|                                                                                                                                
|Item 15. Exhibits and
    Financial Statements Schedules                                                                         |  |      | 78 | 
|                                                                                                                                
|SIGNATURES                                                                                                                       |  |      | 81 | 
|EX-3.3                                                                                                                          
|EX-10.19                                                                                                                        
|EX-10.24                                                                                                                        
|EX-10.25                                                                                                                        
|EX-10.26                                                                                                                        
|EX-21.1                                                                                                                         
|EX-23.1                                                                                                                         
|EX-31.1                                                                                                                         
|EX-31.2                                                                                                                         
|EX-32.1                                                                                                                         
|EX-32.2                                                                                                                         







|                              |                                
|----------------------------- | -------------------------------
|2   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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Information Concerning Forward-Looking Statements






|  |                                                                                                                                                              
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| | implementing our business strategies;                                                                                                                        
| 
| | identifying and consummating acquisitions;                                                                                                                   
| 
| | successfully integrating acquired businesses;                                                                                                                
| 
| | attaining greater market share;                                                                                                                              
| 
| | the resolution of regulatory issues and litigation, including
    those related to compensation arrangements with insurance
    companies;                   
| 
| | the possibility that the receipt of contingent compensation from
    insurance companies could be prohibited;                                                
| 
| | developing and implementing effective information technology
    systems;                                                                                    
| 
| | recruiting and retaining qualified employees;                                                                                                                
| 
| | fluctuations in the demand for insurance products;                                                                                                           
| 
| | fluctuations in the premiums charged by insurance companies
    (with corresponding fluctuations in our premium-based revenue);                              
| 
| | fluctuations in foreign currency exchange rates;                                                                                                             
| 
| | any loss of services of key executive officers;                                                                                                              
| 
| | industry consolidation;                                                                                                                                      
| 
| | increased competition in the industry;                                                                                                                       
| 
| | the actual costs of resolution of contingent liabilities; and                                                                                                
| 
| | the passage of new federal, state or provincial legislation
    subjecting our business to increased regulation in the
    jurisdictions in which we operate.









|                                |                               
|------------------------------- | ------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    3



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PART I





Item 1. Business


Overview








http://www.hubinternational.com


Our products and services










|                              |                                
|----------------------------- | -------------------------------
|4   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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Commercial insurance


|                                                                                                                                                                                                                                                                                      |  |                                                                                                                              |  |                                                                                                                                     
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---------------------------------------------------------------------------------------------------------------------------- |  | ------------------------------------------------------------------------------------------------------------------------------------
|Property and casualty                                                                                                                                                                                                                                                                 |  | Employee benefits                                                                                                            |  | Risk management services                                                                                                            
|                                                                                                                                                                                                                                                                                      |  |                                                                                                                              |  |                                                                                                                                     
|   Business property
       Auto and trucking fleets
       Technology
       Intellectual property
       Natural disaster
       Workers compensation
       Liability
       Surety bonds
       Business income
       Accounts receivable
       Environmental risks |  |    Group life and health
       Employment issues
       Human resources
       Retirement plans
       Contract review |  |    Claims management
       Risk finance structuring
       Exposure evaluation
       Coverage analysis
       Contract review

Personal insurance


|                                                                                                                        |  |                                                                           
|----------------------------------------------------------------------------------------------------------------------- |  | --------------------------------------------------------------------------
|Property and casualty                                                                                                   |  | Life, health and financial                                                
|                                                                                                                        |  |                                                                           
|   Home
       Personal property
       Auto and recreational vehicles
       Travel accident and trip cancellation |  |    Disability
       Life
       Investments
       Financial planning

Strategy




Focus on middle-market commercial accounts.


Grow organically.


Grow through selected acquisitions.






|                                |                               
|------------------------------- | ------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    5



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Standardize procedures to increase operating efficiency and
reduce costs.


Recruit, train and retain qualified personnel.


Competitive advantages




Decentralized hub approach.


Broad array of products and services offered through multiple
distribution channels.


Benefits of scale.






|                              |                                
|----------------------------- | -------------------------------
|6   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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Committed and experienced management.


Our operations






|  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | January 1999  Fairfax Financial Holdings Limited
    (Fairfax) purchased 5.4 million common shares of Hub for
    $34.2 million cash.                                                                                                                                                                                                                                                                                                                            
| 
| | January 1999  We completed a financing whereby we
    issued a total of 2,838,080 common shares, on a private
    placement basis, at a price of $8.60 per common share or
    approximately $24.4 million in the aggregate. Fairfax
    purchased, through certain of its wholly-owned subsidiaries,
    1,185,184 of the common shares.                                                                                                                        
| 
| | February 1999  We completed a public offering in
    Canada of 865,624 common shares at a price of $8.60 per share
    for total proceeds of approximately $7.4 million and listed
    our common shares on the Toronto Stock Exchange (TSX).                                                                                                                                                                                                                    
| 
| | During 1999  We acquired 44 brokerages in Canada and
    completed our first acquisition in the United States, Mack and
    Parker, Inc. now known as Hub International of Illinois Limited
    (HUB Illinois).                                                                                                                                                                                                                                                  
| 
| | During 2000  We acquired 18 brokerages in Canada and
    the United States including C.J. McCarthy Insurance Agency, Inc,
    now known as Hub International of New England, Limited. (HUB New
    England).                                                                                                                                                                                                                                                     
| 
| | During 2001  We acquired 16 brokerages in Canada and
    the United States including J.P. Flanagan Corporation now a part
    of HUB Illinois, Kaye Group Inc. now known as Hub International
    Group Northeast Inc., including its subsidiary Kaye Insurance
    Associates, Inc. now known as Hub International Northeast
    Limited (HUB Northeast) and Burnham Insurance Group, Inc.
    now known as Hub International Midwest Limited
    (HUB Midwest).
| 
| | June 2002  We completed an initial public offering in
    the United States of 6,900,000 common shares, at a price of
    $14.00 per share. Total net proceeds from the offering after
    deducting total expenses were approximately $88.1 million.                                                                                                                                                                                                            
| 
| | During 2002  We acquired 8 brokerages in the United
    States and Canada including Hooper, Hayes and Associates, Inc.,
    now known as. Hub International of California Inc. and Fifth
    Third Insurance Services, Inc., which we have renamed Hub
    International of Indiana Limited (HUB Midwest).                                                                                                                                                       
| 
| | During 2003  We acquired 9 brokerages in the United
    States and in Canada with total annualized revenue of
    $8.0 million.                                                                                                                                                                                                                                                                                                                                  
| 
| | During 2004  We acquired 7 brokerages in the United
    States and in Canada, including Talbot Financial Corporation and
    Bush Cotton Scott LLC, with total annualized revenue of
    $115.4 million.                                                                                                                                                                                                                                                         



Acquisition process








|                                |                               
|------------------------------- | ------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    7



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|  |                                                                                                                                                                  
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------
| | an experienced and talented management team prepared to make a
    long-term commitment to executing our strategic business plan;                                
| 
| | the ability to identify, acquire and seamlessly integrate
    smaller brokerages (fold-ins) in its region;                                                       
| 
| | specialization in certain products or services that may be
    beneficial to or complement our other brokerages; and                                             
| 
| | a demonstrated record of organic growth and profitability,
    operating at, or capable of achieving in the near term, minimum
    financial performance targets.





Distribution channels






|  |                                                                                                                                                                                                                                                                                                                                                                        
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Retail sales and service centers that target middle-market
    companies provide a broad range of property and casualty
    insurance, life and health insurance, risk management and
    financial services from traditional office locations leased by
    our brokerages in local communities;                                                                      
| 
| | Retail call-centers provide sales and services by telephone to
    individuals or members of employee groups, associations,
    affinity groups and specific communities. We operate
    call-centers in Chicago and Chilliwack, British Columbia;                                                                                                                     
| 
| | Wholesale life and financial services centers, known as managing
    general agents, provide life, financial and investment products
    and expertise to independent agents on a wholesale basis from
    our locations in Vancouver, Calgary, Montreal, Toronto, San
    Francisco, Albuquerque and Mechanicsburg, PA; and                                           
| 
| | Wholesale property and casualty insurance centers provide
    products, international risk solutions, captive management
    programs and specialty lines in part to our own retail
    brokerages, but primarily to independent brokers and
    corporations in North America and internationally from our
    locations in New York, Toronto, Montreal and Vancouver.







|                              |                                
|----------------------------- | -------------------------------
|8   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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Competition








Government regulation






















|                                |                               
|------------------------------- | ------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    9



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Risks related to our business


Regulatory investigations and class action lawsuits
related to the structure of compensation paid by insurance
companies to insurance brokers may result in prohibitions of
contingent commissions, affiliate relationships and/or
significant fines or judgments that could have a material
adverse effect on our financial condition, results of operation
and liquidity.
















|                               |                                
|------------------------------ | -------------------------------
|10   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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Insurance company contingent commissions and volume
overrides are less predictable than normal commissions, which
impairs our ability to forecast the amount of such revenue that
we will receive and may negatively impact our operating
results.




If we fail to comply with regulatory requirements for
insurance brokerages, we may not be able to conduct our
business.














|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    11



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We may be unsuccessful in identifying and acquiring
suitable acquisition candidates, which could impede our growth
and ability to remain competitive in our industry.




Our continued growth is partly based on our ability to
successfully integrate acquired brokerages and our failure to do
so may have an adverse effect on our revenue and
expenses.






|  |                                                                                       
|- | --------------------------------------------------------------------------------------
| | diversion of managements attention;                                                  
| 
| | difficulties in the integration of acquired operations and
    retention of personnel;
| 
| | entry into unfamiliar markets;                                                        
| 
| | unanticipated problems or legal liabilities; and                                      
| 
| | tax and accounting issues.                                                            



Insurance brokerages that we have acquired may have
liabilities that we are not aware of and may not be as
profitable as we expect them to be.




If we fail to obtain additional financing for
acquisitions, we may be unable to expand our business.








|                               |                                
|------------------------------ | -------------------------------
|12   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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We cannot accurately forecast our commission revenue
because our commissions depend on premium rates charged by
insurance companies, which historically have varied and are
difficult to predict. Any declines in premiums may adversely
impact our profitability.




Proposed tort reform legislation in the United States, if
enacted, could decrease demand for liability insurance, thereby
reducing our commission revenue.




A substantial portion of our total assets are represented
by goodwill and other intangible assets as a result of our
acquisitions and under new accounting standards, we may be
required to write down the value of our goodwill and other
intangible assets.








The loss of members of our senior management or a
significant number of our brokers could negatively affect our
financial plans, marketing and other objectives.








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    13



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Competition in our industry is intense, and if we are
unable to compete effectively, we may lose market share and our
business may be materially adversely affected.








We do business with certain subsidiaries of our largest
shareholder and if a conflict of interest were to arise it may
not be resolved in our favor and could adversely affect our
revenue.




We depend on our information processing systems.
Interruption or loss of our information processing systems could
have a material adverse effect on our business.








|                               |                                
|------------------------------ | -------------------------------
|14   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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Privacy legislation may impede our ability to utilize our
customer database as a means to generate new sales.




The security of the databases that contain our
customers personal information may be breached which could
subject us to litigation or adverse publicity.




Our corporate structure and strategy of operating through
decentralized brokerages may make it more difficult for us to
become aware of and respond to adverse operating or financial
developments at our brokerages.




Our profitability and liquidity may be materially
adversely affected by errors and omissions.








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    15



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Risks related to our common shares


The price of our common shares may fluctuate
substantially, which could negatively affect the holders of our
common shares.






Significant fluctuation in the market price of our common
shares could result in securities class action claims against
us.




Our largest shareholder may substantially influence
certain actions requiring shareholder approval.






|  |                                                                                                        
|- | -------------------------------------------------------------------------------------------------------
| | electing members of our board of directors;                                                            
| 
| | adopting amendments to our articles and by-laws; and                                                   
| 
| | approving a merger or consolidation, liquidation or sale of all
    or substantially all of our assets.







|                               |                                
|------------------------------ | -------------------------------
|16   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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We are incorporated in Canada, and, as a result, it may
not be possible for shareholders to enforce civil liability
provisions of the securities laws of the United States.







Item 2. Properties









Item 3. Legal Proceedings












|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    17



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|        |                                                    
|------- | ---------------------------------------------------
|Item 4. | Submission of Matters to a Vote of Security Holders







|                               |                                
|------------------------------ | -------------------------------
|18   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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PART II







|        |                                                                                                                 
|------- | ----------------------------------------------------------------------------------------------------------------
|Item 5. | Market for Registrants Common Equity, Related
    Shareholder Matters and Issuer Purchases of Equity Securities



|     |                                       |      |  |        |     |  |  |        |  |  |     |         |  |           |  |         |  |  |  |        | 
|---- | ------------------------------------- | ---- |  | ------ | --- |  |  | ------ |  |  | --- | ------- |  | --------- |  | ------- |  |  |  | ------ | 
|     |                                       | NYSE |  |        | TSX |  |  |       
|     |                                       |      |  |        |     |  |  | Cash   | 
|     |                                       | High |  |        | Low |  |  | High   |  |  | Low |         |  | Dividends | 
|     |                                       |      |  |        |     |  |  |        |  |  |     |         |  |           | 
|2002 |                                       |      |  |        |     |  |  |        |  |  |     |         |  |           |  |         |  |  |  |       
|     | First Quarter                         |      |  |        |     |  |  |        |  |  |     | C$21.00 |  |           |  | C$15.50 |  |  |  | C$0.07 | 
|     | Second Quarter                        |      |  | $16.80 |     |  |  | $13.46 |  |  |     | C$25.75 |  |           |  | C$20.00 |  |  |  | C$0.07 | 
|     | Third Quarter                         |      |  | $16.60 |     |  |  | $12.90 |  |  |     | C$25.25 |  |           |  | C$20.25 |  |  |  | C$0.07 | 
|     | Fourth Quarter                        |      |  | $18.60 |     |  |  | $11.45 |  |  |     | C$29.00 |  |           |  | C$17.71 |  |  |  | C$0.07 | 
|2003 |                                       |      |  |        |     |  |  |        |  |  |     |         |  |           |  |         |  |  |  |       
|     | First Quarter                         |      |  | $15.05 |     |  |  | $11.55 |  |  |     | C$23.12 |  |           |  | C$17.34 |  |  |  | $0.05  | 
|     | Second Quarter                        |      |  | $17.18 |     |  |  | $13.05 |  |  |     | C$23.27 |  |           |  | C$19.00 |  |  |  | $0.05  | 
|     | Third Quarter                         |      |  | $19.97 |     |  |  | $15.50 |  |  |     | C$27.50 |  |           |  | C$20.95 |  |  |  | $0.05  | 
|     | Fourth Quarter                        |      |  | $17.05 |     |  |  | $15.00 |  |  |     | C$22.99 |  |           |  | C$19.40 |  |  |  | $0.05  | 
|2004 |                                       |      |  |        |     |  |  |        |  |  |     |         |  |           |  |         |  |  |  |       
|     | First Quarter                         |      |  | $19.25 |     |  |  | $15.94 |  |  |     | C$25.50 |  |           |  | C$20.42 |  |  |  | $0.05  | 
|     | Second Quarter                        |      |  | $19.40 |     |  |  | $17.75 |  |  |     | C$26.90 |  |           |  | C$24.00 |  |  |  | $0.05  | 
|     | Third Quarter                         |      |  | $19.62 |     |  |  | $17.37 |  |  |     | C$25.65 |  |           |  | C$22.20 |  |  |  | $0.05  | 
|     | Fourth Quarter                        |      |  | $18.84 |     |  |  | $16.00 |  |  |     | C$23.25 |  |           |  | C$19.00 |  |  |  | $0.05  | 
|2005 |                                       |      |  |        |     |  |  |        |  |  |     |         |  |           |  |         |  |  |  |       
|     | First Quarter (through March 1, 2005) |      |  | $20.02 |     |  |  | $17.60 |  |  |     | C$24.91 |  |           |  | C$21.45 |  |  |  | $0.06  | 










Item 6. Selected Financial Data








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    19



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|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |         |         |   |   |        |        | 
|---------------------------------------- | --------------------------------------------------------------- | ----------------------- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | - | ---- | ------- | ------- | - | - | ------ | ------ | 
|                                         |                                                                 | Year Ended December 31, |        
|(in thousands of U.S. dollars,           |                                                                 |                         |        
|except per share amounts)(1)             |                                                                 | 2004                    |         |         | 2003 |   |         | 2002    |   |   | 2001    |         |   | 2000 |        
|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |        
|Consolidated statement of earnings data: |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |         |        
|Canadian GAAP                            |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |         |         |   |   |        |       
|Revenue:                                 |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |         |         |   |   |        |       
|                                         | Commission income                                               |                         | $       | 328,961 |      |   | $       | 259,461 |   |   | $       | 200,976 |   |      | $       | 143,063 |   |   | $      | 86,410 | 
|                                         | Contingent commissions and volume overrides                     |                         |         | 21,705  |      |   |         | 18,530  |   |   |         | 11,464  |   |      |         | 5,899   |   |   |        | 4,909  | 
|                                         | Other                                                           |                         |         | 10,184  |      |   |         | 8,368   |   |   |         | 7,520   |   |      |         | 5,031   |   |   |        | 3,921  | 
|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |        
|                                         |                                                                 |                         | 360,850 |         |      |   | 286,359 |         |   |   | 219,960 |         |   |      | 153,993 |         |   |   | 95,240 |       
|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |        
|Expenses:                                |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |         |         |   |   |        |       
|                                         | Cash compensation                                               |                         |         | 199,520 |      |   |         | 156,320 |   |   |         | 118,667 |   |      |         | 88,015  |   |   |        | 54,701 | 
|                                         | Selling, occupancy and administration                           |                         |         | 73,199  |      |   |         | 56,606  |   |   |         | 44,932  |   |      |         | 35,276  |   |   |        | 21,778 | 
|                                         | Depreciation                                                    |                         |         | 7,266   |      |   |         | 6,244   |   |   |         | 5,492   |   |      |         | 3,940   |   |   |        | 1,885  | 
|                                         | Interest expense                                                |                         |         | 7,470   |      |   |         | 5,191   |   |   |         | 7,317   |   |      |         | 7,447   |   |   |        | 1,981  | 
|                                         | Intangible asset amortization                                   |                         |         | 5,520   |      |   |         | 3,208   |   |   |         | 1,671   |   |      |         | 4,940   |   |   |        | 3,260  | 
|                                         | Non-cash stock based compensation                               |                         |         | 20,890  |      |   |         | 4,801   |   |   |         | 1,089   |   |      |         |        |   |   |        |       | 
|                                         | Loss on write-off of trademarks                                 |                         |         | 2,587   |      |   |         |        |   |   |         |        |   |      |         |        |   |   |        |       | 
|                                         | (Gain) loss on disposal of property, equipment and other assets |                         |         | (1,880  | )    |   |         | (202    | ) |   |         | (2,679  | ) |      |         | (173    | ) |   |        | 127    | 
|                                         | (Gain) on put option liability                                  |                         |         |        |      |   |         | (160    | ) |   |         | (186    | ) |      |         | (719    | ) |   |        |       | 
|                                         | Proceeds from life insurance                                    |                         |         |        |      |   |         | (1,000  | ) |   |         |        |   |      |         |        |   |   |        |       | 
|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |        
|                                         |                                                                 |                         | 314,572 |         |      |   | 231,008 |         |   |   | 176,303 |         |   |      | 138,726 |         |   |   | 83,732 |       
|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |        
|Net earnings before income taxes         |                                                                 |                         | 46,278  |         |      |   | 55,351  |         |   |   | 43,657  |         |   |      | 15,267  |         |   |   | 11,508 |       
|Provision for income tax expense         |                                                                 |                         | 20,034  |         |      |   | 18,842  |         |   |   | 14,256  |         |   |      | 5,262   |         |   |   | 5,370  |       
|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |        
|Net earnings(2)                          |                                                                 | $                       | 26,244  |         |      | $ | 36,509  |         |   | $ | 29,401  |         |   | $    | 10,005  |         |   | $ | 6,138  |       
|                                         |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |        
|Earnings per share(2)                    |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |         |         |   |   |        |       
|                                         | Basic                                                           |                         |         | $0.87   |      |   |         | $1.22   |   |   |         | $1.27   |   |      |         | $0.53   |   |   |        | $0.34  | 
|                                         | Diluted                                                         |                         |         | $0.80   |      |   |         | $1.14   |   |   |         | $1.06   |   |      |         | $0.50   |   |   |        | $0.34  | 
|Weighted average shares outstanding:     |                                                                 |                         |         |         |      |   |         |         |   |   |         |         |   |      |         |         |   |   |        |       
|                                         | Basic                                                           |                         |         | 30,246  |      |   |         | 29,967  |   |   |         | 23,181  |   |      |         | 19,012  |   |   |        | 18,327 | 
|                                         | Diluted                                                         |                         |         | 35,305  |      |   |         | 33,767  |   |   |         | 30,199  |   |      |         | 20,105  |   |   |        | 18,327 | 
|Dividends declared per share(3)          |                                                                 |                         | $0.20   |         |      |   | $0.20   |         |   |   | $0.18   |         |   |      | $0.18   |         |   |   | $0.13  |       





|                               |                                
|------------------------------ | -------------------------------
|20   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents



|                                      |                              |                                                                  |   |        |      |  |   |        |      |   |      |        |        |      |   |        |      |   |   |       |     | 
|------------------------------------- | ---------------------------- | ---------------------------------------------------------------- | - | ------ | ---- |  | - | ------ | ---- | - | ---- | ------ | ------ | ---- | - | ------ | ---- | - | - | ----- | --- | 
|                                      |                              | Year Ended December 31,                                          |  
|(in thousands of U.S. dollars,        |                              |                                                                  |  
|except per share amounts)(1)          |                              | 2004                                                             |   |        | 2003 |  |   | 2002   |      |   | 2001 |        |        | 2000 |  
|                                      |                              |                                                                  |   |        |      |  |   |        |      |   |      |        |        |      |  
|U.S. GAAP                             |                              |                                                                  |   |        |      |  |   |        |      |   |      |        |        |      |   |        |      |   |   |      
|                                      | Net earnings (Canadian GAAP) |                                                                  | $ | 26,244 |      |  | $ | 36,509 |      |   | $    | 29,401 |        |      | $ | 10,005 |      |   | $ | 6,138 |    
|                                      |                              | Cumulative effect of change in accounting policy for put options |   |        |     |  |   |        | 335  |   |      |        |       |      |   |        |     |   |   |       |    | 
|                                      |                              | Adjustment to put option liability                               |   |        |     |  |   |        | (409 | ) |      |        | (814   | )    |   |        | (811 | ) |   |       |    | 
|                                      |                              | Adjustment to investment held for sale                           |   |        |     |  |   |        |     |   |      |        | (2,236 | )    |   |        | 520  |   |   |       |    | 
|                                      |                              | Change in reporting currency                                     |   |        |     |  |   |        |     |   |      |        |       |      |   |        | 144  |   |   |       | 405 | 
|                                      |                              |                                                                  |   |        |      |  |   |        |      |   |      |        |        |      |  
|                                      | Net earnings (U.S. GAAP)(4)  |                                                                  | $ | 26,244 |      |  | $ | 36,435 |      |   | $    | 26,351 |        |      | $ | 9,858  |      |   | $ | 6,543 |    
|                                      |                              |                                                                  |   |        |      |  |   |        |      |   |      |        |        |      |  
|Net earnings per share (U.S. GAAP)(4) |                              |                                                                  |   |        |      |  |   |        |      |   |      |        |        |      |   |        |      |   |   |      
|                                      | Basic                        |                                                                  |   | $0.87  |      |  |   | $1.22  |      |   |      | $1.14  |        |      |   | $0.52  |      |   |   | $0.36 |    
|                                      | Diluted                      |                                                                  |   | $0.80  |      |  |   | $1.14  |      |   |      | $0.96  |        |      |   | $0.49  |      |   |   | $0.36 |    






