##### Table of Contents









SECURITIES AND EXCHANGE COMMISSION




FORM 10-Q

QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF

THE SECURITIES EXCHANGE ACT OF 1934


For Quarter Ended: June 30, 2004

Commission file number: 1-31310

(HUB INTL. LOGO)

HUB INTERNATIONAL LIMITED

(Exact name of registrant as specified in its
Charter)

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

(877) 402-6601

Registrants telephone number, including
area code

Indicate by check mark whether the registrant
(1) has filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934
during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and
(2) has been subject to such filing requirements for the
past 90 days.

Yes þ          No o

Indicate by check mark whether the registrant is
an accelerated filer (as defined in Rule 12b-2 of the
Exchange Act.)

Yes þ          No o

Indicate the number of shares outstanding of each
of the issuers classes of common stock, as of the latest
practicable date.

|                   |  |                                        
|------------------ |  | ---------------------------------------
|ClassCommon Shares |  | Outstanding at August 2, 200430,527,779



---






---










HUB INTERNATIONAL LIMITED

INDEX

|                                                                                                               |  |      |    | 
|-------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                               |  | Page
|                                                                                                               |  |     
|PART I. FINANCIAL
    INFORMATION                                                                              |  |      |    | 
|                                                                                                              
|Item 1. Financial
    Statements (Unaudited)                                                                   |  |      | 3  | 
|                                                                                                              
|Consolidated Balance Sheets
    as of June 30, 2004 and December 31, 2003                                      |  |      | 3  | 
|                                                                                                              
|Consolidated Statements of
    Earnings for the three months and six months ended
    June 30, 2004 and 2003   |  |      | 4  | 
|                                                                                                              
|Consolidated Statements of
    Retained Earnings for the six months ended June 30, 2004
    and 2003           |  |      | 5  | 
|                                                                                                              
|Consolidated Statements of
    Cash Flows for the three months and six months ended
    June 30, 2004 and 2003 |  |      | 6  | 
|                                                                                                              
|Notes to Interim
    Consolidated Financial Statements                                                         |  |      | 7  | 
|                                                                                                              
|Item 2. Managements
    Discussion and Analysis of Financial Condition and
    Results of Operations          |  |      | 22 | 
|                                                                                                              
|Item 3. Quantitative
    and Qualitative Disclosures about Market Risk                                         |  |      | 37 | 
|                                                                                                              
|Item 4. Controls
    and Procedures                                                                            |  |      | 37 | 
|                                                                                                              
|PART II. OTHER
    INFORMATION                                                                                 |  |      |    | 
|                                                                                                              
|Item 1. Legal
    Proceedings                                                                                  |  |      | 38 | 
|                                                                                                              
|Item 2. Changes
    in Securities, Use of Proceeds and Issuer Purchases of
    Equity Securities               |  |      | 38 | 
|                                                                                                              
|Item 4. Submission
    of Matters to a Vote of Security Holders                                                |  |      | 38 | 
|                                                                                                              
|Item 5. Other
    Information                                                                                  |  |      | 40 | 
|                                                                                                              
|Item 6. Exhibits
    and Reports on Form 8-K                                                                   |  |      | 41 | 
|                                                                                                              
|SIGNATURE                                                                                                      |  |      | 42 | 
|EX-10.1                                                                                                       
|EX-10.2                                                                                                       
|EX-31.1                                                                                                       
|EX-31.2                                                                                                       
|EX-32.1                                                                                                       
|EX-32.2                                                                                                       







|                              |                            
|----------------------------- | ---------------------------
|2   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents






PART I. FINANCIAL INFORMATION



Item 1. Financial Statements
(Unaudited)



Hub International Limited

Consolidated Balance Sheets


As of June 30, 2004 and December 31,
2003

(in thousands of U.S. dollars)