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Effective October 1, 2001, we adopted the U.S. dollar
    as our reporting currency. Our financial results for all periods
    prior to October 1, 2001 have been restated from Canadian
    dollars to U.S. dollars at the exchange rate in effect at
    September 30, 2001 of C$1.00 = $0.6338.                                                                                                                                                                                                                                                                                           
|   
|(2) | As discussed in note 2, Summary of significant
    accounting policies, of the notes to the audited
    consolidated financial statements, we adopted Canadian Institute
    of Chartered Accountants (CICA) Section 3062 on
    January 1, 2002. Upon adoption of CICA Section 3062,
    goodwill is no longer amortized. The following table illustrates
    the effect that CICA Section 3062 would have had on net
    earnings and per share information under Canadian GAAP for the
    years ended December 31, 2004, 2003, 2002, 2001 and 2000
    had goodwill not been amortized:

|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |       | 
|------------------------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ----- | 
|                                      |  | Year Ended December 31, |       
|(in thousands of U.S. dollars, except |  |                         |       
|per share amounts)                    |  | 2004                    |        |  | 2003 |   |        | 2002 |  |   | 2001   |  |  | 2000 |       
|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |       
|Reported net earnings  Canadian GAAP |  | $                       | 26,244 |  |      | $ | 36,509 |      |  | $ | 29,401 |  |  | $    | 10,005 |  |  | $ | 6,138 | 
|Add back: Goodwill amortization       |  |                         |       |  |      |   |       |      |  |   |       |  |  |      | 3,996  |  |  |   | 2,820 | 
|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |       
|Net earnings adjusted for goodwill    |  | $                       | 26,244 |  |      | $ | 36,509 |      |  | $ | 29,401 |  |  | $    | 14,001 |  |  | $ | 8,958 | 
|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |       
|Basic EPS  Reported                  |  | $                       | 0.87   |  |      | $ | 1.22   |      |  | $ | 1.27   |  |  | $    | 0.53   |  |  | $ | 0.34  | 
|Basic EPS  Adjusted for goodwill     |  | $                       | 0.87   |  |      | $ | 1.22   |      |  | $ | 1.27   |  |  | $    | 0.74   |  |  | $ | 0.49  | 
|Diluted EPS  Reported                |  | $                       | 0.80   |  |      | $ | 1.14   |      |  | $ | 1.06   |  |  | $    | 0.50   |  |  | $ | 0.34  | 
|Diluted EPS  Adjusted for goodwill   |  | $                       | 0.80   |  |      | $ | 1.14   |      |  | $ | 1.06   |  |  | $    | 0.70   |  |  | $ | 0.49  | 
|                                     



|    |                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | We commenced payment of dividends in the second quarter of 2000.                                                                                                                                                                                                                                                                     
|   
|(4) | We adopted Financial Accounting Standards Boards Statement
    of Financial Accounting Standards No. 142 (SFAS
    No. 142) on January 1, 2002. Upon adoption of SFAS
    No. 142 goodwill is no longer amortized. The following
    table illustrates the effect that SFAS No. 142 would have
    had on net earnings and per share





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    21



---



##### Table of Contents



| |                                                                                                                                      
| | -------------------------------------------------------------------------------------------------------------------------------------
| | information under U.S. GAAP
    for the years ended December 31, 2004, 2003, 2002, 2001 and
    2000 had goodwill not been amortized:

|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |        |  |  |   |       | 
|------------------------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ------ |  |  | ---- | ------ |  |  | - | ----- | 
|                                      |  | Year Ended December 31, |       
|(in thousands of U.S. dollars, except |  |                         |       
|per share amounts)                    |  | 2004                    |        |  | 2003 |   |        | 2002 |  |   | 2001   |  |  | 2000 |       
|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |       
|Reported net earnings  U.S. GAAP     |  | $                       | 26,244 |  |      | $ | 36,435 |      |  | $ | 26,351 |  |  | $    | 9,858  |  |  | $ | 6,543 | 
|Add back: Goodwill amortization       |  |                         |       |  |      |   |       |      |  |   |       |  |  |      | 4,065  |  |  |   | 2,988 | 
|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |       
|Net earnings adjusted for goodwill    |  | $                       | 26,244 |  |      | $ | 36,435 |      |  | $ | 26,351 |  |  | $    | 13,923 |  |  | $ | 9,531 | 
|                                      |  |                         |        |  |      |   |        |      |  |   |        |  |  |      |       
|Basic EPS  Reported                  |  | $                       | 0.87   |  |      | $ | 1.22   |      |  | $ | 1.14   |  |  | $    | 0.52   |  |  | $ | 0.36  | 
|Basic EPS  Adjusted for goodwill     |  | $                       | 0.87   |  |      | $ | 1.22   |      |  | $ | 1.14   |  |  | $    | 0.73   |  |  | $ | 0.52  | 
|Diluted EPS  Reported                |  | $                       | 0.80   |  |      | $ | 1.14   |      |  | $ | 0.96   |  |  | $    | 0.49   |  |  | $ | 0.36  | 
|Diluted EPS  Adjusted for goodwill   |  | $                       | 0.80   |  |      | $ | 1.14   |      |  | $ | 0.96   |  |  | $    | 0.69   |  |  | $ | 0.52  | 
|                                     

|                                       |                                            |                                         |                                                                                                                    |         |        |     |         |         |        |    |         |         |        |        |         |         |     |        |         |         |   |       | 
|-------------------------------------- | ------------------------------------------ | --------------------------------------- | ------------------------------------------------------------------------------------------------------------------ | ------- | ------ | --- | ------- | ------- | ------ | -- | ------- | ------- | ------ | ------ | ------- | ------- | --- | ------ | ------- | ------- | - | ----- | 
|                                       |                                            | As of December 31                       |                                                                                                                   
|                                       |                                            |                                         |                                                                                                                   
|(in thousands of U.S. dollars)(1)      |                                            | 2004                                    |                                                                                                                    |         | 2003   |     |         | 2002    |        |    | 2001    |         |        | 2000   |        
|                                       |                                            |                                         |                                                                                                                    |         |        |     |         |         |        |    |         |         |        |        |        
|Consolidated balance sheet data        |                                            |                                         |                                                                                                                    |         |        |     |         |         |        |    |         |         |        |        |         |         |     |        |         |        
|Total assets                           |                                            | $                                       | 857,535                                                                                                            |         |        | $   | 699,288 |         |        | $  | 596,876 |         |        | $      | 502,296 |         |     | $      | 206,157 |        
|Total debt(2)                          |                                            | $                                       | 186,797                                                                                                            |         |        | $   | 113,799 |         |        | $  | 107,038 |         |        | $      | 196,952 |         |     | $      | 34,665  |        
|Total shareholders equity             |                                            | $                                       | 381,783                                                                                                            |         |        | $   | 342,790 |         |        | $  | 284,274 |         |        | $      | 135,271 |         |     | $      | 112,212 |        
|Reconciliation to U.S. GAAP:           |                                            |                                         |                                                                                                                    |         |        |     |         |         |        |    |         |         |        |        |         |         |     |        |         |        
|                                       | Total shareholders equity (Canadian GAAP) |                                         | $                                                                                                                  | 381,783 |        |     | $       | 342,790 |        |    | $       | 284,274 |        |        | $       | 135,271 |     |        | $       | 112,212 |  
|                                       |                                            | Adjustment to investment held for sale  |                                                                                                                    |         | (1,716 | )   |         |         | (1,716 | )  |         |         | (1,716 | )      |         |         | 520 |        |         |         |  |      
|                                       |                                            | Accumulated other comprehensive income: |                                                                                                                    |         |        |     |         |         |        |    |         |         |        |        |         |         |     |        |         |         |   |      
|                                       |                                            |                                         | Unrealized gains (losses), net of tax of $(99)  2004,
    $(56)  2003, $51  2002, $85 
    2001, $(122)  2000 |         |        | 157 |         |         |        | 90 |         |         |        | (83    | )       |         |     | (140   | )       |         |   | 198   | 
|                                       |                                            |                                         | Cumulative translation account                                                                                     |         |        |    |         |         |        |   |         |         |        | 496    |         |         |     |       |         |         |   | 5,811 | 
|                                       |                                            |                                         | Adjustment to put option liability                                                                                 |         |        |    |         |         |        |   |         |         |        | (1,702 | )       |         |     | (4,898 | )       |         |   |      | 
|                                       |                                            |                                         | Executive share purchase plan loan                                                                                 |         |        |    |         |         |        |   |         |         |        | (1,912 | )       |         |     | (2,142 | )       |         |   |      | 
|                                       |                                            |                                         |                                                                                                                    |         |        |     |         |         |        |    |         |         |        |        |        
|Total shareholders equity (U.S. GAAP) |                                            | $                                       | 380,224                                                                                                            |         |        | $   | 341,164 |         |        | $  | 279,357 |         |        | $      | 128,611 |         |     | $      | 118,221 |        
|                                       |                                            |                                         |                                                                                                                    |         |        |     |         |         |        |    |         |         |        |        |        






|    |                                                                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Effective October 1, 2001, we adopted the U.S. dollar
    as our reporting currency. Our financial results for all periods
    prior to October 1, 2001 have been restated from Canadian
    dollars to U.S. dollars using the exchange rate in effect
    at September 30, 2001 of C$1.00 = $0.6338.
|   
|(2) | Includes long-term debt and capital leases (including current
    portion), bank debt and subordinated convertible notes.                                                                                                                                                                            





|                               |                                
|------------------------------ | -------------------------------
|22   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents






Item 7. Managements Discussion and Analysis
of Financial Condition and Results of Operations


The following discussion and analysis should be read in
conjunction with our consolidated financial statements and
accompanying notes included elsewhere in this report. Certain
information contained in Managements discussion and
analysis of financial condition and results of operations
are forward-looking statements that involve risks and
uncertainties. Our actual results may differ materially from the
results discussed in the forward-looking statements because of
various factors, including those discussed below and elsewhere
in this Form 10-K, particularly under the heading
Risk Factors. Reference to Hub,
we, us, our and the
registrant refer to Hub International Limited and
its subsidiaries, unless otherwise expressly stated. Unless
otherwise indicated, all dollar amounts are expressed in, and
the term dollars and the symbol $ refer
to, U.S. dollars. The term Canadian dollars and
the symbol C$ refer to Canadian dollars. Our
financial statements are prepared in accordance with Canadian
generally accepted accounting principles (Canadian GAAP). These
principles differ in certain respects from United States
generally accepted accounting principles (U.S. GAAP) and to
the extent that they effect us are described in Note 19 to
our audited consolidated financial statements.


Overview








same-store-










|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    23



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##### Table of Contents







Commercial insurance


|                             |  |                           |  |                             
|---------------------------- |  | ------------------------- |  | ----------------------------
|Property and casualty        |  | Employee benefits         |  | Risk management services    
|                             |  |                           |  |                             
|   Business property        |  |    Group life and health |  |    Claims management       
|   Auto and trucking fleets |  |    Employment issues     |  |    Risk finance structuring
|   Technology               |  |    Human resources       |  |    Exposure evaluation     
|   Intellectual property    |  |    Retirement plans      |  |    Coverage analysis       
|   Natural disaster         |  |    Contract review       |  |    Contract review         
|   Workers compensation    |  |                           |  |                             
|   Liability                |  |                           |  |                             
|   Surety bonds             |  |                           |  |                             
|   Business income          |  |                           |  |                             
|   Accounts receivable      |  |                           |  |                             
|   Environmental risks      |  |                           |  |                             

Personal insurance


|                                          |  |                           
|----------------------------------------- |  | --------------------------
|Property and casualty                     |  | Life, health and financial
|                                          |  |                           
|   Home                                  |  |    Disability            
|   Personal property                     |  |    Life                  
|   Auto and recreational vehicles        |  |    Investments           
|   Travel accident and trip cancellation |  |    Financial planning    







|  |                                                                                                                                                                                                                                                   
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Retail sales and service centers that target middle-market
    companies, providing a broad range of property and casualty
    insurance, life and health insurance, risk management and
    financial services;                                  
| 
| | Retail call-centers provide sales and services by telephone to
    individuals or members of employee groups, associations,
    affinity groups and specific communities. We operate
    call-centers in Chicago and Chilliwack, British Columbia;





|                               |                                
|------------------------------ | -------------------------------
|24   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents





|  |                                                                                                                                                                                                                                                                                                                             
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Wholesale life and financial services centers, known as managing
    general agents, provide life, financial and investment products
    and expertise to independent agents on a wholesale basis from
    our locations in Vancouver, Calgary, Montreal, Toronto, San
    Francisco, Albuquerque and Mechanicsburg, PA; and
| 
| | Wholesale property and casualty insurance centers provide
    products, international risk solutions, captive management
    programs and specialty lines to independent brokers and
    corporations in North America and globally from offices in New
    York, Toronto, Montreal and Vancouver.                          

















|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    25



---



##### Table of Contents



Results of Operations


Year ended December 31, 2004 compared to year ended
December 31, 2003


Revenue






(in thousands of U.S. dollars, except percentages)


|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           |  |   |        |   |  |  |     |   
|------------------------------------------- |  | ------- | ------- |  | --------- | - | ------- | --------- | -------------- | - | -------------- | - |  | ------------- | --- | -- | --------- | - | ------- | --------- |  | - | ------ | - |  |  | --- | --
|                                            |  | Revenue |         |  |           |   |         |           | Adjustment for |   |                |   |  |              
|                                            |  |         |         |  | Total Net |   |         | Total Net |                |   | (Acquisitions) |   |  | Organic       |     |    | Organic   |  
|                                            |  | 2004    |         |  | 2003      |   |         | Change($) |                |   | Growth(%)      |   |  | and Disposals |     |    | Growth($) |   |         | Growth(%) | 
|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           | 
|Total                                       |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           |  |   |        |   |  |  |     |   
|Commission Income                           |  | $       | 328,961 |  |           | $ | 259,461 |           |                | $ | 69,500         |   |  |               | 27  | %  |           | $ | (56,814 | )         |  | $ | 12,686 |   |  |  | 5   | % 
|Contingent Commissions and Volume Overrides |  |         | 21,705  |  |           |   | 18,530  |           |                |   | 3,175          |   |  |               | 17  | %  |           |   | (897    | )         |  |   | 2,278  |   |  |  | 12  | % 
|Other Income                                |  |         | 10,184  |  |           |   | 8,368   |           |                |   | 1,816          |   |  |               | 22  | %  |           |   | (1,853  | )         |  |   | (37    | ) |  |  | 0   | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           | 
|Total                                       |  | $       | 360,850 |  |           | $ | 286,359 |           |                | $ | 74,491         |   |  |               | 26  | %  |           | $ | (59,564 | )         |  | $ | 14,927 |   |  |  | 5   | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           | 
|U.S.                                        |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           |  |   |        |   |  |  |     |   
|Commission Income                           |  | $       | 216,293 |  |           | $ | 158,025 |           |                | $ | 58,268         |   |  |               | 37  | %  |           | $ | (58,619 | )         |  | $ | (351   | ) |  |  | 0   | % 
|Contingent Commissions and Volume Overrides |  |         | 14,864  |  |           |   | 13,493  |           |                |   | 1,371          |   |  |               | 10  | %  |           |   | (898    | )         |  |   | 473    |   |  |  | 4   | % 
|Other Income                                |  |         | 7,860   |  |           |   | 5,701   |           |                |   | 2,159          |   |  |               | 38  | %  |           |   | (1,909  | )         |  |   | 250    |   |  |  | 4   | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           | 
|Total                                       |  | $       | 239,017 |  |           | $ | 177,219 |           |                | $ | 61,798         |   |  |               | 35  | %  |           | $ | (61,426 | )         |  | $ | 372    |   |  |  | 0   | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           | 
|Canada                                      |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           |  |   |        |   |  |  |     |   
|Commission Income                           |  | $       | 112,668 |  |           | $ | 101,436 |           |                | $ | 11,232         |   |  |               | 11  | %  |           | $ | 1,805   |           |  | $ | 13,037 |   |  |  | 13  | % 
|Contingent Commissions and Volume Overrides |  |         | 6,841   |  |           |   | 5,037   |           |                |   | 1,804          |   |  |               | 36  | %  |           |   | 1       |           |  |   | 1,805  |   |  |  | 36  | % 
|Other Income                                |  |         | 2,324   |  |           |   | 2,667   |           |                |   | (343           | ) |  |               | (13 | )% |           |   | 56      |           |  |   | (287   | ) |  |  | (11 | )%
|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           | 
|Total                                       |  | $       | 121,833 |  |           | $ | 109,140 |           |                | $ | 12,693         |   |  |               | 12  | %  |           | $ | 1,862   |           |  | $ | 14,555 |   |  |  | 13  | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |   |  |               |     |    |           |   |         |           | 







|  |                                                                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Volume overrides  additional compensation paid by
    insurance companies to brokerages on the basis of the overall
    volume of business a brokerage places with the insurance company;                                         
| 
| | Contingent commissions  additional compensation based
    on the profit an insurance company makes on the book of business
    a brokerage places with the insurance company; and                                                 
| 
| | Other income  comprised primarily of premium finance
    fees, fees charged to clients in lieu of commissions and
    interest income, including income earned while we hold client
    premiums on behalf of insurance companies.







|                               |                                
|------------------------------ | -------------------------------
|26   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents





|                                                                               |                                            |          |        |        |         |   |      |       |  
|------------------------------------------------------------------------------ | ------------------------------------------ | -------- | ------ | ------ | ------- | - | ---- | ----- | -
|(in thousands of U.S. dollars, except                                          |                                            | Net      |        |        | Diluted |  
|per share amounts)                                                             |                                            | Earnings |        |        | EPS     |  
|                                                                               |                                            |          |        |        |         |  
|Reported net earnings (Canadian GAAP) for the year ended
    December 31, 2004 |                                            | $        | 26,244 |        |         | $ | 0.80 |      
|                                                                               | Impact of foreign exchange                 |          | $      | (1,734 | )       |   | $    | (0.05 | )
|                                                                               | Impact of write-off of trademarks          |          | $      | 1,656  |         |   | $    | 0.05  |  
|                                                                               | Non-cash stock based compensation  Talbot |          | $      | 14,388 |         |   | $    | 0.41  |  
|Reported net earnings (Canadian GAAP) for the year ended
    December 31, 2003 |                                            | $        | 36,509 |        |         | $ | 1.14 |      
|                                                                               | Impact of foreign exchange                 |          | $      | (2,260 | )       |   | $    | (0.07 | )
|                                                                               | Life insurance proceeds                    |          | $      | (1,000 | )       |   | $    | (0.03 | )





U.S. Results




Canadian Results




Compensation Expense








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    27



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##### Table of Contents





|                                                   |  |      |         |  |      |   |         |              |  |  |      |   |  |      |    |   |  |  |    |  
|-------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | ------------ |  |  | ---- | - |  | ---- | -- | - |  |  | -- | -
|                                                   |  |      |         |  |      |   |         | % of Revenue | 
|                                                   |  |      |         |  |      |   |         |              | 
|(in thousands of U.S. dollars, except percentages) |  | 2004 |         |  | 2003 |   |         | % Change     |  |  | 2004 |   |  | 2003 |   
|                                                   |  |      |         |  |      |   |         |              |  |  |      |   |  |      |   
|Compensation Comparison                            |  |      |         |  |      |   |         |              |  |  |      |   |  |      |    |   |  |  |    |  
|Cash compensation                                  |  | $    | 199,520 |  |      | $ | 156,320 |              |  |  | 28   | % |  |      | 55 | % |  |  | 54 | %
|Non-cash stock based compensation                  |  |      | 20,890  |  |      |   | 4,801   |              |  |  | 335  | % |  |      | 6  | % |  |  | 2  | %
|                                                   |  |      |         |  |      |   |         |              |  |  |      |   |  |      |   
|Total                                              |  | $    | 220,410 |  |      | $ | 161,121 |              |  |  | 37   | % |  |      | 61 | % |  |  | 56 | %
|                                                   |  |      |         |  |      |   |         |              |  |  |      |   |  |      |   





|                                   |                                                        |      |        |        |      |   |       |       |  |   |       |       | 
|---------------------------------- | ------------------------------------------------------ | ---- | ------ | ------ | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|(in thousands of U.S. dollars)     |                                                        | 2004 |        |        | 2003 |   |       | 2002  | 
|                                   |                                                        |      |        |        |      |   |       |       | 
|Non-cash stock based compensation: |                                                        |      |        |        |      |   |       |       |  |   |       |      
|                                   | Stock options granted June 2002                        |      | $      | 1,955  |      |   | $     | 1,899 |  |   | $     | 1,089 | 
|                                   | Stock options granted February 2003                    |      |        | 445    |      |   |       | 410   |  |   |       |      | 
|                                   | Stock based compensation granted for 2003 bonuses      |      |        | 2,368  |      |   |       | 1,405 |  |   |       |      | 
|                                   | Restricted share units                                 |      |        | 1,609  |      |   |       | 1,087 |  |   |       |      | 
|                                   | Other                                                  |      |        | 125    |      |   |       |      |  |   |       |      | 
|                                   |                                                        |      |        |        |      |   |       |       | 
|                                   |                                                        |      | 6,502  |        |      |   | 4,801 |       |  |   | 1,089 |      
|                                   | Stock based compensation related to Talbot acquisition |      |        | 14,388 |      |   |       |      |  |   |       |      | 
|                                   |                                                        |      |        |        |      |   |       |       | 
|                                   |                                                        | $    | 20,890 |        |      | $ | 4,801 |       |  | $ | 1,089 |      
|                                   |                                                        |      |        |        |      |   |       |       | 



|                                                      |  |                         |        |  |      |   |        |      |  |   |       |  |  |      |       |  |      |   |       |  |  |   |       | 
|----------------------------------------------------- |  | ----------------------- | ------ |  | ---- | - | ------ | ---- |  | - | ----- |  |  | ---- | ----- |  | ---- | - | ----- |  |  | - | ----- | 
|                                                      |  | Year ended December 31, |       
|                                                      |  |                         |       
|(in thousands of U.S. dollars)                        |  | 2005                    |        |  | 2006 |   |        | 2007 |  |   | 2008  |  |  | 2009 |       |  | 2010 |  
|                                                      |  |                         |        |  |      |   |        |      |  |   |       |  |  |      |       |  |      |  
|Stock options granted June 2002                       |  | $                       | 851    |  |      | $ |       |      |  | $ |      |  |  | $    |      |  |      | $ |      |  |  | $ |      | 
|Stock options granted February 2003                   |  |                         | 366    |  |      |   |       |      |  |   |      |  |  |      |      |  |      |   |      |  |  |   |      | 
|Stock based compensation granted for 2003 bonuses     |  |                         | 2,340  |  |      |   | 2,254  |      |  |   | 2,163 |  |  |      | 2,163 |  |      |   | 2,163 |  |  |   | 2,104 | 
|Stock based compensation regarding Talbot acquisition |  |                         | 25,459 |  |      |   | 8,400  |      |  |   | 1,508 |  |  |      |      |  |      |   |      |  |  |   |      | 
|Restricted share units                                |  |                         | 1,661  |  |      |   | 1,654  |      |  |   | 1,618 |  |  |      | 1,618 |  |      |   | 347   |  |  |   | 130   | 
|Other                                                 |  |                         | 112    |  |      |   | 27     |      |  |   | 9     |  |  |      |      |  |      |   |      |  |  |   |      | 
|                                                      |  |                         |        |  |      |   |        |      |  |   |       |  |  |      |       |  |      |  
|                                                      |  | $                       | 30,789 |  |      | $ | 12,335 |      |  | $ | 5,298 |  |  | $    | 3,781 |  |      | $ | 2,510 |  |  | $ | 2,234 | 
|                                                      |  |                         |        |  |      |   |        |      |  |   |       |  |  |      |       |  |      |  





|                               |                                
|------------------------------ | -------------------------------
|28   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents





Selling, Occupancy and Administration Expense




Depreciation




Interest Expense




Intangible Asset Amortization




Loss on Write-off of Trademarks




Gain/Loss on Disposal of Subsidiaries, Property, Equipment
and Other Assets




Provision for Income Tax Expense




Net Earnings and Earnings Per Share




Year ended December 31, 2003 compared to year ended
December 31, 2002


Revenue








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    29



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##### Table of Contents





|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           |  |   |        |   |  |  |     |   
|------------------------------------------- |  | ------- | ------- |  | --------- | - | ------- | --------- | -------------- | - | -------------- |  |  | ------------- | -- | - | --------- | - | ------- | --------- |  | - | ------ | - |  |  | --- | --
|                                            |  | Revenue |         |  |           |   |         |           | Adjustment for |   |                |  |  |              
|(in thousands of U.S. dollars,              |  |         |         |  | Total Net |   |         | Total Net |                |   | (Acquisitions) |  |  | Organic       |    |   | Organic   |  
|except percentages)                         |  | 2003    |         |  | 2002      |   |         | Change($) |                |   | Growth(%)      |  |  | and Disposals |    |   | Growth($) |   |         | Growth(%) | 
|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           | 
|Total                                       |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           |  |   |        |   |  |  |     |   
|Commission Income                           |  | $       | 259,461 |  |           | $ | 200,976 |           |                | $ | 58,485         |  |  |               | 29 | % |           | $ | (36,303 | )         |  | $ | 22,182 |   |  |  | 11  | % 
|Contingent Commissions and Volume Overrides |  |         | 18,530  |  |           |   | 11,464  |           |                |   | 7,066          |  |  |               | 62 | % |           |   | (2,951  | )         |  |   | 4,115  |   |  |  | 36  | % 
|Other Income                                |  |         | 8,368   |  |           |   | 7,520   |           |                |   | 848            |  |  |               | 11 | % |           |   | (749    | )         |  |   | 99     |   |  |  | 1   | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           | 
|Total                                       |  | $       | 286,359 |  |           | $ | 219,960 |           |                | $ | 66,399         |  |  |               | 30 | % |           | $ | (40,003 | )         |  | $ | 26,396 |   |  |  | 12  | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           | 
|U.S.                                        |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           |  |   |        |   |  |  |     |   
|Commission Income                           |  | $       | 158,025 |  |           | $ | 120,741 |           |                | $ | 37,284         |  |  |               | 31 | % |           | $ | (35,038 | )         |  | $ | 2,246  |   |  |  | 2   | % 
|Contingent Commissions and Volume Overrides |  |         | 13,493  |  |           |   | 7,780   |           |                |   | 5,713          |  |  |               | 73 | % |           |   | (2,872  | )         |  |   | 2,841  |   |  |  | 37  | % 
|Other Income                                |  |         | 5,701   |  |           |   | 5,628   |           |                |   | 73             |  |  |               | 1  | % |           |   | (753    | )         |  |   | (680   | ) |  |  | (12 | )%
|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           | 
|Total                                       |  | $       | 177,219 |  |           | $ | 134,149 |           |                | $ | 43,070         |  |  |               | 32 | % |           | $ | (38,663 | )         |  | $ | 4,407  |   |  |  | 3   | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           | 
|Canada                                      |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           |  |   |        |   |  |  |     |   
|Commission Income                           |  | $       | 101,436 |  |           | $ | 80,235  |           |                | $ | 21,201         |  |  |               | 26 | % |           | $ | (1,265  | )         |  | $ | 19,936 |   |  |  | 25  | % 
|Contingent Commissions and Volume Overrides |  |         | 5,037   |  |           |   | 3,684   |           |                |   | 1,353          |  |  |               | 37 | % |           |   | (79     | )         |  |   | 1,274  |   |  |  | 35  | % 
|Other Income                                |  |         | 2,667   |  |           |   | 1,892   |           |                |   | 775            |  |  |               | 41 | % |           |   | 4       |           |  |   | 779    |   |  |  | 41  | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           | 
|Total                                       |  | $       | 109,140 |  |           | $ | 85,811  |           |                | $ | 23,329         |  |  |               | 27 | % |           | $ | (1,340  | )         |  | $ | 21,989 |   |  |  | 26  | % 
|                                            |  |         |         |  |           |   |         |           |                |   |                |  |  |               |    |   |           |   |         |           | 







|  |                                                                                                                                                                                                                                    
|- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Volume overrides  additional compensation paid by
    insurance companies to brokerages on the basis of the overall
    volume of business a brokerage places with the insurance company.                                         
| 
| | Contingent commissions  additional compensation based
    on the profit an insurance company makes on the book of business
    a brokerage places with the insurance company.                                                     
| 
| | Other income  comprised primarily of premium finance
    fees, fees charged to clients in lieu of commissions and
    interest income, including income earned while we hold client
    premiums on behalf of insurance companies.









|                               |                                
|------------------------------ | -------------------------------
|30   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents



|                                                                      |                                                                            |          |        |        |         |   |      |       |  
|--------------------------------------------------------------------- | -------------------------------------------------------------------------- | -------- | ------ | ------ | ------- | - | ---- | ----- | -
|(In thousands of U.S. dollars,                                        |                                                                            | Net      |        |        | Diluted |  
|except per share amounts)                                             |                                                                            | Earnings |        |        | EPS     |  
|                                                                      |                                                                            |          |        |        |         |  
|Net earnings (Canadian GAAP) for the year ended
    December 31, 2003 |                                                                            | $        | 36,509 |        |         | $ | 1.14 |      
|                                                                      | Impact of foreign exchange                                                 |          | $      | (2,260 | )       |   | $    | (0.07 | )
|                                                                      | Life insurance proceeds                                                    |          | $      | (1,000 | )       |   | $    | (0.03 | )
|                                                                      | Non-cash stock based compensation for the year ended
    December 31, 2002 |          | $      | 4,801  |         |   | $    | 0.14  |  
|Net earnings (Canadian GAAP)                                          |                                                                            | $        | 29,401 |        |         | $ | 1.06 |      
|                                                                      | Gain on sale of Old Lyme                                                   |          | $      | (2,613 | )       |   | $    | (0.09 | )
|                                                                      | Non-cash stock based compensation                                          |          | $      | 1,089  |         |   | $    | 0.04  |  





U.S. Results










Canadian Results








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    31



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##### Table of Contents





Compensation Expense




Compensation Comparison


|                                                   |  |      |         |  |      |   |         |          |  |      |  |      |  |    
|-------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | -------- |  | ---- |  | ---- |  | ---
|                                                   |  |      |         |  |      |   |         | % of    
|                                                   |  |      |         |  |      |   |         | Revenue 
|                                                   |  |      |         |  |      |   |         |         
|(in thousands of U.S. dollars, except percentages) |  | 2003 |         |  | 2002 |   |         | % Change |  | 2003 |  | 2002
|                                                   |  |      |         |  |      |   |         |          |  |      |  |     
|Cash compensation                                  |  | $    | 156,320 |  |      | $ | 118,667 |          |  | 32%  |  | 54%  |  | 54%
|Non-cash stock based compensation                  |  |      | 4,801   |  |      |   | 1,089   |          |  | 341% |  | 2%   |  | % 
|                                                   |  |      |         |  |      |   |         |          |  |      |  |     
|Total                                              |  | $    | 161,121 |  |      | $ | 119,756 |          |  | 35%  |  | 56%  |  | 54%
|                                                   |  |      |         |  |      |   |         |          |  |      |  |     









|                               |                                
|------------------------------ | -------------------------------
|32   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents





Selling, Occupancy and Administration Expense




Depreciation




Interest Expense




Intangible Asset Amortization




Gain on Put Option Liability




Provision for Income Tax Expense




Net Earnings and Earnings Per Share












|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    33



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##### Table of Contents





Cash Flow, Liquidity and Capital Resources










|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Revolving U.S. dollar LIBOR loan  This unsecured
    facility totals $75 million and bears interest at a
    floating rate of prime plus 1%, or 112.5 basis points above
    LIBOR. The LIBOR was 2.40% and 1.12% at December 31, 2004
    and 2003, respectively. The facility is available on a revolving
    basis for one year and expires on April 22, 2005. However
    if the revolving period is not extended, we may convert the
    outstanding balance under the facility to a three year
    non-revolving term loan repayable at the end of three years with
    an interest rate of 137.5 basis points above the Canadian dollar
    interest swap rate. An annual commitment fee of 20 basis points
    is assessed on the unused balance. Borrowings under this
    facility totaled $65 million and $NIL at December 31,
    2004 and 2003, respectively. As of December 31, 2004 and
    2003 we were in compliance with all financial covenants
    governing this facility.
|   
|(2) | Demand U.S. dollar base rate loan  We have an
    undrawn $10.0 million facility which bears interest at the
    banks U.S. base rate, which was 5.75% and 4.50% at
    December 31, 2004 and 2003, respectively, plus
    50 basis points. Borrowings under this facility are
    repayable on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       









|                               |                                
|------------------------------ | -------------------------------
|34   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents





















|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    35



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##### Table of Contents



Contractual obligations




|                                        |  |          |  |        |   |           |  |   |        |  |  |       |        |  |         |   |         |  |  |   |        | 
|--------------------------------------- |  | -------- |  | ------ | - | --------- |  | - | ------ |  |  | ----- | ------ |  | ------- | - | ------- |  |  | - | ------ | 
|Contractual Obligations                 |  |          |  |        |   |           |  |   |        |  |  |      
|Payments due by period (in thousands of |  |          |  | On     |   | Less than |  |   | 1-3    |  |  | 4-5   |        |  | After   |  
|U.S. dollars)                           |  | Total    |  | Demand |   | 1 Year    |  |   | Years  |  |  | Years |        |  | 5 Years |  
|                                        |  |          |  |        |   |           |  |   |        |  |  |       |        |  |         |  
|Long-term debt                          |  | $151,329 |  | $      |  |           |  | $ | 4,912  |  |  | $     | 14,899 |  |         | $ | 84,185  |  |  | $ | 47,333 | 
|Capital lease obligations               |  | 468      |  |        |  |           |  |   | 283    |  |  |       | 185    |  |         |   |        |  |  |   |       | 
|Operating lease obligations             |  | 76,465   |  |        |  |           |  |   | 15,680 |  |  |       | 26,179 |  |         |   | 19,538  |  |  |   | 15,068 | 
|Executive share purchase plan loans     |  | 526      |  |        |  |           |  |   |       |  |  |       |       |  |         |   | 526     |  |  |   |       | 
|                                        |  |          |  |        |   |           |  |   |        |  |  |       |        |  |         |   |        
|Total                                   |  | $228,788 |  | $      |  |           |  | $ | 20,875 |  |  | $     | 41,263 |  |         | $ | 104,249 |  |  | $ | 62,401 | 
|                                        |  |          |  |        |   |           |  |   |        |  |  |       |        |  |         |   |        

Acquisitions








Contingent liabilities








|                               |                                
|------------------------------ | -------------------------------
|36   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents























|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    37



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##### Table of Contents



Shareholders equity


Restricted share units.


Share repurchases.


Shares reserved for issuance.




Market risk


Interest rate risk




Exchange rate sensitivity






|                                                  |  |      |     |  |      |      |     |      |  |      |     | 
|------------------------------------------------- |  | ---- | --- |  | ---- | ---- | --- | ---- |  | ---- | --- | 
|(in millions of U.S. dollars, except percentages) |  | 2004 |     |  | 2003 |      |     | 2002 | 
|                                                  |  |      |     |  |      |      |     |      | 
|Revenue                                           |  | +/-$ | 1.6 |  |      | +/-$ | 1.5 |      |  | +/-$ | 1.3 | 
|Net earnings                                      |  | +/-$ | 0.4 |  |      | +/-$ | 0.2 |      |  | +/-$ | 0.2 | 
|Cumulative translation account                    |  | +/-$ | 2.6 |  |      | +/-$ | 1.9 |      |  | +/-$ | 1.2 | 







|                               |                                
|------------------------------ | -------------------------------
|38   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents



Goodwill and other intangible assets




|                               |       |      |         |         |      |   |         |         | 
|------------------------------ | ----- | ---- | ------- | ------- | ---- | - | ------- | ------- | 
|(in thousands of U.S. dollars) |       | 2004 |         |         | 2003 |  
|                               |       |      |         |         |      |  
|Customer relationships         |       | $    | 95,982  |         |      | $ | 43,422  |        
|Non-competition covenants      |       |      | 4,110   |         |      |   | 2,643   |        
|Trademarks                     |       |      |        |         |      |   | 2,587   |        
|Goodwill                       |       |      | 394,063 |         |      |   | 323,185 |        
|Accumulated amortization       |       |      | (28,637 | )       |      |   | (23,072 | )      
|                               |       |      |         |         |      |  
|                               | Total |      | $       | 465,518 |      |   | $       | 348,765 | 
|                               |       |      |         |         |      |  







|                               |       |      |       |       |      |   |       |       |  |   |       |       | 
|------------------------------ | ----- | ---- | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|Year ended December 31,        |       |      |       |       |      |  
|(in thousands of U.S. dollars) |       | 2004 |       |       | 2003 |   |       | 2002  | 
|                               |       |      |       |       |      |   |       |       | 
|Customer relationships         |       | $    | 5,344 |       |      | $ | 3,040 |       |  | $ | 1,627 |      
|Non-competition covenants      |       |      | 176   |       |      |   | 168   |       |  |   | 44    |      
|                               |       |      |       |       |      |   |       |       | 
|                               | Total |      | $     | 5,520 |      |   | $     | 3,208 |  |   | $     | 1,671 | 
|                               |       |      |       |       |      |   |       |       | 



|                               |       |      |       |       |      |   |       |       |  |   |       |       |  |      |       |       |  |   |       |       | 
|------------------------------ | ----- | ---- | ----- | ----- | ---- | - | ----- | ----- |  | - | ----- | ----- |  | ---- | ----- | ----- |  | - | ----- | ----- | 
|Year ended December 31,        |       |      |       |       |      |   |       |       |  |  
|(in thousands of U.S. dollars) |       | 2005 |       |       | 2006 |   |       | 2007  |  |   | 2008  |       |  | 2009 |      
|                               |       |      |       |       |      |   |       |       |  |   |       |       |  |      |      
|Customer relationships         |       | $    | 7,388 |       |      | $ | 7,388 |       |  | $ | 7,388 |       |  | $    | 7,388 |       |  | $ | 7,388 |      
|Non-competition covenants      |       |      | 180   |       |      |   | 126   |       |  |   | 70    |       |  |      | 2     |       |  |   | 1     |      
|                               |       |      |       |       |      |   |       |       |  |   |       |       |  |      |      
|                               | Total |      | $     | 7,568 |      |   | $     | 7,514 |  |   | $     | 7,458 |  |      | $     | 7,390 |  |   | $     | 7,389 | 
|                               |       |      |       |       |      |   |       |       |  |   |       |       |  |      |      





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    39



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##### Table of Contents



Related party transactions




|                                         |  |      |        |  |      |   |        |      |  |   |        | 
|---------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|Year ended December 31,                  |  |      |        |  |      |  
|(in thousands of U.S. dollars)           |  | 2004 |        |  | 2003 |   |        | 2002 | 
|                                         |  |      |        |  |      |   |        |      | 
|Northbridge Financial Corporation        |  | $    | 23,378 |  |      | $ | 18,504 |      |  | $ | 12,787 | 
|Crum & Forster Holdings, Inc.            |  |      | 682    |  |      |   | 1,259  |      |  |   | 914    | 
|Fairfax Inc.                             |  |      | 3,638  |  |      |   | 8,411  |      |  |   | 6,278  | 
|                                         |  |      |        |  |      |   |        |      | 
|                                         |  |      | 27,698 |  |      |   | 28,174 |      |  |   | 19,979 | 
|Old Lyme Insurance Company, Ltd (OLIC) |  |      | 2,113  |  |      |   |       |      |  |   |       | 
|                                         |  |      |        |  |      |   |        |      | 
|                                         |  | $    | 29,811 |  |      | $ | 28,174 |      |  | $ | 19,979 | 
|                                         |  |      |        |  |      |   |        |      | 







Off-Balance Sheet Transactions




Critical Accounting Policies and Estimates








|                               |                                
|------------------------------ | -------------------------------
|40   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents





Recognition of Commission Income




Allocation of the Purchase Price of an Acquisition








Goodwill and Other Intangible Assets












|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    41



---



##### Table of Contents





Stock based compensation








Effects of recent accounting pronouncements




Financial Instruments  Recognition and
Measurement




Comprehensive Income







Item 7A.    Quantitative and
Qualitative Disclosures About Market Risk








|                               |                                
|------------------------------ | -------------------------------
|42   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents






Item 8.    Financial Statements and
Supplementary Data


Index to consolidated financial statements


|                                                                                                                                        |  |      |    | 
|--------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                                        |  | Page |   
|                                                                                                                                        |  |      |   
|Report of Independent Registered Public
    Accounting Firm to the Board of Directors and Shareholders of
    Hub International Limited |  |      | 44 | 
|Managements Annual Report on Internal
    Control over Financial Reporting                                                             |  |      | 45 | 
|Consolidated Balance Sheets as of
    December 31, 2004 and 2003                                                                        |  |      | 46 | 
|Consolidated Statements of Earnings for the
    Years Ended December 31, 2004, 2003 and 2002                                            |  |      | 47 | 
|Consolidated Statements of Retained
    Earnings for the Years Ended December 31, 2004, 2003 and
    2002                               |  |      | 48 | 
|Consolidated Statements of Cash Flows for
    the Years Ended December 31, 2004, 2003 and 2002                                          |  |      | 49 | 
|Notes to Consolidated Financial Statements
    for the Years Ended December 31, 2004, 2003 and 2002                                     |  |      | 50 | 

Index to notes to consolidated financial statements


|         |    |  |             |                                                          |      |  |    | 
|-------- | -- |  | ----------- | -------------------------------------------------------- | ---- |  | -- | 
|Footnote |    |  | Description |                                                          | Page | 
|         |    |  |             |                                                          |      | 
|         | 1  |  |             | Nature of operations and recent significant transactions |      |  | 50 | 
|         | 2  |  |             | Summary of significant accounting policies               |      |  | 51 | 
|         | 3  |  |             | Commitments and contingencies                            |      |  | 53 | 
|         | 4  |  |             | Acquisitions                                             |      |  | 55 | 
|         | 5  |  |             | Accounts and other receivables                           |      |  | 59 | 
|         | 6  |  |             | Intangible assets                                        |      |  | 59 | 
|         | 7  |  |             | Property and equipment                                   |      |  | 61 | 
|         | 8  |  |             | Accounts payable and accrued liabilities                 |      |  | 61 | 
|         | 9  |  |             | Debt                                                     |      |  | 61 | 
|         | 10 |  |             | Defined Contribution Plan                                |      |  | 63 | 
|         | 11 |  |             | Shareholders equity                                     |      |  | 63 | 
|         | 12 |  |             | Equity Incentive Plan                                    |      |  | 65 | 
|         | 13 |  |             | Earnings per share                                       |      |  | 67 | 
|         | 14 |  |             | Fair value of financial instruments                      |      |  | 67 | 
|         | 15 |  |             | Income taxes                                             |      |  | 67 | 
|         | 16 |  |             | Interest and income taxes paid                           |      |  | 69 | 
|         | 17 |  |             | Segmented information                                    |      |  | 69 | 
|         | 18 |  |             | Related party transactions                               |      |  | 71 | 
|         | 19 |  |             | Reconciliation to U.S. GAAP                              |      |  | 71 | 
|         | 20 |  |             | Quarterly data                                           |      |  | 76 | 
|         | 21 |  |             | Subsequent events                                        |      |  | 76 | 