|                                                  |  |             |         |      |  |   |         | 
|------------------------------------------------- |  | ----------- | ------- | ---- |  | - | ------- | 
|                                                  |  | 2004        |         | 2003
|                                                  |  |             |         |     
|                                                  |  | (Unaudited) |         |     
|ASSETS                                            |  |             |         |      |  |   |         | 
|Current assets:                                   |  |             |         |      |  |   |         | 
|Cash and cash equivalents                         |  | $           | 144,527 |      |  | $ | 82,052  | 
|Trust cash                                        |  |             | 57,207  |      |  |   | 54,534  | 
|Accounts and other receivables                    |  |             | 174,119 |      |  |   | 163,728 | 
|Income taxes receivable                           |  |             | 5,634   |      |  |   | 6,768   | 
|Future income taxes                               |  |             | 3,452   |      |  |   | 2,865   | 
|Prepaid expenses                                  |  |             | 7,911   |      |  |   | 4,449   | 
|                                                  |  |             |         |      |  |   |         | 
|Total current assets                              |  |             | 392,850 |      |  |   | 314,396 | 
|Goodwill                                          |  |             | 311,935 |      |  |   | 305,862 | 
|Other intangible assets                           |  |             | 46,538  |      |  |   | 42,903  | 
|Property and equipment                            |  |             | 23,354  |      |  |   | 24,181  | 
|Future income taxes                               |  |             | 6,997   |      |  |   | 6,458   | 
|Other assets                                      |  |             | 6,784   |      |  |   | 6,803   | 
|                                                  |  |             |         |      |  |   |         | 
|Total assets                                      |  | $           | 788,458 |      |  | $ | 700,603 | 
|                                                  |  |             |         |      |  |   |         | 
|LIABILITIES AND SHAREHOLDERS
    EQUITY          |  |             |         |      |  |   |         | 
|Current liabilities:                              |  |             |         |      |  |   |         | 
|Accounts payable and accrued liabilities          |  | $           | 226,556 |      |  | $ | 226,168 | 
|Income taxes payable                              |  |             | 2,520   |      |  |   | 3,804   | 
|Future income taxes                               |  |             | 490     |      |  |   | 114     | 
|Current portion long-term debt and capital leases |  |             | 2,428   |      |  |   | 3,362   | 
|                                                  |  |             |         |      |  |   |         | 
|Total current liabilities                         |  |             | 231,994 |      |  |   | 233,448 | 
|Long-term debt and capital leases                 |  |             | 140,467 |      |  |   | 75,437  | 
|Subordinated convertible debentures               |  |             | 35,000  |      |  |   | 35,000  | 
|Future income taxes                               |  |             | 14,883  |      |  |   | 13,928  | 
|                                                  |  |             |         |      |  |   |         | 
|Total liabilities                                 |  |             | 422,344 |      |  |   | 357,813 | 
|                                                  |  |             |         |      |  |   |         | 
|Commitments and Contingencies                     |  |             |         |      |  |   |         | 
|Shareholders equity                              |  |             |         |      |  |   |         | 
|Share capital                                     |  |             | 258,638 |      |  |   | 254,845 | 
|Issuable shares                                   |  |             | 940     |      |  |   | 721     | 
|Contributed surplus                               |  |             | 9,589   |      |  |   | 4,806   | 
|Cumulative translation account                    |  |             | 16,420  |      |  |   | 20,062  | 
|Retained earnings                                 |  |             | 80,527  |      |  |   | 62,356  | 
|                                                  |  |             |         |      |  |   |         | 
|Total shareholders equity                        |  |             | 366,114 |      |  |   | 342,790 | 
|                                                  |  |             |         |      |  |   |         | 
|Total liabilities and shareholders
    equity    |  | $           | 788,458 |      |  | $ | 700,603 | 
|                                                  |  |             |         |      |  |   |         | 

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





|                            |                               
|--------------------------- | ------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    3



---



##### Table of Contents



Hub International Limited




Consolidated Statements of Earnings

For the three months and six months ended
June 30, 2004 and 2003

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


(Unaudited)