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    43



---



##### Table of Contents






Report of Independent Registered Public Accounting Firm to
the Board of Directors and Shareholders of Hub International
Limited:


Internal Control  Integrated Framework










|                               |                                
|------------------------------ | -------------------------------
|44   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents



Internal Control  Integrated Framework Internal Control 
Integrated Framework














Managements Annual Report on Internal Control over
Financial Reporting




Internal
Control  Integrated Framework






|                                     |  |                                           
|------------------------------------ |  | ------------------------------------------
|-s- Martin P. Hughes                 |  | -s- Dennis J. Pauls                       
|Martin P. Hughes                     |  | Dennis J. Pauls                           
|Chairman and Chief Executive Officer |  | Vice President and Chief Financial Officer
|March 7, 2005                        |  | March 7, 2005                             





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    45



---



##### Table of Contents






Hub International Limited


Consolidated Balance Sheets


As of December 31,


(in thousands of U.S. dollars)


|                                                  |  |      |         |  |      |   |         | 
|------------------------------------------------- |  | ---- | ------- |  | ---- | - | ------- | 
|                                                  |  | 2004 |         |  | 2003 |  
|                                                  |  |      |         |  |      |  
|ASSETS                                            |  |      |         |  |      |   |         | 
|Current assets:                                   |  |      |         |  |      |   |         | 
|Cash and cash equivalents                         |  | $    | 98,204  |  |      | $ | 82,052  | 
|Trust cash                                        |  |      | 71,718  |  |      |   | 54,534  | 
|Accounts and other receivables                    |  |      | 162,841 |  |      |   | 163,728 | 
|Income taxes receivable                           |  |      | 6,208   |  |      |   | 6,768   | 
|Future income taxes                               |  |      | 3,901   |  |      |   | 2,776   | 
|Prepaid expenses                                  |  |      | 5,835   |  |      |   | 4,449   | 
|                                                  |  |      |         |  |      |  
|Total current assets                              |  |      | 348,707 |  |      |   | 314,307 | 
|Goodwill                                          |  |      | 376,676 |  |      |   | 305,862 | 
|Other intangible assets                           |  |      | 88,842  |  |      |   | 42,903  | 
|Property and equipment                            |  |      | 27,907  |  |      |   | 24,181  | 
|Future income taxes                               |  |      | 4,368   |  |      |   | 5,232   | 
|Other assets                                      |  |      | 11,035  |  |      |   | 6,803   | 
|                                                  |  |      |         |  |      |  
|Total assets                                      |  | $    | 857,535 |  |      | $ | 699,288 | 
|                                                  |  |      |         |  |      |  
|                                                 
|LIABILITIES AND SHAREHOLDERS EQUITY              |  |      |         |  |      |   |         | 
|Current liabilities:                              |  |      |         |  |      |   |         | 
|Accounts payable and accrued liabilities          |  | $    | 271,843 |  |      | $ | 226,168 | 
|Income taxes payable                              |  |      | 2,273   |  |      |   | 3,804   | 
|Future income taxes                               |  |      | 34      |  |      |   | 24      | 
|Current portion long-term debt and capital leases |  |      | 5,195   |  |      |   | 3,362   | 
|                                                  |  |      |         |  |      |  
|Total current liabilities                         |  |      | 279,345 |  |      |   | 233,358 | 
|Long-term debt and capital leases                 |  |      | 146,602 |  |      |   | 75,437  | 
|Subordinated convertible debentures               |  |      | 35,000  |  |      |   | 35,000  | 
|Future income taxes                               |  |      | 14,805  |  |      |   | 12,703  | 
|                                                  |  |      |         |  |      |  
|Total liabilities                                 |  |      | 475,752 |  |      |   | 356,498 | 
|                                                  |  |      |         |  |      |  
|Commitments and Contingencies                     |  |      |         |  |      |   |         | 
|Shareholders equity                              |  |      |         |  |      |   |         | 
|Share capital                                     |  |      | 259,617 |  |      |   | 254,845 | 
|Issuable shares                                   |  |      |        |  |      |   | 721     | 
|Contributed surplus                               |  |      | 12,681  |  |      |   | 4,806   | 
|Cumulative translation account                    |  |      | 26,983  |  |      |   | 20,062  | 
|Retained earnings                                 |  |      | 82,502  |  |      |   | 62,356  | 
|                                                  |  |      |         |  |      |  
|Total shareholders equity                        |  |      | 381,783 |  |      |   | 342,790 | 
|                                                  |  |      |         |  |      |  
|Total liabilities and shareholders equity        |  | $    | 857,535 |  |      | $ | 699,288 | 
|                                                  |  |      |         |  |      |  

(the accompanying notes form an integral part of the
financial statements)






|                               |                                
|------------------------------ | -------------------------------
|46   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents






Hub International Limited


Consolidated Statements of Earnings


For the Years Ended December 31,


(in thousands of U.S. dollars, except per share
amounts)


|                                                          |                                                                            |      |         |         |      |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | -------------------------------------------------------------------------- | ---- | ------- | ------- | ---- | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                                            | 2004 |         |         | 2003 |   |         | 2002    |  
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|Revenue                                                   |                                                                            |      |         |         |      |   |         |         |   |   |         |        
|                                                          | Commission income                                                          |      | $       | 328,961 |      |   | $       | 259,461 |   |   | $       | 200,976 |  
|                                                          | Contingent commissions and volume overrides                                |      |         | 21,705  |      |   |         | 18,530  |   |   |         | 11,464  |  
|                                                          | Other                                                                      |      |         | 10,184  |      |   |         | 8,368   |   |   |         | 7,520   |  
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|                                                          |                                                                            |      | 360,850 |         |      |   | 286,359 |         |   |   | 219,960 |        
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|Expenses                                                  |                                                                            |      |         |         |      |   |         |         |   |   |         |        
|                                                          | Cash compensation                                                          |      |         | 199,520 |      |   |         | 156,320 |   |   |         | 118,667 |  
|                                                          | Selling, occupancy and administration                                      |      |         | 73,199  |      |   |         | 56,606  |   |   |         | 44,932  |  
|                                                          | Depreciation                                                               |      |         | 7,266   |      |   |         | 6,244   |   |   |         | 5,492   |  
|                                                          | Interest expense                                                           |      |         | 7,470   |      |   |         | 5,191   |   |   |         | 7,317   |  
|                                                          | Intangible asset amortization                                              |      |         | 5,520   |      |   |         | 3,208   |   |   |         | 1,671   |  
|                                                          | Non-cash stock based compensation                                          |      |         | 20,890  |      |   |         | 4,801   |   |   |         | 1,089   |  
|                                                          | Loss on write-off of trademarks                                            |      |         | 2,587   |      |   |         |        |   |   |         |        |  
|                                                          | Gain on disposal of subsidiaries, property, equipment and other
    assets |      |         | (1,880  | )    |   |         | (202    | ) |   |         | (2,679  | )
|                                                          | Gain on put option liability                                               |      |         |        |      |   |         | (160    | ) |   |         | (186    | )
|                                                          | Proceeds from life insurance                                               |      |         |        |      |   |         | (1,000  | ) |   |         |        |  
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|                                                          |                                                                            |      | 314,572 |         |      |   | 231,008 |         |   |   | 176,303 |        
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|Net earnings before income taxes                          |                                                                            |      | 46,278  |         |      |   | 55,351  |         |   |   | 43,657  |        
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|Provision for income tax expense                          |                                                                            |      |         |         |      |   |         |         |   |   |         |        
|                                                          | Current                                                                    |      |         | 19,904  |      |   |         | 16,922  |   |   |         | 12,851  |  
|                                                          | Future                                                                     |      |         | 130     |      |   |         | 1,920   |   |   |         | 1,405   |  
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|                                                          |                                                                            |      | 20,034  |         |      |   | 18,842  |         |   |   | 14,256  |        
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|Net earnings                                              |                                                                            | $    | 26,244  |         |      | $ | 36,509  |         |   | $ | 29,401  |        
|                                                          |                                                                            |      |         |         |      |   |         |         |  
|Earnings per share                                        |                                                                            |      |         |         |      |   |         |         |   |   |         |        
|                                                          | Basic                                                                      |      |         | $0.87   |      |   |         | $1.22   |   |   |         | $1.27   |  
|                                                          | Diluted                                                                    |      |         | $0.80   |      |   |         | $1.14   |   |   |         | $1.06   |  
|Weighted average shares outstanding  Basic
    (000s)   |                                                                            |      | 30,246  |         |      |   | 29,967  |         |   |   | 23,181  |        
|Weighted average shares outstanding  Diluted
    (000s) |                                                                            |      | 35,305  |         |      |   | 33,767  |         |   |   | 30,199  |        

(the accompanying notes form an integral part of the
financial statements)






|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    47



---



##### Table of Contents






Hub International Limited


Consolidated Statements of Retained Earnings


For the Years Ended December 31,


(in thousands of U.S. dollars)


|                                      |  |      |        |   |      |   |        |      |  |   |        |  
|------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                      |  | 2004 |        |   | 2003 |   |        | 2002 | 
|                                      |  |      |        |   |      |   |        |      | 
|Retained earnings  Beginning of year |  | $    | 62,356 |   |      | $ | 31,915 |      |  | $ | 6,995  |  
|Net earnings                          |  |      | 26,244 |   |      |   | 36,509 |      |  |   | 29,401 |  
|Dividends                             |  |      | (6,098 | ) |      |   | (6,068 | )    |  |   | (4,481 | )
|                                      |  |      |        |   |      |   |        |      | 
|Retained earnings  End of year       |  | $    | 82,502 |   |      | $ | 62,356 |      |  | $ | 31,915 |  
|                                      |  |      |        |   |      |   |        |      | 

(the accompanying notes form an integral part of the
financial statements)






|                               |                                
|------------------------------ | -------------------------------
|48   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents






Hub International Limited


Consolidated Statements of Cash Flows


For the Years Ended December 31,


(in thousands of U.S. dollars)


|                                                                 |                                                                            |      |         |         |      |   |         |        |   |   |         |         |  
|---------------------------------------------------------------- | -------------------------------------------------------------------------- | ---- | ------- | ------- | ---- | - | ------- | ------ | - | - | ------- | ------- | -
|                                                                 |                                                                            | 2004 |         |         | 2003 |   |         | 2002   |  
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|OPERATING ACTIVITIES                                             |                                                                            |      |         |         |      |   |         |        |   |   |         |        
|Net earnings                                                     |                                                                            | $    | 26,244  |         |      | $ | 36,509  |        |   | $ | 29,401  |        
|Items not affecting working capital                              |                                                                            |      |         |         |      |   |         |        |   |   |         |        
|                                                                 | Amortization and depreciation                                              |      |         | 12,786  |      |   |         | 9,452  |   |   |         | 7,163   |  
|                                                                 | Gain on disposal of subsidiaries, property, equipment and other
    assets |      |         | (1,880  | )    |   |         | (202   | ) |   |         | (2,679  | )
|                                                                 | Non-cash stock based compensation                                          |      |         | 20,890  |      |   |         | 4,801  |   |   |         | 1,089   |  
|                                                                 | Loss on write-off of trademarks                                            |      |         | 2,587   |      |   |         |       |   |   |         |        |  
|                                                                 | Gain on put option liability                                               |      |         |        |      |   |         | (160   | ) |   |         | (186    | )
|                                                                 | Future income taxes                                                        |      |         | 130     |      |   |         | 1,920  |   |   |         | 1,405   |  
|Non-cash working capital items                                   |                                                                            |      |         |         |      |   |         |        |   |   |         |        
|                                                                 | Trust cash                                                                 |      |         | (3,351  | )    |   |         | (886   | ) |   |         | (3,222  | )
|                                                                 | Accounts and other receivables                                             |      |         | 15,672  |      |   |         | (4,067 | ) |   |         | (26,665 | )
|                                                                 | Prepaid expenses                                                           |      |         | (1,303  | )    |   |         | (2,616 | ) |   |         | 1,287   |  
|                                                                 | Accounts payable and accrued liabilities                                   |      |         | (12,285 | )    |   |         | 13,431 |   |   |         | 11,673  |  
|                                                                 | Other assets                                                               |      |         | 512     |      |   |         | (2,062 | ) |   |         |        |  
|                                                                 | Income taxes                                                               |      |         | (2,646  | )    |   |         | (2,184 | ) |   |         | (202    | )
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|Net cash flows from operating activities                         |                                                                            |      | 57,356  |         |      |   | 53,936  |        |   |   | 19,064  |        
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|INVESTING ACTIVITIES                                             |                                                                            |      |         |         |      |   |         |        |   |   |         |        
|Property and equipment  purchases                               |                                                                            |      | (7,293  | )       |      |   | (6,125  | )      |   |   | (4,469  | )      
|Property and equipment  proceeds on sale                        |                                                                            |      | 159     |         |      |   | 69      |        |   |   | 6       |        
|Purchase of subsidiaries, net of cash received                   |                                                                            |      | (94,307 | )       |      |   | (14,881 | )      |   |   | (50,813 | )      
|Sale of subsidiaries                                             |                                                                            |      | 7,454   |         |      |   | 1,098   |        |   |   | 2,623   |        
|Proceeds from investment held for sale                           |                                                                            |      |        |         |      |   |        |        |   |   | 43,521  |        
|Other assets                                                     |                                                                            |      | 687     |         |      |   | (307    | )      |   |   | 684     |        
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|Net cash flows used for investing activities                     |                                                                            |      | (93,300 | )       |      |   | (20,146 | )      |   |   | (8,448  | )      
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|FINANCING ACTIVITIES                                             |                                                                            |      |         |         |      |   |         |        |   |   |         |        
|Long-term debt  advances                                        |                                                                            |      | 65,000  |         |      |   | 65,000  |        |   |   | 51,175  |        
|Long-term debt and capital leases  repayments                   |                                                                            |      | (11,326 | )       |      |   | (54,540 | )      |   |   | (50,094 | )      
|Proceeds from sale of executive purchase plan shares             |                                                                            |      | 497     |         |      |   | 222     |        |   |   |        |        
|Dividends paid                                                   |                                                                            |      | (6,098  | )       |      |   | (6,068  | )      |   |   | (4,481  | )      
|Share capital  issued for cash, net of issue costs              |                                                                            |      |        |         |      |   | (61     | )      |   |   | 88,147  |        
|Bank debt                                                        |                                                                            |      |        |         |      |   |        |        |   |   | (55,000 | )      
|Subordinated convertible debenture  repayment                   |                                                                            |      |        |         |      |   |        |        |   |   | (26,800 | )      
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|Net cash flows from financing activities                         |                                                                            |      | 48,073  |         |      |   | 4,553   |        |   |   | 2,947   |        
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|Effect of exchange rate changes on cash and cash
    equivalents |                                                                            |      | 4,023   |         |      |   | 3,067   |        |   |   | 100     |        
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|Change in cash and cash equivalents                              |                                                                            |      | 16,152  |         |      |   | 41,410  |        |   |   | 13,663  |        
|Cash and cash equivalents  Beginning of year                    |                                                                            |      | 82,052  |         |      |   | 40,642  |        |   |   | 26,979  |        
|                                                                 |                                                                            |      |         |         |      |   |         |        |  
|Cash and cash equivalents  End of year                          |                                                                            | $    | 98,204  |         |      | $ | 82,052  |        |   | $ | 40,642  |        
|                                                                 |                                                                            |      |         |         |      |   |         |        |  

(the accompanying notes form an integral part of the
financial statements)






|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    49



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##### Table of Contents






Hub International Limited


Notes to Consolidated Financial Statements


For the years ended December 31, 2004, 2003 and 2002


(In thousands of U.S. dollars, except per share amounts
or as otherwise indicated)





1.  Nature of operations and recent significant
transactions


Business operations




Talbot






Bank Facility




Private Debt Offering




Initial U.S. Public Offering




Sale of Old Lyme








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|------------------------------ | -------------------------------
|50   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents








2.  Summary of significant accounting policies




Basis of presentation




Estimates and assumptions




Foreign currency translation




Revenue Recognition








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    51



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##### Table of Contents



Cash and cash equivalents




Concentration of credit risk






Trust cash




Property and equipment




Business combinations




Goodwill and other intangible assets












|                               |                                
|------------------------------ | -------------------------------
|52   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents





Interest rate swap




Stock based compensation




Future income taxes




Put options







3.    Commitments and contingencies


|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In April 2004, Hub International Northeast Limited (HUB
    Northeast), formerly known as Kaye Insurance Associates,
    Inc., a subsidiary of Hub, received a subpoena from the Office
    of the Attorney General of the State of New York seeking
    information regarding certain compensation agreements between
    insurance brokers and insurance companies. The New York Attorney
    General subpoenaed information on such compensation agreements
    from several other major insurance brokers and insurance
    companies as well. Such compensation agreements, also known as
    contingent agreements, between insurance companies and brokers
    are a long-standing and common practice within the insurance
    industry. HUB Northeast discloses such agreements on its
    invoices to clients and on its web site. In addition, the
    Company discloses the arrangements in public filings. In August
    2004, HUB Northeast received a second subpoena from the
    Office of the Attorney General of the State of New York seeking
    information regarding all revenue that HUB Northeast may
    have derived from insurance companies. In September 2004,
    HUB Northeast received a third subpoena from the Office of
    the Attorney General of the State of New York seeking
    information regarding any fictitious and
    inflated insurance quotes to which
    HUB Northeast may have been a party.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Promptly after HUB Northeasts receipt of the first New
    York Attorney Generals subpoena, the Company retained
    external counsel to assist in responding to the New York
    Attorney Generals inquiries and, among other things,
    requested that such external counsel conduct a thorough
    investigation of HUB Northeast to determine whether any current
    or former employee engaged in the practice of falsifying or
    inflating insurance quotes. Such investigation of HUB Northeast
    is substantially complete. Subsequently, outside counsels
    investigation was expanded to other hubs, both for internal
    purposes and in the course of assisting it in responding to the
    inquiries of other regulatory authorities. To date, management
    is unaware of any incidents of falsifying or inflating insurance
    quotes. While it is not possible to predict the outcome of this
    investigation, if





|                                |                                
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|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    53



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| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | such compensation agreements were to be restricted or no longer
    permitted, the Companys financial condition, results of
    operations and liquidity may be materially adversely affected.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|
| | From August 2004 through February 2005, various other
    subsidiaries of the Company received and responded to letters of
    inquiry and subpoenas from authorities in Connecticut, Texas,
    Illinois, Delaware, Pennsylvania, New Hampshire and Quebec.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|
| | In October 2004, the Company was joined as a defendant in a
    class action lawsuit (the Opticare case) against 30
    different insurance brokers and insurance companies. The lawsuit
    was originally filed in August 2004 in the U.S. District
    Court for the Southern District of New York by OptiCare Health
    Systems Inc., a client of a Marsh & McLennan subsidiary. It
    now names the ten largest U.S. insurance brokers and four
    of the largest commercial insurers. The amended complaint
    alleges that the defendants used the contingent commission
    structure of placement service agreements in a conspiracy to
    deprive policyholders of independent and unbiased
    brokerage services, as well as free and open competition in the
    market for insurance. In December, 2004, the Company was
    also named as one of multiple defendants in two identical class
    actions filed in Federal District Court in Illinois, with
    allegations substantially similar to those in the Opticare case.
    None of the complaints contain any specific factual allegations
    against the Company. The Company disputes the allegations of
    these complaints and intends to vigorously defend against the
    suits. However, a finding that the contingent commission
    structure conflicts with an insurance brokers duty to its
    clients as well as the cost of defending against the lawsuit and
    the diversion of managements attention could have a
    material adverse effect on the Companys financial
    condition, results of operations and liquidity.
    See note 21 Subsequent events
|
| | The Company has not recorded a liability at December 31,
    2004 related to these matters.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | In connection with the acquisition of Talbot on July 1,
    2004, the Company will purchase special shares of Satellite
    owned by the management of Talbot over the next three years,
    using a combination of both restricted and unrestricted common
    shares of the Company. Payments will be made on
    September 1, 2005, March 31, 2006 and March 31,
    2007 based upon Talbots earnings for the 12 month
    periods ending December 31, 2004, 2005 and 2006,
    respectively. The contingent payment to Talbot management will
    be recorded by the Company as a charge to earnings in the form
    of non-cash stock based compensation expense over the period in
    which the payments are earned. During 2004, the Company recorded
    $14.4 million of non-cash stock based compensation with an
    offsetting credit to accounts payable and accrued liabilities
    for the same amount. Based on Talbots financial
    performance for 2004, management estimates the Company may be
    obligated to pay contingent payments of approximately
    $30-$35 million in common shares of the Company in addition
    to the $14.4 million of amounts accrued to date mentioned
    above.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In connection with the acquisition of Hooper Hayes and
    Associates, Inc., now known as Hub International California,
    Inc., in 2002 the Company issued 196,000 shares (the
    Retractable Shares) that were deposited in escrow
    subject to release over a period of three years upon the
    satisfaction of certain performance targets. As of
    December 31, 2004, 126,000 shares have been released from
    escrow.                                                                                                                                                                                                                                                                                                                                              
|
| | In connection with other various acquisitions completed through
    December 31, 2004, the Company may be obligated to pay
    contingent consideration up to a maximum sum of approximately
    $12.4 million in cash and $3.6 million in common
    shares of the Company based upon the acquired brokerages
    achieving certain targets. The contingent payments are payable
    on various dates through August, 2007 according to the terms and
    conditions of each purchase agreement. Any additional
    consideration will be recorded as an adjustment to goodwill once
    the contingency is resolved. In connection with contingent
    consideration earned as at December 31, 2004, the financial
    statements reflect a liability to pay cash of $0.2 million.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | In connection with the Companys executive share purchase
    plan, under certain circumstances, the Company may be obligated
    to purchase loans for officers, directors and employees from a
    Canadian chartered bank totaling $4,287 and $4,513 as of
    December 31, 2004 and 2003 respectively, to assist in
    purchasing common shares of the Company. The Company no longer
    makes loans to its executive officers and directors. As
    collateral, the employees have pledged 431,000 and 478,000
    common shares as of December 31, 2004 and 2003,
    respectively, which have a market value of $7,885 and $8,105 as
    of December 31, 2004 and 2003,





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|54   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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|    |                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | respectively. Interest on the loans
    in the amount of $192, $279 and $264 for the years ended
    December 31, 2004, 2003 and 2002, respectively, was paid by
    the Company and is included in cash compensation expense.                    
|   
|(d) | The Company is committed under
    lease agreements for office premises and computer equipment. At
    December 31, 2004, aggregate minimum rental commitments
    (net of expected sub-lease receipts) under operating leases are
    as follows:

|                    |  |   |        | 
|------------------- |  | - | ------ | 
|2005                |  | $ | 15,680 | 
|2006                |  |   | 14,257 | 
|2007                |  |   | 11,922 | 
|2008                |  |   | 10,322 | 
|2009                |  |   | 9,216  | 
|2010 and thereafter |  |   | 15,068 | 
|                    |  |   |       
|                    |  | $ | 76,465 | 
|                    |  |   |       



| |                                                                                                                                                                                                             
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Rent expense for the year ended December 31, 2004, 2003,
    and 2002 amounted to $14,242, $11,503 and $9,684, respectively,
    net of sublease rental income of $1,536, $1,282 and $737,
    respectively.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(e) | In the ordinary course of business, the Company and its
    subsidiaries are subject to various claims and lawsuits
    consisting primarily of alleged errors and omissions in
    connection with the placement of insurance. In the opinion of
    management, the ultimate resolution of all asserted and
    potential claims and lawsuits will not have a material adverse
    effect on the consolidated financial position or results of
    operations of the Company.




4.  Acquisitions and dispositions








|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | During 2004, the Company purchased Talbot, (as described below),
    all of the issued and outstanding membership interests of Bush,
    Cotton and Scott, LLC. located in the State of Washington,
    as well as the assets of five other insurance brokerages, all of
    which were accounted for using the purchase method of
    accounting. Accordingly, the results of operations and cash
    flows of the acquired companies have been included in the
    Companys consolidated results from their respective
    acquisition dates.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | The Company purchased Talbot which is based in New Mexico on
    July 1, 2004, in accordance with the following terms: The
    Company purchased all of the common shares of Satellite, a
    corporation formed by senior management at Talbot. In turn,
    Satellite purchased 100% of Talbot from Safeco Corporation. The
    Company will purchase special shares of Satellite owned by the
    management of Talbot over the next three years, using a
    combination of both restricted and unrestricted common shares of
    the Company. Payments will be made on September 1, 2005,
    March 31, 2006 and March 31, 2007 based upon
    Talbots earnings for the 12 month periods ending
    December 31, 2004, 2005 and 2006, respectively. The
    contingent payment to Talbot management will be recorded by the
    Company as a charge to earnings in the form of non-cash stock
    based compensation expense over the period in which the payments
    are earned. For 2004 the Company recorded $14,388 of non-cash
    stock based compensation relating to the Talbot acquisition with
    an offsetting credit to accounts payable and accrued liabilities
    for the same amount. Based on Talbots financial
    performance for 2004 the Company anticipates total earnout
    payments in the $45-$50 million range.





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    55



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|                                                 |  |              |         |              |               |   |        |         |  |   |        |   |  |   |         |  
|------------------------------------------------ |  | ------------ | ------- | ------------ | ------------- | - | ------ | ------- |  | - | ------ | - |  | - | ------- | -
|                                                 |  |              |         | Bush, Cotton |               |   |        |         | 
|                                                 |  | Talbot       |         |              | & Scott       |   |        | Other   |  |   | Total  |  
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  
|                                                 |  | July 1, 2004 |         |              | April 1, 2004 |   |        | Various |  |   |       
|Acquisition Date                                 |  |              |         |              |               |   |        |         |  |   |        |   |  |   |         |  
|Current assets                                   |  | $            | 49,639  |              |               | $ | 4,702  |         |  | $ | 358    |   |  | $ | 54,699  |  
|Current liabilities                              |  |              | (41,261 | )            |               |   | (4,803 | )       |  |   | (146   | ) |  |   | (46,210 | )
|Property, equipment and other assets             |  |              | 8,316   |              |               |   | 96     |         |  |   | 95     |   |  |   | 8,507   |  
|Long-term debt and capital leases                |  |              | (16,129 | )            |               |   | (2,826 | )       |  |   |       |   |  |   | (18,955 | )
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  
|Net assets (liabilities) at fair value           |  | $            | 565     |              |               | $ | (2,831 | )       |  | $ | 307    |   |  | $ | (1,959  | )
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  
|Consideration                                    |  |              |         |              |               |   |        |         |  |   |        |   |  |   |         |  
|Cash                                             |  | $            | 93,946  |              |               | $ | 11,966 |         |  | $ | 10,798 |   |  | $ | 116,710 |  
|Payable                                          |  |              |        |              |               |   |       |         |  |   | 1,447  |   |  |   | 1,447   |  
|Common shares (at market value)                  |  |              |        |              |               |   | 2,800  |         |  |   | 533    |   |  |   | 3,333   |  
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  
|                                                 |  | $            | 93,946  |              |               | $ | 14,766 |         |  | $ | 12,778 |   |  | $ | 121,490 |  
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  
|Goodwill                                         |  | $            | 48,649  |              |               | $ | 9,932  |         |  | $ | 10,722 |   |  | $ | 69,303  |  
|Customer relationships                           |  |              | 44,163  |              |               |   | 6,891  |         |  |   | 1,641  |   |  |   | 52,695  |  
|Non-competition covenants                        |  |              | 569     |              |               |   | 774    |         |  |   | 108    |   |  |   | 1,451   |  
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  
|                                                 |  | $            | 93,381  |              |               | $ | 17,597 |         |  | $ | 12,471 |   |  | $ | 123,449 |  
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  
|Number of shares issued as consideration (000s) |  |              |        |              |               |   | 152    |         |  |   | 29     |   |  |   | 181     |  
|                                                 |  |              |         |              |               |   |        |         |  |   |        |  







|    |                                                                                                                                                                                                                                                                                                                              
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | During 2003, the Company acquired nine brokerages, all of which
    were accounted for using the purchase method of accounting.
    Accordingly, the results of operations and cash flows of the
    acquired companies have been included in the Companys
    consolidated results from their respective acquisition dates.





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|56   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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|                                                 |  |         |        |  
|------------------------------------------------ |  | ------- | ------ | -
|                                                 |  | Total   |       
|                                                 |  |         |       
|                                                 |  | Various |       
|Acquisition Date                                 |  |         |        |  
|Current assets                                   |  | $       | 4,298  |  
|Current liabilities                              |  |         | (3,726 | )
|Property, equipment and other assets             |  |         | 24     |  
|                                                 |  |         |       
|Net assets at fair value                         |  | $       | 596    |  
|                                                 |  |         |       
|Consideration                                    |  |         |        |  
|Cash                                             |  | $       | 8,136  |  
|Common shares (at market value)                  |  |         | 538    |  
|                                                 |  |         |       
|                                                 |  | $       | 8,674  |  
|                                                 |  |         |       
|Goodwill                                         |  | $       | 6,389  |  
|Customer relationships                           |  |         | 1,352  |  
|Non-competition covenants                        |  |         | 337    |  
|                                                 |  |         |       
|                                                 |  | $       | 8,078  |  
|                                                 |  |         |       
|Number of shares issued as consideration (000s) |  |         | 32     |  
|                                                 |  |         |       







|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | During 2002, the Company purchased all of the issued and
    outstanding shares of Hooper Hayes & Associates,
    Inc., now known as Hub International of California Inc., and
    Fifth Third Insurance Services, Inc. which was renamed Hub
    International of Indiana Limited (HUB Midwest), as well as
    outstanding shares or net assets of 6 other brokerages, all of
    which were acquired using the purchase method of accounting.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In accordance with the purchase agreement dated July 1,
    2001, the former owners of Burnham Stewart Group, Inc.
    (Burnham), now known as HUB Midwest were entitled to
    additional consideration based upon certain acquired operations
    of Burnham achieving 2002 profitability targets. The additional
    consideration to be issued was a multiple of the final adjusted
    profitability as of December 31, 2002 for those operations.
    The total additional consideration was $22,166 of which $8,423
    was cash and the remainder of $13,743 in 1,228 common
    shares of the Company. The Company issued the common shares in
    March 2003. As of December 31, 2002, the Company had
    accrued the cash portion of the contingent consideration and the
    share portion of the contingent consideration had been recorded
    as issuable shares and included in
    shareholders equity. As part of the negotiations of the
    contingent consideration, the former owners of Burnham agreed to
    relinquish their rights to put options on all of the
    1,423 common shares issued as part of the
    2002 acquisition, as well as on shares issued as contingent
    consideration in exchange for release from escrow provisions on
    those same common shares. The total additional consideration of
    $22,794 is shown as an addition to goodwill and customer
    relationships in the table below.





|                                |                                
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|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    57



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##### Table of Contents





|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |        |  |  |   |        |  
|-------------------------------------------------------------------------- |  | ------------ | ------ | - | ------------- | ------- | ---------- | ------------- |  | - | ------- | - |  | ----- | ------ |  |  | - | ------ | -
|                                                                           |  |              |        |   |               | Burnham |            |               |  |   |        
|                                                                           |  | Hooper       |        |   |               |         | Contingent |               |  |   |         |  
|                                                                           |  | Hayes        |        |   | Hub Indiana   |         |            | Consideration |  |   | Other   |   |  | Total |       
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|                                                                           |  | Nov. 1, 2002 |        |   | Dec. 31, 2002 |         |            | Dec. 31, 2002 |  |   | Various |   |  |      
|Acquisition Date                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |        |  |  |   |        |  
|Working capital                                                            |  | $            | (1,141 | ) |               | $       | (289       | )             |  | $ | (628    | ) |  | $     | 1,180  |  |  | $ | (878   | )
|Property, equipment and other assets                                       |  |              | 69     |   |               |         | 1,312      |               |  |   |        |   |  |       | 108    |  |  |   | 1,489  |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|Net assets (liabilities) at fair value                                     |  | $            | (1,072 | ) |               | $       | 1,023      |               |  | $ | (628    | ) |  | $     | 1,288  |  |  | $ | 611    |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|Consideration                                                              |  |              |        |   |               |         |            |               |  |   |         |   |  |       |        |  |  |   |        |  
|Cash                                                                       |  | $            | 1,514  |   |               | $       | 37,250     |               |  | $ |        |   |  | $     | 12,899 |  |  | $ | 51,663 |  
|Debt                                                                       |  |              |       |   |               |         | 122        |               |  |   | 8,423   |   |  |       | 2,365  |  |  |   | 10,910 |  
|Contingently issuable shares                                               |  |              |       |   |               |         |           |               |  |   | 13,743  |   |  |       |       |  |  |   | 13,743 |  
|Common shares (at market value)                                            |  |              | 7,115  |   |               |         |           |               |  |   |        |   |  |       | 344    |  |  |   | 7,459  |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|                                                                           |  | $            | 8,629  |   |               | $       | 37,372     |               |  | $ | 22,166  |   |  | $     | 15,608 |  |  | $ | 83,775 |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|Goodwill                                                                   |  | $            | 6,209  |   |               | $       | 24,622     |               |  | $ | 21,096  |   |  | $     | 10,704 |  |  | $ | 62,631 |  
|Customer relationships                                                     |  |              | 3,265  |   |               |         | 11,727     |               |  |   | 1,698   |   |  |       | 3,384  |  |  |   | 20,074 |  
|Non-competition covenants                                                  |  |              | 227    |   |               |         |           |               |  |   |        |   |  |       | 232    |  |  |   | 459    |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|                                                                           |  | $            | 9,701  |   |               | $       | 36,349     |               |  | $ | 22,794  |   |  | $     | 14,320 |  |  | $ | 83,164 |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|Number of shares issued as consideration (000s)                           |  |              | 449    |   |               |         |           |               |  |   |        |   |  |       | 24     |  |  |   | 473    |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       
|Number of shares issued as contingently issuable
    consideration (000s) |  |              |       |   |               |         |           |               |  |   | 1,228   |   |  |       |       |  |  |   | 1,228  |  
|                                                                           |  |              |        |   |               |         |            |               |  |   |         |   |  |       |       



Contingent consideration








|                               |                                
|------------------------------ | -------------------------------
|58   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents






5.    Accounts and other receivables




|                                         |  |              |         |   |      |   |         |  
|---------------------------------------- |  | ------------ | ------- | - | ---- | - | ------- | -
|                                         |  | December 31, |        
|                                         |  |              |        
|                                         |  | 2004         |         |   | 2003 |  
|                                         |  |              |         |   |      |  
|Client premiums receivable               |  | $            | 128,345 |   |      | $ | 138,494 |  
|Commissions receivable                   |  |              | 31,565  |   |      |   | 22,228  |  
|Less: Allowance for doubtful accounts    |  |              | (1,436  | ) |      |   | (1,086  | )
|Less: Allowance for policy cancellations |  |              | (1,876  | ) |      |   | (1,343  | )
|                                         |  |              |         |   |      |  
|                                         |  |              | 156,598 |   |      |   | 158,293 |  
|Other receivables                        |  |              | 6,243   |   |      |   | 5,435   |  
|                                         |  |              |         |   |      |  
|                                         |  | $            | 162,841 |   |      | $ | 163,728 |  
|                                         |  |              |         |   |      |  



|                                                          |  |      |        |   |      |   |       |      |  |   |      |  
|--------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ----- | ---- |  | - | ---- | -
|                                                          |  | 2004 |        |   | 2003 |   |       | 2002 | 
|                                                          |  |      |        |   |      |   |       |      | 
|Balance, January 1                                        |  | $    | 1,086  |   |      | $ | 714   |      |  | $ | 815  |  
|Charged to net earnings before income taxes               |  |      | 664    |   |      |   | 1,057 |      |  |   | 233  |  
|Deductions of amounts previously charged to the provision |  |      | (1,251 | ) |      |   | (810  | )    |  |   | (335 | )
|Acquired through acquisitions                             |  |      | 937    |   |      |   | 125   |      |  |   | 1    |  
|                                                          |  |      |        |   |      |   |       |      | 
|Balance, December 31                                      |  | $    | 1,436  |   |      | $ | 1,086 |      |  | $ | 714  |  
|                                                          |  |      |        |   |      |   |       |      | 






6.    Intangible assets




|                                   |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |   |       |       |  |   |        |        | 
|---------------------------------- | ------------------------- | ----------------------- | ------- | ------ | ----------------------- | - | ------ | ------ |  | -------- | ------ | ------ | ----------- | ------------ | ------ | ------ | ----- | - | ----- | ----- |  | - | ------ | ------ | 
|                                   |                           | As of December 31, 2004 |         |        | As of December 31, 2003 |  
|                                   |                           |                         |         |        |                         |  
|                                   |                           | Gross                   |         |        |                         |   | Gross  |        |  |         
|                                   |                           | Carrying                |         |        | Accumulated             |   |        |        |  | Carrying |        |        | Accumulated |              |        |       
|                                   |                           | Amount                  |         |        | Amortization            |   |        | Total  |  |          | Amount |        |             | Amortization |        |        | Total |  
|                                   |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |  
|Definite life intangible assets:   |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |   |       |       |  |   |        |       
|                                   | Customer relationships    |                         | $       | 95,982 |                         |   | $      | 10,802 |  |          | $      | 85,180 |             |              | $      | 43,422 |       |   | $     | 5,480 |  |   | $      | 37,942 | 
|                                   | Non-competition covenants |                         |         | 791    |                         |   |        | 448    |  |          |        | 343    |             |              |        | 476    |       |   |       | 269   |  |   |        | 207    | 
|                                   | Trademarks                |                         |         |       |                         |   |        |       |  |          |        |       |             |              |        | 2,587  |       |   |       |      |  |   |        | 2,587  | 
|                                   |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |  
|                                   |                           |                         | 96,773  |        |                         |   | 11,250 |        |  |          | 85,523 |        |             |              | 46,485 |        |       |   | 5,749 |       |  |   | 40,736 |       
|                                   |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |  
|Indefinite life intangible assets: |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |   |       |       |  |   |        |       
|                                   | Non-competition covenants |                         |         | 3,319  |                         |   |        |       |  |          |        | 3,319  |             |              |        | 2,167  |       |   |       |      |  |   |        | 2,167  | 
|                                   |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |  
|Total                              |                           | $                       | 100,092 |        |                         | $ | 11,250 |        |  | $        | 88,842 |        |             | $            | 48,652 |        |       | $ | 5,749 |       |  | $ | 42,903 |       
|                                   |                           |                         |         |        |                         |   |        |        |  |          |        |        |             |              |        |        |       |  







|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    59



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##### Table of Contents







|                                   |                           |      |        |        |      |   |       |       | 
|---------------------------------- | ------------------------- | ---- | ------ | ------ | ---- | - | ----- | ----- | 
|                                   |                           | 2004 |        |        | 2003 |  
|                                   |                           |      |        |        |      |  
|Definite life intangible assets:   |                           |      |        |        |      |   |       |      
|                                   | Customer relationships    |      | $      | 52,695 |      |   | $     | 1,602 | 
|                                   | Non-competition covenants |      |        |       |      |   |       | 206   | 
|                                   |                           |      |        |        |      |  
|                                   |                           |      | 52,695 |        |      |   | 1,808 |      
|Indefinite life intangible assets: |                           |      |        |        |      |   |       |      
|                                   | Non-competition covenants |      |        | 1,451  |      |   |       | 136   | 
|                                   |                           |      |        |        |      |  
|Total                              |                           | $    | 54,146 |        |      | $ | 1,944 |      
|                                   |                           |      |        |        |      |  





|                                  |  |            |        |   |            |   |         |       |  |   |         |  
|--------------------------------- |  | ---------- | ------ | - | ---------- | - | ------- | ----- |  | - | ------- | -
|                                  |  | Operations |        |   | Operations |   |         |      
|                                  |  | in Canada  |        |   | in U.S.    |   |         | Total | 
|                                  |  |            |        |   |            |   |         |       | 
|Balance as of December 31, 2002   |  | $          | 75,386 |   |            | $ | 206,326 |       |  | $ | 281,712 |  
|Goodwill acquired during 2003     |  |            | 535    |   |            |   | 7,654   |       |  |   | 8,189   |  
|Goodwill disposed during 2003     |  |            | (478   | ) |            |   | (197    | )     |  |   | (675    | )
|Cumulative translation adjustment |  |            | 16,636 |   |            |   |        |       |  |   | 16,636  |  
|                                  |  |            |        |   |            |   |         |       | 
|Balance as of December 31, 2003   |  |            | 92,079 |   |            |   | 213,783 |       |  |   | 305,862 |  
|Goodwill acquired during 2004     |  |            | 1,005  |   |            |   | 68,298  |       |  |   | 69,303  |  
|Goodwill disposed during 2004     |  |            | (4,604 | ) |            |   | (727    | )     |  |   | (5,331  | )
|Cumulative translation adjustment |  |            | 6,842  |   |            |   |        |       |  |   | 6,842   |  
|                                  |  |            |        |   |            |   |         |       | 
|Balance as of December 31, 2004   |  | $          | 95,322 |   |            | $ | 281,354 |       |  | $ | 376,676 |  
|                                  |  |            |        |   |            |   |         |       | 



|                          |  |      |       |  |      |   |       |      |  |   |       | 
|------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- | 
|                          |  | 2004 |       |  | 2003 |   |       | 2002 | 
|                          |  |      |       |  |      |   |       |      | 
|Customer relationships    |  | $    | 5,344 |  |      | $ | 3,040 |      |  | $ | 1,627 | 
|Non-competition covenants |  |      | 176   |  |      |   | 168   |      |  |   | 44    | 
|                          |  |      |       |  |      |   |       |      | 
|Total                     |  | $    | 5,520 |  |      | $ | 3,208 |      |  | $ | 1,671 | 
|                          |  |      |       |  |      |   |       |      | 



|                          |  |      |       |  |      |   |       |      |  |   |       |  |  |      |       |  |  |   |       | 
|------------------------- |  | ---- | ----- |  | ---- | - | ----- | ---- |  | - | ----- |  |  | ---- | ----- |  |  | - | ----- | 
|Year ended December 31,   |  | 2005 |       |  | 2006 |   |       | 2007 |  |   | 2008  |  |  | 2009 |      
|                          |  |      |       |  |      |   |       |      |  |   |       |  |  |      |      
|Customer relationships    |  | $    | 7,388 |  |      | $ | 7,388 |      |  | $ | 7,388 |  |  | $    | 7,388 |  |  | $ | 7,388 | 
|Non-competition covenants |  |      | 180   |  |      |   | 126   |      |  |   | 70    |  |  |      | 2     |  |  |   | 1     | 
|                          |  |      |       |  |      |   |       |      |  |   |       |  |  |      |      
|Total                     |  | $    | 7,568 |  |      | $ | 7,514 |      |  | $ | 7,458 |  |  | $    | 7,390 |  |  | $ | 7,389 | 
|                          |  |      |       |  |      |   |       |      |  |   |       |  |  |      |      





|                               |                                
|------------------------------ | -------------------------------
|60   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents






7.    Property and equipment


|                       |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |   |        |  |  |   |        | 
|---------------------- |  | ---- | ------ | ----------- | ------------ | - | -------- | ----- |  | - | ------ | ----------- |  | ------------ | -------- |  | ----- | - | ------ |  |  | - | ------ | 
|                       |  | 2004 |        |             | 2003         |  
|                       |  |      |        |             |              |  
|                       |  |      |        | Accumulated |              |   | Net Book |       |  |   |        | Accumulated |  |              | Net Book | 
|                       |  | Cost |        |             | Depreciation |   |          | Value |  |   | Cost   |             |  | Depreciation |          |  | Value |  
|                       |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |  
|Leasehold improvements |  | $    | 12,496 |             |              | $ | 4,937    |       |  | $ | 7,559  |             |  | $            | 10,522   |  |       | $ | 3,419  |  |  | $ | 7,103  | 
|Office equipment       |  |      | 18,959 |             |              |   | 10,268   |       |  |   | 8,691  |             |  |              | 15,416   |  |       |   | 8,357  |  |  |   | 7,059  | 
|Computer equipment     |  |      | 29,250 |             |              |   | 17,593   |       |  |   | 11,657 |             |  |              | 24,998   |  |       |   | 14,979 |  |  |   | 10,019 | 
|                       |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |  
|                       |  | $    | 60,705 |             |              | $ | 32,798   |       |  | $ | 27,907 |             |  | $            | 50,936   |  |       | $ | 26,755 |  |  | $ | 24,181 | 
|                       |  |      |        |             |              |   |          |       |  |   |        |             |  |              |          |  |       |  










8.    Accounts payable and accrued
liabilities




|                                                       |  |              |         |  |      |   |         | 
|------------------------------------------------------ |  | ------------ | ------- |  | ---- | - | ------- | 
|                                                       |  | December 31, |        
|                                                       |  |              |        
|                                                       |  | 2004         |         |  | 2003 |  
|                                                       |  |              |         |  |      |  
|Insurance premiums payable                             |  | $            | 198,901 |  |      | $ | 176,211 | 
|Other accounts payable and accrued liabilities         |  |              | 58,554  |  |      |   | 49,957  | 
|Stock based compensation related to Talbot acquisition |  |              | 14,388  |  |      |   |        | 
|                                                       |  |              |         |  |      |  
|                                                       |  | $            | 271,843 |  |      | $ | 226,168 | 
|                                                       |  |              |         |  |      |  




9.    Debt


|                                                      |  |              |         |   |      |   |        |  
|----------------------------------------------------- |  | ------------ | ------- | - | ---- | - | ------ | -
|                                                      |  | December 31, |        
|                                                      |  |              |        
|                                                      |  | 2004         |         |   | 2003 |  
|                                                      |  |              |         |   |      |  
|Series A Senior Notes, with interest at 5.71%(1)      |  | $            | 10,000  |   |      | $ | 10,000 |  
|Series B Senior Notes, with interest at 6.16%(1)      |  |              | 55,000  |   |      |   | 55,000 |  
|Revolving U.S. Dollar LIBOR loan(2)                   |  |              | 65,000  |   |      |   |       |  
|Term loan, interest only at 10%, due February 2007(3) |  |              | 7,500   |   |      |   | 7,500  |  
|Term loan, variable interest, due December 2007       |  |              | 3,500   |   |      |   |       |  
|Various other unsecured notes payable and debt(4)     |  |              | 10,329  |   |      |   | 5,649  |  
|Capital leases(4)                                     |  |              | 468     |   |      |   | 650    |  
|                                                      |  |              |         |   |      |  
|Long-term debt and capital leases                     |  |              | 151,797 |   |      |   | 78,799 |  
|Less current portion                                  |  |              | (5,195  | ) |      |   | (3,362 | )
|                                                      |  |              |         |   |      |  
|                                                      |  | $            | 146,602 |   |      | $ | 75,437 |  
|                                                      |  |              |         |   |      |  





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    61



---



##### Table of Contents





|                                 |  |   |         | 
|-------------------------------- |  | - | ------- | 
|For the Year Ending December 31, |  |   |         | 
|2005                             |  | $ | 5,195   | 
|2006                             |  |   | 4,479   | 
|2007                             |  |   | 10,605  | 
|2008                             |  |   | 69,426  | 
|2009                             |  |   | 14,759  | 
|2010 and thereafter              |  |   | 47,333  | 
|                                 |  |   |        
|                                 |  | $ | 151,797 | 
|                                 |  |   |        






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Senior Notes  As at December 31, 2004 the
    Company has outstanding $65 million aggregate principal
    amount of unsecured senior notes issued June 10, 2002. The
    senior notes were issued in two series: Series A represents
    $10 million aggregate principal amount of 5.71% senior
    notes with interest due semi-annually, and principal of $3,333
    due annually, June 15, 2008 through June 15, 2010 and
    Series B represents $55 million aggregate principal
    amount of 6.16% senior notes with interest due semi-annually,
    and principal of $11,000 due annually June 15, 2009 through
    June 15, 2013. The senior notes were sold on a private
    basis in the United States to institutional accredited
    investors. Net proceeds of the sale of the senior notes were
    used to pay down $50 million of the Companys
    revolving U.S. Dollar LIBOR Loan with the balance for
    general corporate purposes and acquisitions. The Company
    incurred approximately $0.7 million in fees and expenses
    related to the offering of these notes, which were capitalized
    and are being amortized to expense over the term of the notes.
    At December 31, 2004, $65 million was outstanding
    under these senior notes, and the Company was in compliance with
    all financial covenants.
|   
|    | On July 15, 2003, the Company entered into an interest rate
    swap agreement. The effect of the swap is to convert the fixed
    rate interest payments on the 5.71% senior notes and 6.16%
    senior notes in amounts of $10 million and
    $55 million, respectively, to a floating rate of
    approximately 2.00% and 2.40% for 2004 and 2003, respectively.
    The Company accounts for the swap transaction using the
    synthetic instruments method under which the net interest
    expense on the swap and associated debt is reported in earnings
    as if it were a single, synthetic, financial instrument. As at
    December 31, 2004, the Company estimated the fair value of
    the swap to be $2.4 million, which is not recognized in
    these financial statements. Accordingly, $2.4 million is
    the estimated amount that the Company would need to pay to
    terminate the swap as of December 31, 2004.                                                                                                                                                                                                                                                                                                                                                                                                      
|   
|(2) | Revolving U.S. dollar LIBOR loan  This unsecured
    facility totals $75 million, bears interest at a floating
    rate of prime plus 1% or 112.5 basis points above LIBOR. LIBOR
    was 2.40% and 1.12% at December 31, 2004 and 2003,
    respectively. The facility is available on a revolving basis for
    one year and expires on April 22, 2005. However, if the
    revolving period is not extended, the Company may convert the
    outstanding balance under the facility to a three year non-
    revolving term loan repayable at the end of three years with an
    interest rate of 137.5 basis points above the Canadian dollar
    interest swap rate. An annual commitment fee of 20 basis points
    is assessed on the unused balance. Borrowings under this
    facility totaled $65 million and $NIL at December 31,
    2004 and 2003, respectively. As of December 31, 2004, the
    Company was in compliance with all financial covenants governing
    this facility.                                                                                                                                                                                                                                                                                                                                               
|   
|(3) | This term loan is from an insurance carrier. The terms of the
    loan provide for an incentive arrangement whereby a credit can
    be earned that will reduce annual interest payments under the
    loan (based on target premiums placed with the carrier) which
    reduces the principal repayment due in February 2007 (based on
    both target premiums placed with the carrier as well as the loss
    ratio on premiums placed with the carrier). Under this incentive
    arrangement, both the annual interest payments as well as the
    principal payment can be reduced to zero. Credits were earned
    for 2004 and 2003 which reduced interest payments to zero from
    $750, for both years.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   
|(4) | Certain property and equipment have been pledged as collateral
    in amounts not less than the outstanding balance of the loan at
    December 31, 2004 and 2003, respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  





|                               |                                
|------------------------------ | -------------------------------
|62   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents














10. Defined contribution plan







11. Shareholders equity


Share capital








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    63



---



##### Table of Contents



|                                                                               |  |               |        |   |        |   |         |  
|------------------------------------------------------------------------------ |  | ------------- | ------ | - | ------ | - | ------- | -
|                                                                               |  | Common Shares |       
|                                                                               |  | Outstanding   |       
|                                                                               |  |               |       
|                                                                               |  | (000s)       |        |   | Amount |  
|                                                                               |  |               |        |   |        |  
|Balance, December 31, 2001                                                     |  |               | 21,656 |   |        | $ | 125,506 |  
|Issued  U.S. IPO                                                              |  |               | 6,900  |   |        |   | 90,616  |  
|Issued for executive stock purchase plan (net of repurchases)                  |  |               | (4     | ) |        |   | (152    | )
|Release of put option liability                                                |  |               |       |   |        |   | 11,768  |  
|Purchase of subsidiaries                                                       |  |               | 473    |   |        |   | 7,459   |  
|                                                                               |  |               |        |   |        |  
|Balance, December 31, 2002                                                     |  |               | 29,025 |   |        |   | 235,197 |  
|Purchase of subsidiaries                                                       |  |               | 32     |   |        |   | 538     |  
|Repurchases of executive share purchase plan shares                            |  |               | (7     | ) |        |   | (66     | )
|Share issue costs, net of future tax asset                                     |  |               |       |   |        |   | (61     | )
|Shares issued for contingent consideration                                     |  |               | 1,246  |   |        |   | 14,041  |  
|Cancellation of shares                                                         |  |               | (8     | ) |        |   | (91     | )
|Restricted share units released                                                |  |               | 7      |   |        |   | 112     |  
|Stock options exercised                                                        |  |               | 1      |   |        |   | 14      |  
|Reclassification of executive share purchase plan loans                        |  |               | (153   | ) |        |   | (1,918  | )
|Release of put option liability                                                |  |               |       |   |        |   | 7,079   |  
|                                                                               |  |               |        |   |        |  
|Balance, December 31, 2003                                                     |  |               | 30,143 |   |        |   | 254,845 |  
|Shares issued                                                                  |  |               | 181    |   |        |   | 3,337   |  
|Executive share purchase plan share loan cancellations, net of
    repurchases |  |               | 1      |   |        |   | 33      |  
|Shares issued for contingent consideration                                     |  |               | 53     |   |        |   | 904     |  
|Cancellation of shares                                                         |  |               | (2     | ) |        |   | (26     | )
|Stock options exercised                                                        |  |               | 33     |   |        |   | 497     |  
|Restricted share units released                                                |  |               | 2      |   |        |   | 27      |  
|                                                                               |  |               |        |   |        |  
|Balance, December 31, 2004                                                     |  |               | 30,411 |   |        | $ | 259,617 |  
|                                                                               |  |               |        |   |        |  

Issuable shares


|                                      |  |               |        |   |        |   |         |  
|------------------------------------- |  | ------------- | ------ | - | ------ | - | ------- | -
|                                      |  | Common Shares |       
|                                      |  |               |       
|                                      |  | (000s)       |        |   | Amount |  
|                                      |  |               |        |   |        |  
|Balance, December 31, 2001            |  |               |       |   |        | $ |        |  
|Issuable for contingent consideration |  |               | 1,228  |   |        |   | 13,743  |  
|                                      |  |               |        |   |        |  
|Balance, December 31, 2002            |  |               | 1,228  |   |        |   | 13,743  |  
|Issued                                |  |               | (1,228 | ) |        |   | (13,743 | )
|Issuable for contingent consideration |  |               | 43     |   |        |   | 721     |  
|                                      |  |               |        |   |        |  
|Balance, December 31, 2003            |  |               | 43     |   |        |   | 721     |  
|Issued                                |  |               | (43    | ) |        |   | (721    | )
|                                      |  |               |        |   |        |  
|Balance, December 31, 2004            |  |               |       |   |        | $ |        |  
|                                      |  |               |        |   |        |  

Contributed surplus


|                                  |  |      |        |  |      |   |       |      |  |   |       | 
|--------------------------------- |  | ---- | ------ |  | ---- | - | ----- | ---- |  | - | ----- | 
|                                  |  | 2004 |        |  | 2003 |   |       | 2002 | 
|                                  |  |      |        |  |      |   |       |      | 
|Balance at December 31            |  | $    | 4,806  |  |      | $ | 1,234 |      |  | $ |      | 
|Non-cash stock based compensation |  |      | 7,755  |  |      |   | 3,284 |      |  |   | 1,082 | 
|Other                             |  |      | 120    |  |      |   | 288   |      |  |   | 152   | 
|                                  |  |      |        |  |      |   |       |      | 
|Balance at December 31            |  | $    | 12,681 |  |      | $ | 4,806 |      |  | $ | 1,234 | 
|                                  |  |      |        |  |      |   |       |      | 





|                               |                                
|------------------------------ | -------------------------------
|64   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents



Cumulative translation account


|                                                                        |  |      |        |   |      |   |        |      |  |   |       |  
|----------------------------------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ----- | -
|                                                                        |  | 2004 |        |   | 2003 |   |        | 2002 | 
|                                                                        |  |      |        |   |      |   |        |      | 
|Balance at December 31                                                  |  | $    | 20,062 |   |      | $ | 2,185  |      |  | $ | 2,770 |  
|Translation of self-sustaining foreign operations                       |  |      | 6,981  |   |      |   | 19,553 |      |  |   | (269  | )
|Translation of debt financing of self-sustaining foreign
    operations |  |      | (60    | ) |      |   | (1,676 | )    |  |   | (316  | )
|                                                                        |  |      |        |   |      |   |        |      | 
|Balance at December 31                                                  |  | $    | 26,983 |   |      | $ | 20,062 |      |  | $ | 2,185 |  
|                                                                        |  |      |        |   |      |   |        |      | 




12. Equity Incentive Plan






|                           |  |         |       |   |                  |   |       | 
|-------------------------- |  | ------- | ----- | - | ---------------- | - | ----- | 
|                           |  | Number  |       |   | Weighted-Average |  
|                           |  | (000s) |       |   | Exercise Price   |  
|                           |  |         |       |   |                  |  
|Balance, December 31, 2001 |  |         |      |   |                  | $ |      | 
|Granted                    |  |         | 1,270 |   |                  | $ | 15.67 | 
|Exercised                  |  |         |      |   |                  | $ |      | 
|Forfeited                  |  |         |      |   |                  | $ |      | 
|                           |  |         |       |   |                  |  
|Balance, December 31, 2002 |  |         | 1,270 |   |                  | $ | 15.67 | 
|Granted                    |  |         | 268   |   |                  | $ | 13.79 | 
|Exercised                  |  |         | (1    | ) |                  | $ | 15.67 | 
|Forfeited                  |  |         | (39   | ) |                  | $ | 15.67 | 
|                           |  |         |       |   |                  |  
|Balance, December 31, 2003 |  |         | 1,498 |   |                  | $ | 15.64 | 
|Exercised                  |  |         | (33   | ) |                  | $ | 15.06 | 
|Forfeited                  |  |         | (9    | ) |                  | $ | 15.29 | 
|                           |  |         |       |   |                  |  
|Balance, December 31, 2004 |  |         | 1,456 |   |                  | $ | 15.34 | 
|                           |  |         |       |   |                  |  



|               |  |             |       |  |                  |  |            |             |  |  |             |  |  |                  |       |  |             |  |            |  |  |  |     | 
|-------------- |  | ----------- | ----- |  | ---------------- |  | ---------- | ----------- |  |  | ----------- |  |  | ---------------- | ----- |  | ----------- |  | ---------- |  |  |  | --- | 
|               |  | 2004        |       |  | 2003             | 
|               |  |             |       |  |                  | 
|               |  | Number      |       |  | Weighted-Average |  |            | Number      |  |  | Number      |  |  | Weighted-Average |       |  | Number      | 
|               |  | Outstanding |       |  | Remaining        |  |            | Exercisable |  |  | Outstanding |  |  | Remaining        |       |  | Exercisable | 
|Exercise Price |  | (000s)     |       |  | Contractual Life |  |            | (000s)     |  |  | (000s)     |  |  | Contractual Life |       |  | (000s)     | 
|               |  |             |       |  |                  |  |            |             |  |  |             |  |  |                  |       |  |             | 
|$15.67         |  |             | 1,201 |  |                  |  | 4.42 years |             |  |  | 812         |  |  |                  | 1,230 |  |             |  | 5.43 years |  |  |  | 417 | 
|$13.79         |  |             | 255   |  |                  |  | 5.16 years |             |  |  | 96          |  |  |                  | 268   |  |             |  | 6.08 years |  |  |  | 6   | 
|               |  |             |       |  |                  |  |            |             |  |  |             |  |  |                  |       |  |             | 
|               |  |             | 1,456 |  |                  |  | 4.55 years |             |  |  | 908         |  |  |                  | 1,498 |  |             |  | 5.55 years |  |  |  | 423 | 
|               |  |             |       |  |                  |  |            |             |  |  |             |  |  |                  |       |  |             | 





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    65



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##### Table of Contents



|               |  |             |       |  |                  |  |            |             |  |  |   | 
|-------------- |  | ----------- | ----- |  | ---------------- |  | ---------- | ----------- |  |  | - | 
|               |  | 2002        |      
|               |  |             |      
|               |  | Number      |       |  | Weighted-Average |  |            | Number      | 
|               |  | Outstanding |       |  | Remaining        |  |            | Exercisable | 
|Exercise Price |  | (000s)     |       |  | Contractual Life |  |            | (000s)     | 
|               |  |             |       |  |                  |  |            |             | 
|$15.67         |  |             | 1,270 |  |                  |  | 6.45 years |             |  |  |  | 
|$13.79         |  |             |      |  |                  |  |            |             |  |  |  | 
|               |  |             |       |  |                  |  |            |             | 
|               |  |             | 1,270 |  |                  |  | 6.45 years |             |  |  |  | 
|               |  |             |       |  |                  |  |            |             | 



|                        |  |      |          |  |      |  |          | 
|----------------------- |  | ---- | -------- |  | ---- |  | -------- | 
|                        |  | 2003 |          |  | 2002 | 
|                        |  |      |          |  |      | 
|Dividend yield          |  |      | 2.00%    |  |      |  | 1.15%    | 
|Expected volatility     |  |      | 40.1%    |  |      |  | 30.0%    | 
|Risk free interest rate |  |      | 2.90%    |  |      |  | 4.14%    | 
|Expected life           |  |      | 5  years |  |      |  | 5  years | 











|                                   |                                                        |      |        |        |      |   |       |       |  |   |       |       | 
|---------------------------------- | ------------------------------------------------------ | ---- | ------ | ------ | ---- | - | ----- | ----- |  | - | ----- | ----- | 
|                                   |                                                        | 2004 |        |        | 2003 |   |       | 2002  | 
|                                   |                                                        |      |        |        |      |   |       |       | 
|Non-cash stock based compensation: |                                                        |      |        |        |      |   |       |       |  |   |       |      
|                                   | Stock options granted June 2002                        |      | $      | 1,955  |      |   | $     | 1,899 |  |   | $     | 1,089 | 
|                                   | Stock options granted February 2003                    |      |        | 445    |      |   |       | 410   |  |   |       |      | 
|                                   | Stock based compensation granted for 2003 bonuses      |      |        | 2,368  |      |   |       | 1,405 |  |   |       |      | 
|                                   | Restricted share units                                 |      |        | 1,609  |      |   |       | 1,087 |  |   |       |      | 
|                                   | Other                                                  |      |        | 125    |      |   |       |      |  |   |       |      | 
|                                   |                                                        |      |        |        |      |   |       |       | 
|                                   |                                                        |      | 6,502  |        |      |   | 4,801 |       |  |   | 1,089 |      
|                                   | Stock based compensation related to Talbot acquisition |      |        | 14,388 |      |   |       |      |  |   |       |      | 
|                                   |                                                        |      |        |        |      |   |       |       | 
|                                   |                                                        | $    | 20,890 |        |      | $ | 4,801 |       |  | $ | 1,089 |      
|                                   |                                                        |      |        |        |      |   |       |       | 





|                               |                                
|------------------------------ | -------------------------------
|66   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents






13. Earnings per share




|                                                                |                                                                              |      |        |       |      |   |        |       |  |   |        |       | 
|--------------------------------------------------------------- | ---------------------------------------------------------------------------- | ---- | ------ | ----- | ---- | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                |                                                                              | 2004 |        |       | 2003 |   |        | 2002  | 
|                                                                |                                                                              |      |        |       |      |   |        |       | 
|Net earnings (numerator)                                        |                                                                              | $    | 26,244 |       |      | $ | 36,509 |       |  | $ | 29,401 |      
|Effect of dilutive securities:                                  |                                                                              |      |        |       |      |   |        |       |  |   |        |      
|                                                                | Interest on 8.5% subordinated convertible debentures (net of
    income tax) |      |        | 1,900 |      |   |        | 1,886 |  |   |        | 2,520 | 
|                                                                | Dividends in lieu on restricted share units (net of income tax)              |      |        | 95    |      |   |        | 111   |  |   |        |      | 
|                                                                |                                                                              |      |        |       |      |   |        |       | 
|Net earnings plus assumed conversions (numerator)               |                                                                              | $    | 28,239 |       |      | $ | 38,506 |       |  | $ | 31,921 |      
|                                                                |                                                                              |      |        |       |      |   |        |       | 
|Weighted average shares outstanding  Basic
    (denominator)   |                                                                              |      | 30,246 |       |      |   | 29,967 |       |  |   | 23,181 |      
|Effect of dilutive securities:                                  |                                                                              |      |        |       |      |   |        |       |  |   |        |      
|                                                                | 8.5% subordinated convertible debentures                                     |      |        | 2,705 |      |   |        | 3,210 |  |   |        | 4,513 | 
|                                                                | Stock options                                                                |      |        | 1,294 |      |   |        | 147   |  |   |        |      | 
|                                                                | Restricted share units                                                       |      |        | 687   |      |   |        | 299   |  |   |        |      | 
|                                                                | Talbot earnout shares                                                        |      |        | 303   |      |   |        |      |  |   |        |      | 
|                                                                | Retractable shares                                                           |      |        | 70    |      |   |        | 133   |  |   |        | 49    | 
|                                                                | Issuable shares                                                              |      |        |      |      |   |        | 11    |  |   |        | 307   | 
|                                                                | Put options                                                                  |      |        |      |      |   |        |      |  |   |        | 2,149 | 
|                                                                |                                                                              |      |        |       |      |   |        |       | 
|Weighted average shares outstanding  Diluted
    (denominator) |                                                                              |      | 35,305 |       |      |   | 33,767 |       |  |   | 30,199 |      
|                                                                |                                                                              |      |        |       |      |   |        |       | 
|Earnings per common share:                                      |                                                                              |      |        |       |      |   |        |       |  |   |        |      
|                                                                | Basic                                                                        |      | $      | 0.87  |      |   | $      | 1.22  |  |   | $      | 1.27  | 
|                                                                | Diluted                                                                      |      | $      | 0.80  |      |   | $      | 1.14  |  |   | $      | 1.06  | 




14. Fair value of financial instruments









15. Income taxes








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    67



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##### Table of Contents





|                                                |  |      |        |   |      |   |        |      |  |   |        |  
|----------------------------------------------- |  | ---- | ------ | - | ---- | - | ------ | ---- |  | - | ------ | -
|                                                |  | 2004 |        |   | 2003 |   |        | 2002 | 
|                                                |  |      |        |   |      |   |        |      | 
|Provision for tax at statutory rates            |  | $    | 16,716 |   |      | $ | 20,270 |      |  | $ | 16,852 |  
|Non-deductible stock based compensation expense |  |      | 6,044  |   |      |   |       |      |  |   |       |  
|Income earned outside of Canada                 |  |      | (1,689 | ) |      |   | (1,688 | )    |  |   | (2,036 | )
|Non-taxable life insurance proceeds             |  |      |       |   |      |   | (366   | )    |  |   |       |  
|Non-taxable gain on sale of Old Lyme            |  |      |       |   |      |   |       |      |  |   | (1,009 | )
|Other                                           |  |      | (1,037 | ) |      |   | 626    |      |  |   | 449    |  
|                                                |  |      |        |   |      |   |        |      | 
|Provision for tax                               |  | $    | 20,034 |   |      | $ | 18,842 |      |  | $ | 14,256 |  
|                                                |  |      |        |   |      |   |        |      | 



|                                |                                     |      |   |         |      |  |   |         |  
|------------------------------- | ----------------------------------- | ---- | - | ------- | ---- |  | - | ------- | -
|                                |                                     | 2004 |   |         | 2003 | 
|                                |                                     |      |   |         |      | 
|Future income tax assets        |                                     |      |   |         |      |  |   |        
|                                | Current                             |      | $ | 3,901   |      |  | $ | 2,776   |  
|                                | Long-term                           |      |   | 4,368   |      |  |   | 5,232   |  
|                                |                                     |      |   |         |      | 
|                                | Total future income tax assets      |      |   | 8,269   |      |  |   | 8,008   |  
|                                |                                     |      |   |         |      | 
|Future income tax (liabilities) |                                     |      |   |         |      |  |   |        
|                                | Current                             |      |   | (34     | )    |  |   | (24     | )
|                                | Long-term                           |      |   | (14,805 | )    |  |   | (12,703 | )
|                                |                                     |      |   |         |      | 
|                                | Total future income tax liabilities |      |   | (14,839 | )    |  |   | (12,727 | )
|                                |                                     |      |   |         |      | 
|                                | Net future income tax liabilities   |      | $ | (6,570  | )    |  | $ | (4,719  | )
|                                |                                     |      |   |         |      | 

|                                                    |  |      |         |   |      |   |        |  
|--------------------------------------------------- |  | ---- | ------- | - | ---- | - | ------ | -
|                                                    |  | 2004 |         |   | 2003 |  
|                                                    |  |      |         |   |      |  
|Non-deductible book reserves                        |  | $    | 3,768   |   |      | $ | 2,211  |  
|Non-cash stock based compensation                   |  |      | 3,268   |   |      |   | 1,633  |  
|Net operating loss carryforwards                    |  |      | 3,217   |   |      |   | 2,895  |  
|IPO costs                                           |  |      | 1,434   |   |      |   | 2,003  |  
|Goodwill and other intangible asset amortization    |  |      | (10,876 | ) |      |   | (9,504 | )
|Unrealized foreign currency gains on long-term debt |  |      | (3,895  | ) |      |   | (1,744 | )
|Other accrual adjustments                           |  |      | (1,517  | ) |      |   | (1,373 | )
|Property and equipment depreciation                 |  |      | (1,379  | ) |      |   | (1,335 | )
|Other                                               |  |      | 376     |   |      |   | 495    |  
|Valuation allowance for future tax assets           |  |      | (966    | ) |      |   |       |  
|                                                    |  |      |         |   |      |  
|Net future income tax liabilities                   |  | $    | (6,570  | ) |      | $ | (4,719 | )
|                                                    |  |      |         |   |      |  







|                               |                                
|------------------------------ | -------------------------------
|68   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents






16. Interest and income taxes paid




|                  |  |      |        |  |      |   |        |      |  |   |        | 
|----------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                  |  | 2004 |        |  | 2003 |   |        | 2002 | 
|                  |  |      |        |  |      |   |        |      | 
|Interest paid     |  | $    | 6,936  |  |      | $ | 5,731  |      |  | $ | 7,714  | 
|Income taxes paid |  | $    | 21,806 |  |      | $ | 21,007 |      |  | $ | 13,124 | 




17. Segmented information






|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|--------------------------------------- |  | ------ | ------- | - | ---- | - | ------- | ------------ |  | - | ------- | - |  | ---- | ------- | - | ------------ | - | ------- | - |  | - | ------- | -
|                                        |  | 2004   |         |   | 2003 |  
|                                        |  |        |         |   |      |  
|                                        |  | Canada |         |   | U.S. |   |         | Consolidated |  |   | Canada  |   |  | U.S. |         |   | Consolidated |  
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|Revenue                                 |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                               |  | $      | 121,752 |   |      | $ | 239,243 |              |  | $ | 360,995 |   |  | $    | 109,238 |   |              | $ | 177,487 |   |  | $ | 286,725 |  
|Corporate                               |  |        | 22,448  |   |      |   | 9,424   |              |  |   | 31,872  |   |  |      | 20,331  |   |              |   | 1,803   |   |  |   | 22,134  |  
|Elimination of intra-segment revenue    |  |        | (22,367 | ) |      |   | (9,650  | )            |  |   | (32,017 | ) |  |      | (20,429 | ) |              |   | (2,071  | ) |  |   | (22,500 | )
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|                                        |  | $      | 121,833 |   |      | $ | 239,017 |              |  | $ | 360,850 |   |  | $    | 109,140 |   |              | $ | 177,219 |   |  | $ | 286,359 |  
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|Net earnings (loss) before income taxes |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                               |  | $      | 24,704  |   |      | $ | 40,096  |              |  | $ | 64,800  |   |  | $    | 17,600  |   |              | $ | 43,105  |   |  | $ | 60,705  |  
|Corporate                               |  |        | (9,163  | ) |      |   | (9,359  | )            |  |   | (18,522 | ) |  |      | 6,771   |   |              |   | (12,125 | ) |  |   | (5,354  | )
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|                                        |  | $      | 15,541  |   |      | $ | 30,737  |              |  | $ | 46,278  |   |  | $    | 24,371  |   |              | $ | 30,980  |   |  | $ | 55,351  |  
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|Income tax expense (benefit)  current  |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                               |  | $      | 8,772   |   |      | $ | 15,699  |              |  | $ | 24,471  |   |  | $    | 7,020   |   |              | $ | 14,302  |   |  | $ | 21,322  |  
|Corporate                               |  |        | (712    | ) |      |   | (3,855  | )            |  |   | (4,567  | ) |  |      | 209     |   |              |   | (4,609  | ) |  |   | (4,400  | )
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|                                        |  | $      | 8,060   |   |      | $ | 11,844  |              |  | $ | 19,904  |   |  | $    | 7,229   |   |              | $ | 9,693   |   |  | $ | 16,922  |  
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|Income tax expense (benefit)  future   |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                               |  | $      | (252    | ) |      | $ | 1,103   |              |  | $ | 851     |   |  | $    | (355    | ) |              | $ | 2,876   |   |  | $ | 2,521   |  
|Corporate                               |  |        | (688    | ) |      |   | (33     | )            |  |   | (721    | ) |  |      | (883    | ) |              |   | 282     |   |  |   | (601    | )
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|                                        |  | $      | (940    | ) |      | $ | 1,070   |              |  | $ | 130     |   |  | $    | (1,238  | ) |              | $ | 3,158   |   |  | $ | 1,920   |  
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|Net earnings (loss)                     |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                               |  | $      | 16,184  |   |      | $ | 23,294  |              |  | $ | 39,478  |   |  | $    | 10,935  |   |              | $ | 25,927  |   |  | $ | 36,862  |  
|Corporate                               |  |        | (7,763  | ) |      |   | (5,471  | )            |  |   | (13,234 | ) |  |      | 7,445   |   |              |   | (7,798  | ) |  |   | (353    | )
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  
|                                        |  | $      | 8,421   |   |      | $ | 17,823  |              |  | $ | 26,244  |   |  | $    | 18,380  |   |              | $ | 18,129  |   |  | $ | 36,509  |  
|                                        |  |        |         |   |      |   |         |              |  |   |         |   |  |      |         |   |              |  





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    69



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##### Table of Contents



|                                    |  |        |         |  |      |   |         |              |  |   |         |  |  |      |         |  |              |   |         |  |  |   |         | 
|----------------------------------- |  | ------ | ------- |  | ---- | - | ------- | ------------ |  | - | ------- |  |  | ---- | ------- |  | ------------ | - | ------- |  |  | - | ------- | 
|                                    |  | 2004   |         |  | 2003 |  
|                                    |  |        |         |  |      |  
|                                    |  | Canada |         |  | U.S. |   |         | Consolidated |  |   | Canada  |  |  | U.S. |         |  | Consolidated |  
|                                    |  |        |         |  |      |   |         |              |  |   |         |  |  |      |         |  |              |  
|Identifiable assets                 |  |        |         |  |      |   |         |              |  |   |         |  |  |      |         |  |              |   |         |  |  |   |         | 
|Brokerage                           |  | $      | 172,445 |  |      | $ | 624,171 |              |  | $ | 796,616 |  |  | $    | 176,653 |  |              | $ | 442,517 |  |  | $ | 619,170 | 
|Corporate                           |  |        | 52,339  |  |      |   | 8,580   |              |  |   | 60,919  |  |  |      | 65,316  |  |              |   | 16,117  |  |  |   | 81,433  | 
|                                    |  |        |         |  |      |   |         |              |  |   |         |  |  |      |         |  |              |  
|                                    |  | $      | 224,784 |  |      | $ | 632,751 |              |  | $ | 857,535 |  |  | $    | 241,969 |  |              | $ | 458,634 |  |  | $ | 700,603 | 
|                                    |  |        |         |  |      |   |         |              |  |   |         |  |  |      |         |  |              |  
|Amortization of intangible assets   |  | $      | 110     |  |      | $ | 5,410   |              |  | $ | 5,520   |  |  | $    | 75      |  |              | $ | 3,133   |  |  | $ | 3,208   | 
|Additions to property and equipment |  | $      | 2,802   |  |      | $ | 8,373   |              |  | $ | 11,175  |  |  | $    | 2,942   |  |              | $ | 5,185   |  |  | $ | 8,127   | 
|Depreciation                        |  | $      | 2,542   |  |      | $ | 4,724   |              |  | $ | 7,266   |  |  | $    | 2,350   |  |              | $ | 3,894   |  |  | $ | 6,244   | 
|Interest income                     |  | $      | 984     |  |      | $ | 966     |              |  | $ | 1,950   |  |  | $    | 914     |  |              | $ | 735     |  |  | $ | 1,649   | 
|Interest expense                    |  | $      | 6,680   |  |      | $ | 790     |              |  | $ | 7,470   |  |  | $    | 4,752   |  |              | $ | 439     |  |  | $ | 5,191   | 

|                                        |  |        |         |   |      |   |         |              |  |   |         |  
|--------------------------------------- |  | ------ | ------- | - | ---- | - | ------- | ------------ |  | - | ------- | -
|                                        |  | 2002   |        
|                                        |  |        |        
|                                        |  | Canada |         |   | U.S. |   |         | Consolidated | 
|                                        |  |        |         |   |      |   |         |              | 
|Revenue                                 |  |        |         |   |      |   |         |              |  |   |         |  
|Brokerage                               |  | $      | 85,761  |   |      | $ | 134,249 |              |  | $ | 220,010 |  
|Corporate                               |  |        | 19,758  |   |      |   | 54,183  |              |  |   | 73,941  |  
|Elimination of intra-segment revenue    |  |        | (19,708 | ) |      |   | (54,283 | )            |  |   | (73,991 | )
|                                        |  |        |         |   |      |   |         |              | 
|                                        |  | $      | 85,811  |   |      | $ | 134,149 |              |  | $ | 219,960 |  
|                                        |  |        |         |   |      |   |         |              | 
|Net earnings (loss) before income taxes |  |        |         |   |      |   |         |              |  |   |         |  
|Brokerage                               |  | $      | 10,688  |   |      | $ | 38,229  |              |  | $ | 48,917  |  
|Corporate                               |  |        | 8,879   |   |      |   | (14,139 | )            |  |   | (5,260  | )
|                                        |  |        |         |   |      |   |         |              | 
|                                        |  | $      | 19,567  |   |      | $ | 24,090  |              |  | $ | 43,657  |  
|                                        |  |        |         |   |      |   |         |              | 
|Income tax expense (benefit)  current  |  |        |         |   |      |   |         |              |  |   |         |  
|Brokerage                               |  | $      | 4,472   |   |      | $ | 11,871  |              |  | $ | 16,343  |  
|Corporate                               |  |        | 778     |   |      |   | (4,270  | )            |  |   | (3,492  | )
|                                        |  |        |         |   |      |   |         |              | 
|                                        |  | $      | 5,250   |   |      | $ | 7,601   |              |  | $ | 12,851  |  
|                                        |  |        |         |   |      |   |         |              | 
|Income tax expense (benefit)  future   |  |        |         |   |      |   |         |              |  |   |         |  
|Brokerage                               |  | $      | (408    | ) |      | $ | 2,280   |              |  | $ | 1,872   |  
|Corporate                               |  |        | (18     | ) |      |   | (449    | )            |  |   | (467    | )
|                                        |  |        |         |   |      |   |         |              | 
|                                        |  | $      | (426    | ) |      | $ | 1,831   |              |  | $ | 1,405   |  
|                                        |  |        |         |   |      |   |         |              | 
|Net earnings (loss)                     |  |        |         |   |      |   |         |              |  |   |         |  
|Brokerage                               |  | $      | 6,624   |   |      | $ | 24,078  |              |  | $ | 30,702  |  
|Corporate                               |  |        | 8,119   |   |      |   | (9,420  | )            |  |   | (1,301  | )
|                                        |  |        |         |   |      |   |         |              | 
|                                        |  | $      | 14,743  |   |      | $ | 14,658  |              |  | $ | 29,401  |  
|                                        |  |        |         |   |      |   |         |              | 
|Identifiable assets                     |  |        |         |   |      |   |         |              |  |   |         |  
|Brokerage                               |  | $      | 132,142 |   |      | $ | 412,379 |              |  | $ | 544,521 |  
|Corporate                               |  |        | 28,920  |   |      |   | 23,435  |              |  |   | 52,355  |  
|                                        |  |        |         |   |      |   |         |              | 
|                                        |  | $      | 161,062 |   |      | $ | 435,814 |              |  | $ | 596,876 |  
|                                        |  |        |         |   |      |   |         |              | 





|                               |                                
|------------------------------ | -------------------------------
|70   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents



|                                               |  |        |       |  |      |   |       |              |  |   |       | 
|---------------------------------------------- |  | ------ | ----- |  | ---- | - | ----- | ------------ |  | - | ----- | 
|                                               |  | 2002   |      
|                                               |  |        |      
|                                               |  | Canada |       |  | U.S. |   |       | Consolidated | 
|                                               |  |        |       |  |      |   |       |              | 
|Amortization of goodwill and intangible assets |  | $      | 36    |  |      | $ | 1,635 |              |  | $ | 1,671 | 
|Additions to property and equipment            |  | $      | 2,370 |  |      | $ | 2,124 |              |  | $ | 4,494 | 
|Depreciation                                   |  | $      | 1,823 |  |      | $ | 3,669 |              |  | $ | 5,492 | 
|Interest income                                |  | $      | 683   |  |      | $ | 1,070 |              |  | $ | 1,753 | 
|Interest expense                               |  | $      | 6,416 |  |      | $ | 901   |              |  | $ | 7,317 | 




18. Related party transactions




|                                          |  |      |        |  |      |   |        |      |  |   |        | 
|----------------------------------------- |  | ---- | ------ |  | ---- | - | ------ | ---- |  | - | ------ | 
|                                          |  | 2004 |        |  | 2003 |   |        | 2002 | 
|                                          |  |      |        |  |      |   |        |      | 
|Northbridge Financial Corporation         |  | $    | 23,378 |  |      | $ | 18,504 |      |  | $ | 12,787 | 
|Crum & Forster Holdings, Inc.             |  |      | 682    |  |      |   | 1,259  |      |  |   | 914    | 
|Fairfax Inc.                              |  |      | 3,638  |  |      |   | 8,411  |      |  |   | 6,278  | 
|                                          |  |      |        |  |      |   |        |      | 
|                                          |  |      | 27,698 |  |      |   | 28,174 |      |  |   | 19,979 | 
|Old Lyme Insurance Company, Ltd. (OLIC) |  |      | 2,113  |  |      |   |       |      |  |   |       | 
|                                          |  |      |        |  |      |   |        |      | 
|                                          |  | $    | 29,811 |  |      | $ | 28,174 |      |  | $ | 19,979 | 
|                                          |  |      |        |  |      |   |        |      | 












19. Reconciliation to U.S. GAAP








|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    71



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##### Table of Contents



Net earnings and comprehensive income




|                                                                        |                                                                                      |      |        |       |      |   |        |        |   |   |        |      |  
|----------------------------------------------------------------------- | ------------------------------------------------------------------------------------ | ---- | ------ | ----- | ---- | - | ------ | ------ | - | - | ------ | ---- | -
|                                                                        |                                                                                      | 2004 |        |       | 2003 |   |        | 2002   |  
|                                                                        |                                                                                      |      |        |       |      |   |        |        |  
|Net earnings for the year based on Canadian GAAP                        |                                                                                      | $    | 26,244 |       |      | $ | 36,509 |        |   | $ | 29,401 |     
|Cumulative effect of change in accounting policy for put
    options(2) |                                                                                      |      |       |       |      |   | 335    |        |   |   |       |     
|Adjustment to put option liability(2)                                   |                                                                                      |      |       |       |      |   | (409   | )      |   |   | (814   | )   
|Adjustment to investment held for sale(1)                               |                                                                                      |      |       |       |      |   |       |        |   |   | (2,236 | )   
|                                                                        |                                                                                      |      |        |       |      |   |        |        |  
|Net earnings for the year based on U.S. GAAP(3)                         |                                                                                      |      | 26,244 |       |      |   | 36,435 |        |   |   | 26,351 |     
|Other comprehensive income:(4)                                          |                                                                                      |      |        |       |      |   |        |        |   |   |        |     
|                                                                        | Unrealized gains (losses) net of tax of $(35)  2004,
    $(38)  2003, $50  2002,  |      |        | 55    |      |   |        | 62     |   |   |        | (81  | )
|                                                                        | Reclassification adjustment, net of tax of $(2) 
    2004, $48  2003, $(85)  2002 |      |        | 4     |      |   |        | (78    | ) |   |        | 138  |  
|                                                                        | Foreign currency translation adjustment                                              |      |        | 6,921 |      |   |        | 17,877 |   |   |        | (585 | )
|                                                                        |                                                                                      |      |        |       |      |   |        |        |  
|Comprehensive income based on U.S. GAAP(4)                              |                                                                                      | $    | 33,224 |       |      | $ | 54,296 |        |   | $ | 25,823 |     
|                                                                        |                                                                                      |      |        |       |      |   |        |        |  
|Basic earnings per share based on U.S. GAAP                             |                                                                                      | $    | 0.87   |       |      | $ | 1.22   |        |   | $ | 1.14   |     
|Diluted earnings per share based on U.S. GAAP                           |                                                                                      | $    | 0.80   |       |      | $ | 1.14   |        |   | $ | 0.96   |     

Shareholders equity




|                                            |                                                                         |      |         |     |      |   |         |    | 
|------------------------------------------- | ----------------------------------------------------------------------- | ---- | ------- | --- | ---- | - | ------- | -- | 
|                                            |                                                                         | 2004 |         |     | 2003 |  
|                                            |                                                                         |      |         |     |      |  
|Shareholders equity based on Canadian GAAP |                                                                         | $    | 381,783 |     |      | $ | 342,790 |   
|Adjustment to investment held for sale(1)   |                                                                         |      | (1,716  | )   |      |   | (1,716  | ) 
|Accumulated other comprehensive income:     |                                                                         |      |         |     |      |   |         |   
|                                            | Unrealized gains (losses), net of tax of $(99)  2004,
    $(56)  2003 |      |         | 157 |      |   |         | 90 | 
|                                            |                                                                         |      |         |     |      |  
|Shareholders equity based on U.S. GAAP(3)  |                                                                         | $    | 380,224 |     |      | $ | 341,164 |   
|                                            |                                                                         |      |         |     |      |  








|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Under Canadian GAAP, Old Lyme was recorded as an investment held
    for sale at its cost, which was equivalent to its fair value, of
    $40,938 on June 28, 2001. No further adjustments were made
    to the carrying value of the investment until Old Lyme was sold
    on May 30, 2002, when the Company recorded a gain of
    $2,613, equal to the difference between the sale proceeds (which
    were agreed to be its net asset value under U.S. GAAP as of
    December 31, 2001 plus interest at 4% per annum from
    December 31, 2001 until closing) and its carrying value.
    Interest on debt financing the purchase of Old Lyme was charged
    to income as it accrued.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under U.S. GAAP, Old Lyme was recorded as an investment
    held for sale at its fair value of $40,938. Between acquisition
    and completion of the sale the carrying value of the investment
    was adjusted for increases in fair value due to changes in its
    U.S. GAAP net asset value and interest accretion. Such
    adjustments were reflected as changes in goodwill arising on the
    HUB Northeast acquisition. Interest on debt financing the
    purchase of Old Lyme was debited to the carrying value of the
    investment and did not impact earnings. The difference between
    the carrying value of the investment as of the date of
    completion of the sale and the sale proceeds was reflected as an
    adjustment to goodwill arising on the HUB Northeast acquisition
    and accordingly no gain or loss was recorded in income.





|                               |                                
|------------------------------ | -------------------------------
|72   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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| |                                                                                                  
| | -------------------------------------------------------------------------------------------------
| | The impact of the above noted Canadian and U.S. GAAP
    differences on earnings were as follows:

|                                                                                             |  |      |   |      |  |      |   |  |  |   |        |  
|-------------------------------------------------------------------------------------------- |  | ---- | - | ---- |  | ---- | - |  |  | - | ------ | -
|                                                                                             |  | 2004 |   | 2003 |  | 2002 |  
|                                                                                             |  |      |   |      |  |      |  
|Gain recognized under Canadian GAAP not recorded under
    U.S. GAAP                         |  | $    |  |      |  | $    |  |  |  | $ | (2,613 | )
|Interest charged to earnings under Canadian GAAP not charged to
    earnings under U.S. GAAP |  |      |  |      |  |      |  |  |  |   | 377    |  
|                                                                                             |  |      |   |      |  |      |   |  | 
|                                                                                             |  | $    |  |      |  | $    |  |  |  | $ | (2,236 | )
|                                                                                             |  |      |   |      |  |      |   |  | 



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Under Canadian GAAP, the fair value of the put options
    (determined using the Black-Scholes model) issued in connection
    with certain 2001 acquisitions was allocated to equity
    instruments on the balance sheet. The balance of the purchase
    price was allocated to debt. Changes in the value of the put
    options in periods subsequent to the acquisition date are
    included in earnings. Under U.S. GAAP prior to July 1,
    2003, the fair value of the share consideration and the attached
    put options was initially recorded in equity and the redemption
    value of the shares to which the put options are attached was
    reclassified as mezzanine equity outside of shareholders
    equity as a result of the put options granted on those shares to
    certain of the selling shareholders. On July 1, 2003, the
    Company adopted Statement of Financial Accounting Standards
    (SFAS) No. 150, Accounting for Certain Financial
    Instruments with Characteristics of both Liabilities and Equity.
    This Statement requires that an issuer classify financial
    instruments meeting certain criteria as liabilities (or assets
    in some circumstances) rather than equity. As a result of the
    adoption of this new standard, the Company changed its
    accounting policy with respect to the financial instruments
    issued in connection with certain 2001 acquisitions. Effective
    July 1, 2003, the Company remeasured the fair value of the
    put options (using the Black-Scholes model) and classified this
    amount as liability. Amounts previously classified as mezzanine
    equity were reclassified as shareholders equity. The
    difference between the estimated fair value of the put options
    as at July 1, 2003 and May 31, 2001 was reported as a
    cumulative adjustment to net earnings under U.S. GAAP.
    Comparative financial statements were not restated. Under
    U.S. GAAP, changes in the estimated fair value of the put
    options are included in earnings.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Also under U.S. GAAP, the fair value of the put options at
    the date of issuance was also recorded as a debit and credit to
    shareholders equity, representing an unearned compensation
    expense, as the put options require the selling shareholders to
    remain employed by the Company in order to be able to exercise
    the put options. Compensation expense was recognized using the
    straight-line method over the period from the issue date to the
    exercise date.
|
| | As part of the negotiations of contingent consideration the
    former owners of certain 2001 acquisitions agreed to relinquish
    their rights to put options on 730,000 common shares at
    December 31, 2003 and on 1,423,000 common shares at
    December 31, 2002. Accordingly at December 31, 2004
    and 2003 no put options were outstanding on the Companys
    common shares.                                                                                                   





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    73



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|    |                                                                                                                                                                                                                                                      
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The condensed consolidated statements of earnings and cash flows
    for the years ended December 31, 2004, 2003 and 2002 and
    the condensed consolidated balance sheets as at
    December 31, 2004 and 2003, under U.S. GAAP are as
    follows:

|                                                             |  |      |         |   |      |   |         |      |  |   |         |  
|------------------------------------------------------------ |  | ---- | ------- | - | ---- | - | ------- | ---- |  | - | ------- | -
|                                                             |  | 2004 |         |   | 2003 |   |         | 2002 | 
|                                                             |  |      |         |   |      |   |         |      | 
|Condensed consolidated statements of earnings:               |  |      |         |   |      |   |         |      |  |   |         |  
|Revenue                                                      |  | $    | 360,850 |   |      | $ | 286,359 |      |  | $ | 219,960 |  
|Net earnings before income taxes                             |  | $    | 46,278  |   |      | $ | 55,376  |      |  | $ | 40,781  |  
|Net earnings                                                 |  | $    | 26,244  |   |      | $ | 36,435  |      |  | $ | 26,351  |  
|Condensed consolidated statements of cash flows:             |  |      |         |   |      |   |         |      |  |   |         |  
|Cash provided by operating activities                        |  | $    | 57,356  |   |      | $ | 53,936  |      |  | $ | 19,456  |  
|Cash (used in) investing activities                          |  | $    | (93,300 | ) |      | $ | (20,146 | )    |  | $ | (8,970  | )
|Cash provided by financing activities                        |  | $    | 48,073  |   |      | $ | 4,553   |      |  | $ | 3,176   |  
|Effect of exchange rate changes in cash and cash equivalents |  | $    | 4,023   |   |      | $ | 3,067   |      |  | $ | 100     |  
|Condensed consolidated balance sheets:                       |  |      |         |   |      |   |         |      |  |   |         |  
|Total current assets                                         |  | $    | 348,707 |   |      | $ | 314,307 |      |  |   |         |  
|Total assets(5)                                              |  | $    | 853,753 |   |      | $ | 695,125 |      |  |   |         |  
|Total current liabilities                                    |  | $    | 279,345 |   |      | $ | 233,358 |      |  |   |         |  
|Total liabilities(5)                                         |  | $    | 473,529 |   |      | $ | 355,961 |      |  |   |         |  
|Total shareholders equity                                   |  | $    | 380,224 |   |      | $ | 341,164 |      |  |   |         |  



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(4) | Under U.S. GAAP, comprehensive income is measured in
    accordance with SFAS No. 130, Reporting Comprehensive
    Income. This standard defines comprehensive income as all
    changes in equity other than those resulting from investments by
    owners and distributions to owners and includes the change in
    unrealized gains (losses) on debt and equity securities and
    foreign currency translation adjustments. Under Canadian GAAP
    unrealized gains and losses (arising from a temporary decline in
    value) on equity securities are not recorded and foreign
    currency translation adjustments are presented as movements in
    the cumulative translation account. Certain disclosures required
    by SFAS 115, Accounting for Certain Investments in Debt and
    Equity Securities, have not been included as such disclosures
    related to the Companys investments in debt and equity
    securities are immaterial to the overall financial statement
    presentation.                                                                                                                                                                                                       
|   
|(5) | Under Canadian GAAP, the Company accounts for the interest rate
    swap transaction which converted fixed rate interest payments of
    5.71% and 6.16% on the Senior Notes of $10 million and
    $55 million, respectively, using the synthetic instruments
    method. Under this method, the Company reports in earnings the
    net interest expense on the swap and associated debt as if it
    were a single, synthetic, financial instrument. The fair value
    of the swap, estimated at $2.4 million, is not recognized
    in the Companys Canadian GAAP financial statements. Under
    U.S. GAAP, the Company has designated the swap transaction
    of a hedge of changes in the fair value of its fixed rate debt
    caused by changes in interest rates. Under SFAS 133, Accounting
    for Derivative Instruments and Hedging Activities, the Company
    records the swap on its U.S. GAAP balance sheet at its fair
    value. Changes in fair value of the swap are reported in
    earnings. Changes in the fair value of the debt being hedged
    which are attributable to changes in interest rates are
    recognized in earnings by adjustment of the carrying amount of
    the debt.





|                               |                                
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|74   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents



Pro forma results of Talbot acquisition (unaudited)




|                                                          |         |      |         |      |      |   |         |      | 
|--------------------------------------------------------- | ------- | ---- | ------- | ---- | ---- | - | ------- | ---- | 
|                                                          |         | 2004 |         |      | 2003 |  
|                                                          |         |      |         |      |      |  
|Revenue                                                   |         | $    | 417,406 |      |      | $ | 386,288 |     
|Net income                                                |         | $    | 15,408  |      |      | $ | 12,667  |     
|Earnings per share                                        |         |      |         |      |      |   |         |     
|                                                          | Basic   |      | $       | 0.51 |      |   | $       | 0.42 | 
|                                                          | Diluted |      | $       | 0.47 |      |   | $       | 0.40 | 
|Weighted average shares outstanding  Basic
    (000s)   |         |      | 30,246  |      |      |   | 29,967  |     
|Weighted average shares outstanding  Diluted
    (000s) |         |      | 33,307  |      |      |   | 31,567  |     



Effects of New Accounting Pronouncements






Financial Instruments  Recognition and
Measurement




Comprehensive Income








|                                |                                
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|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    75



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##### Table of Contents






20. Quarterly Data (unaudited)


|                                 |  |         |        |  |         |   |        |         |  |   |         |  |  |      |         |  |  |   |         | 
|-------------------------------- |  | ------- | ------ |  | ------- | - | ------ | ------- |  | - | ------- |  |  | ---- | ------- |  |  | - | ------- | 
|                                 |  | First   |        |  | Second  |   |        | Third   |  |   | Fourth  |  |  | Full |        
|                                 |  | Quarter |        |  | Quarter |   |        | Quarter |  |   | Quarter |  |  | Year |        
|                                 |  |         |        |  |         |   |        |         |  |   |         |  |  |      |        
|Year Ended December 31, 2004     |  |         |        |  |         |   |        |         |  |   |         |  |  |      |         |  |  |   |         | 
|Revenue                          |  | $       | 79,349 |  |         | $ | 82,231 |         |  | $ | 94,902  |  |  | $    | 104,368 |  |  | $ | 360,850 | 
|Net earnings                     |  | $       | 9,623  |  |         | $ | 11,591 |         |  | $ | 1,146   |  |  | $    | 3,884   |  |  | $ | 26,244  | 
|Net earnings per share  Basic   |  | $       | 0.32   |  |         | $ | 0.38   |         |  | $ | 0.04    |  |  | $    | 0.13    |  |  | $ | 0.87    | 
|Net earnings per share  Diluted |  | $       | 0.29   |  |         | $ | 0.35   |         |  | $ | 0.04    |  |  | $    | 0.12    |  |  | $ | 0.80    | 
|Year Ended December 31, 2003     |  |         |        |  |         |   |        |         |  |   |         |  |  |      |         |  |  |   |         | 
|Revenue                          |  | $       | 68,877 |  |         | $ | 74,155 |         |  | $ | 64,671  |  |  | $    | 78,656  |  |  | $ | 286,359 | 
|Net earnings                     |  | $       | 8,904  |  |         | $ | 10,109 |         |  | $ | 6,820   |  |  | $    | 10,676  |  |  | $ | 36,509  | 
|Net earnings per share  Basic   |  | $       | 0.30   |  |         | $ | 0.34   |         |  | $ | 0.23    |  |  | $    | 0.36    |  |  | $ | 1.22    | 
|Net earnings per share  Diluted |  | $       | 0.28   |  |         | $ | 0.31   |         |  | $ | 0.22    |  |  | $    | 0.33    |  |  | $ | 1.14    | 




21. Subsequent events
















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|76   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



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##### Table of Contents








|        |                                                                                         
|------- | ----------------------------------------------------------------------------------------
|Item 9. | Changes in and Disagreements with Accountants on Accounting
    and Financial Disclosure








|         |                        
|-------- | -----------------------
|Item 9A. | Controls and Procedures

Evaluation of Disclosure Controls and Procedures






Managements Annual Report on Internal Control over
Financial Reporting




Changes in Internal Control over Financial Reporting




Annual Certifications









Item 9B. Other Information







PART III







|         |                                                   
|-------- | --------------------------------------------------
|Item 10. | Directors and Executive Officers of the Registrant







|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    77



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##### Table of Contents






Item 11. Executive Compensation







Item 12. Security Ownership of Certain Beneficial
Owners and Management, and Related Stockholder Matters







Item 13. Certain Relationships and Related
Transactions







Item 14. Principal Accountant Fees and Services







PART IV





Item 15. Exhibits and Financial Statements
Schedules












|        |      |                        |  |                                                                                                                                                                                                                                                                                                                              
|------- | ---- | ---------------------- |  | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |      |                       
|No.     |      | Description of Exhibit
|        |      |                       
|        | 2.1  |                        |  | Stock Purchase Agreement by and among Hub U.S. Holdings,
    Inc. and Fifth Third Financial Corp., dated December 29,
    2002 (incorporated by reference to the registrants Current
    Report on Form 8-K filed January 7, 2003).                                                                                         
|        | 2.2  |                        |  | Stock Purchase Agreement by and among Satellite Acquisition
    Corporation, Safeco Corporations and General America Corporation
    as the Sole shareholder of Talbot Financial Corporation, dated
    March 15, 2004 (incorporated by reference to the
    registrants Current Report on Form 8-K filed
    July 7, 2004).
|        | 2.3  |                        |  | Subscription Agreement by and among Hub U.S. Holdings,
    Inc., Satellite Acquisition Corporation, Randall Talbot, David
    Weymouth, Roy Taylor and TalMan, LLC, dated March 15, 2004
    (incorporated by reference to the registrants Current
    Report on Form 8-K filed July 7, 2004).                              
|        | 2.4  |                        |  | Shareholder Agreement by and among Hub U.S. Holdings, Inc.,
    Hub International Limited, TalMan, LLC, and Satellite
    Acquisition Corporation, dated July 1, 2004 (incorporated
    by reference to the registrants Current Report on
    Form 8-K filed July 7, 2004).                                                 
|        | 3.1 |                        |  | Articles of Incorporation of the registrant.                                                                                                                                                                                                                                                                                 
|        | 3.2 |                        |  | By-laws of the Registrant.                                                                                                                                                                                                                                                                                                   





|                               |                                
|------------------------------ | -------------------------------
|78   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents



|        |         |  |                        |                                                                                                                                                                                                                                                                                          
|------- | ------- |  | ---------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |         |  |                       
|No.     |         |  | Description of Exhibit
|        |         |  |                       
|        | 3.3     |  |                        | Certificate of Continuance.                                                                                                                                                                                                                                                              
|        | 4.1    |  |                        | Specimen Certificate representing Common Shares.                                                                                                                                                                                                                                         
|        | 10.1   |  |                        | Agreement and Plan of Merger between HUB International Limited,
    416 Acquisition Inc. and Kaye Group Inc. dated January 19,
    2001.                                                                                                                                                 
|        | 10.2*  |  |                        | Executive Share Purchase Plan.                                                                                                                                                                                                                                                           
|        | 10.3*  |  |                        | Employee Share Purchase Plan.                                                                                                                                                                                                                                                            
|        | 10.4*  |  |                        | Employment Agreement dated as of March 19, 2002 between HUB
    International Limited and Martin P. Hughes.                                                                                                                                                                              
|        | 10.5*  |  |                        | Executive confidentiality, non-solicitation and insider
    agreement dated as of March 19, 2001 between HUB
    International Limited and its subsidiaries and Martin P. Hughes.                                                                                                        
|        | 10.6*  |  |                        | Employment Agreement dated as of March 19, 2002 between HUB
    International Limited and Richard A. Gulliver.                                                                                                                                                                           
|        | 10.7*  |  |                        | Executive confidentiality, non-solicitation and insider
    agreement dated as of March 19, 2001 between HUB
    International Limited and its subsidiaries and Richard A.
    Gulliver.                                                                                                 
|        | 10.8*  |  |                        | Employment Agreement dated as of March 19, 2002 between HUB
    International Limited and Dennis J. Pauls.                                                                                                                                                                               
|        | 10.9*  |  |                        | Executive confidentiality, non-solicitation and insider
    agreement dated as of March 19, 2001 between HUB
    International Limited and its subsidiaries and Dennis J.
    Pauls.                                                                                                     
|        | 10.10* |  |                        | Employment Agreement dated as of March 19, 2002 between HUB
    International Limited and W. Kirk James.                                                                                                                                                                                 
|        | 10.11* |  |                        | Executive confidentiality, non-solicitation and insider
    agreement dated as of March 19, 2001 between
    HUB International Limited and its subsidiaries and W. Kirk
    James.                                                                                                       
|        | 10.12* |  |                        | Employment Agreement dated as of June 28, 2001 among Kaye
    Group Inc., HUB International Limited and Bruce D. Guthart.                                                                                                                                                                
|        | 10.13* |  |                        | Employment Agreement dated as of January 1, 2002 among
    Barton Insurance Brokers Ltd., HUB International Limited
    and R. Craig Barton.                                                                                                                                             
|        | 10.14*  |  |                        | HUB International Limited Equity Incentive Plan, as amended
    (incorporated by reference to the registrants Definitive
    Proxy Statement and Management Circular on Schedule 14A as
    filed with the Commission on March 31, 2003).                                               
|        | 10.15   |  |                        | Amended and Restated Credit Agreement dated as of April 23,
    2004 between Hub International Limited and Bank of Montreal
    (incorporated by reference to the registrants Quarterly
    Report on Form 10-Q, for the period ended June 30,
    2004).                               
|        | 10.16  |  |                        | Debenture dated as of June 28, 2001 between HUB
    International Limited and Odyssey Reinsurance Corporation.                                                                                                                                                                           
|        | 10.17  |  |                        | Debenture dated as of June 28, 2001 between HUB
    International Limited and United States Fire Insurance Company.                                                                                                                                                                      
|        | 10.18  |  |                        | Claims Services Agreement dated as of May 30, 2002 between
    Old Lyme Insurance Company of Rhode Island, Inc. and Claims
    Administration Corporation.                                                                                                                               
|        | 10.19   |  |                        | Administrative Services and Cost Allocation Agreement dated as
    of January 1, 2002 between Old Lyme Insurance Company of
    Rhode Island, Inc. and HUB International Northeast Limited,
    as amended (incorporated by reference to the Form S-1
    and filed herewith as amended).
|        | 10.20*  |  |                        | Employment Agreement dated as of May 15, 1996, between Kaye
    Group Inc. and Michael Sabanos, as amended (incorporated by
    reference to the Annual Report on Form 10-K, for the year
    ended December 31, 2002.)                                                                  
|        | 10.21   |  |                        | ISDA Master Agreement and Schedule to the Master Agreement dated
    as of July 15, 2003 by and between Hub International
    Limited and Bank of Montreal (incorporated by reference to the
    registrants Quarterly Report on Form 10-Q, for the
    period ended June 30, 2004.)    





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    79



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##### Table of Contents



|        |        |  |                        |                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|------- | ------ |  | ---------------------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Exhibit |        |  |                       
|No.     |        |  | Description of Exhibit
|        |        |  |                       
|        | 10.22  |  |                        | Note Purchase Agreement between Hub International Limited and
    each of the purchasers regarding the U.S. $10,000,000 5.71%
    Series A Senior Notes due June 15, 2010 and
    U.S. $55,000,000 6.16% Series B Senior Notes due
    June 15, 2013 (excluding any appendices and exhibits
    thereto) (incorporated by reference to the registrants
    Annual Report on Form 10-K, for the year ended
    December 31, 2003. (the 2003 10-K).
|        | 10.23* |  |                        | Management Bonus Modification Agreement effective as of
    December 31, 2003 between Hub International Limited,
    each Operating Subsidiary and each of the Eligible Managers, as
    applicable (excluding any appendices and exhibits thereto)
    (incorporated by reference to the 2003 10K).                                                                                                                                                
|        | 10.24* |  |                        | Employment Agreement dated as of March 14, 2005 with effect
    as at January 1, 2004 between HUB International Limited and
    Lawrence J. Lineker.                                                                                                                                                                                                                                                                                                
|        | 10.25* |  |                        | Employment Agreement dated as of March 14, 2005 with effect
    as at April 1, 2004 between HUB International Limited and
    Marianne D. Paine.                                                                                                                                                                                                                                                                                                    
|        | 10.26  |  |                        | Contingent Compensation Agreement dated effective as of
    April 1, 2004 between Old Lyme Insurance Company Ltd.
    and Program Brokerage Corporation.                                                                                                                                                                                                                                                                                            
|        | 21.1   |  |                        | List of Registrants subsidiaries.                                                                                                                                                                                                                                                                                                                                                                                                                  
|        | 23.1   |  |                        | Consent of PricewaterhouseCoopers LLP.                                                                                                                                                                                                                                                                                                                                                                                                              
|        | 31.1   |  |                        | Certification of the Chief Executive Officer, Martin P. Hughes,
    pursuant to Rule 13a-14(a) or 15d-14(a), as enacted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                              
|        | 31.2   |  |                        | Certification of the Chief Financial Officer, Dennis J. Pauls,
    pursuant to Rule 13a-14(a) or 15d-14(a), as enacted
    pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                               
|        | 32.1   |  |                        | Certification of the Chief Executive Officer, Martin P. Hughes,
    pursuant to 18 U.S.C. Section 1350, as enacted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                   
|        | 32.2   |  |                        | Certification of the Chief Financial Officer, Dennis J. Pauls,
    pursuant to 18 U.S.C. Section 1350, as enacted pursuant to
    Section 906 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                                    






|  |                                                                                                                                                                                                                                 
|- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Incorporated herein by reference to the registrants
    Registration Statement on Form S-1 (No. 333-84734), as
    filed with the Securities and Exchange Commission (the
    Commission) on March 22, 2002
    (Form S-1).
| 
|* | Management contract or compensatory plan or arrangement.                                                                                                                                                                        





|                               |                                
|------------------------------ | -------------------------------
|80   HUB INTERNATIONAL LIMITED | ANNUAL REPORT December 31, 2004



---



##### Table of Contents






SIGNATURES






| |                                                                                                                                                                                                               
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Hub International Limited                                                                                                                                                                                     
|
| | /s/ Martin P. Hughes                                                                                                                                                                                          
| |                                                                                                                                                                                                               
| | Martin P. Hughes                                                                                                                                                                                              
| | Chief Executive Officer                                                                                                                                                                                       
|
|
| | Pursuant to the requirements of the Securities Exchange Act of
    1934, this report has been signed by the following persons on
    behalf of the Registrant and in the capacities and on
    March 16, 2005.

|                                                     |  |                                                                                            
|---------------------------------------------------- |  | -------------------------------------------------------------------------------------------
|SIGNATURE                                            |  | TITLE                                                                                      
|                                                     |  |                                                                                            
|                                                    
|/s/ Martin P.
    HughesMartin P.
    Hughes         |  | Chairman of the Board and Chief Executive Officer (Principal
    Executive Officer)        
|                                                    
|/s/ Dennis J.
    PaulsDennis J.
    Pauls           |  | Vice President and Chief Financial Officer (Principal Financial
    and Accounting Officer)
|                                                    
|/s/ Richard A. GulliverRichard A.
    Gulliver       |  | President, Director                                                                        
|                                                    
|/s/ Bruce D. GuthartBruce
    D. Guthart             |  | Chief Operating Officer, Director                                                          
|                                                    
|/s/ Stuart RossStuart
    Ross                       |  | Director                                                                                   
|                                                    
|/s/ Edward W.
    Lyman, Jr.Edward
    W. Lyman, Jr. |  | Director                                                                                   
|                                                    
|/s/ Anthony F.
    GriffithsAnthony
    F. Griffiths |  | Director                                                                                   
|                                                    
|/s/ Bradley P. MartinBradley
    P. Martin           |  | Director                                                                                   
|                                                    
|/s/ Paul MurrayPaul
    Murray                       |  | Director                                                                                   
|                                                    
|/s/ Frank S. WilkinsonFrank
    S. Wilkinson         |  | Director                                                                                   





|                                |                                
|------------------------------- | -------------------------------
|ANNUAL REPORT December 31, 2004 | HUB INTERNATIONAL LIMITED    81