|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------- | ------ | ---------------- | - | ---- | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                                                   |                |        |                 
|                                                          |                                                                                   | Second quarter |        | First six months
|                                                          |                                                                                   |                |        |                 
|                                                          |                                                                                   | 2004           |        | 2003             |   | 2004 |        | 2003  
|                                                          |                                                                                   |                |        |                  |   |      |        |       
|Revenue                                                   |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Commission income                                                                 |                | $      | 76,960           |   |      | $      | 69,442 |   |   | $       | 138,589 |   |   | $       | 123,983 |  
|                                                          | Contingent commissions and volume overrides                                       |                |        | 3,038            |   |      |        | 2,889  |   |   |         | 18,075  |   |   |         | 15,266  |  
|                                                          | Other                                                                             |                |        | 2,233            |   |      |        | 1,824  |   |   |         | 4,916   |   |   |         | 3,783   |  
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                                                   |                | 82,231 |                  |   |      | 74,155 |        |   |   | 161,580 |         |   |   | 143,032 |        
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Expenses                                                  |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Compensation                                                                      |                |        | 42,114           |   |      |        | 39,877 |   |   |         | 82,751  |   |   |         | 76,889  |  
|                                                          | Selling, occupancy and administration                                             |                |        | 16,086           |   |      |        | 13,808 |   |   |         | 31,639  |   |   |         | 26,914  |  
|                                                          | Depreciation                                                                      |                |        | 1,730            |   |      |        | 1,517  |   |   |         | 3,317   |   |   |         | 2,911   |  
|                                                          | Interest expense                                                                  |                |        | 1,702            |   |      |        | 1,516  |   |   |         | 3,362   |   |   |         | 2,883   |  
|                                                          | Intangible asset amortization                                                     |                |        | 936              |   |      |        | 756    |   |   |         | 1,717   |   |   |         | 1,557   |  
|                                                          | (Gain)/loss on disposal of subsidiaries,
    property, equipment and other assets |                |        | (597             | ) |      |        | 65     |   |   |         | (559    | ) |   |         | 9       |  
|                                                          | Loss on write-off of trademarks                                                   |                |        |                 |   |      |        |       |   |   |         | 2,587   |   |   |         |        |  
|                                                          | (Gain) on put option liability                                                    |                |        |                 |   |      |        | (267   | ) |   |         |        |   |   |         | (240    | )
|                                                          | Non-cash stock based compensation                                                 |                |        | 1,701            |   |      |        | 1,258  |   |   |         | 3,315   |   |   |         | 2,220   |  
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                                                   |                | 63,672 |                  |   |      | 58,530 |        |   |   | 128,129 |         |   |   | 113,143 |        
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Net earnings before income taxes                          |                                                                                   |                | 18,559 |                  |   |      | 15,625 |        |   |   | 33,451  |         |   |   | 29,889  |        
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Provision for income tax expense                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Current                                                                           |                |        | 4,992            |   |      |        | 3,604  |   |   |         | 11,730  |   |   |         | 9,265   |  
|                                                          | Future                                                                            |                |        | 1,976            |   |      |        | 1,912  |   |   |         | 507     |   |   |         | 1,611   |  
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                                                   |                | 6,968  |                  |   |      | 5,516  |        |   |   | 12,237  |         |   |   | 10,876  |        
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Net earnings                                              |                                                                                   | $              | 11,591 |                  |   | $    | 10,109 |        |   | $ | 21,214  |         |   | $ | 19,013  |        
|                                                          |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|Earnings per share                                        |                                                                                   |                |        |                  |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Basic                                                                             |                | $      | 0.38             |   |      | $      | 0.34   |   |   | $       | 0.70    |   |   | $       | 0.65    |  
|                                                          | Diluted                                                                           |                | $      | 0.35             |   |      | $      | 0.31   |   |   | $       | 0.64    |   |   | $       | 0.59    |  
|Weighted average shares outstanding
     Basic (000s)   |                                                                                   |                | 30,189 |                  |   |      | 29,326 |        |   |   | 30,102  |         |   |   | 29,326  |        
|Weighted average shares outstanding
     Diluted (000s) |                                                                                   |                | 34,905 |                  |   |      | 33,930 |        |   |   | 34,711  |         |   |   | 33,632  |        

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





|                              |                            
|----------------------------- | ---------------------------
|4   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Hub International Limited




Consolidated Statements of Retained
Earnings

For the six months ended June 30, 2004
and 2003

(in thousands of U.S. dollars)


(Unaudited)


|                                            |  |      |        |      |  |   |        |  
|------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                            |  | 2004 |        | 2003
|                                            |  |      |        |     
|Retained earnings  Beginning of
    period |  | $    | 62,356 |      |  | $ | 31,915 |  
|Net earnings                                |  |      | 21,214 |      |  |   | 19,013 |  
|Dividends                                   |  |      | (3,043 | )    |  |   | (3,038 | )
|                                            |  |      |        |      |  |   |        |  
|Retained earnings  End of
    period       |  | $    | 80,527 |      |  | $ | 47,890 |  
|                                            |  |      |        |      |  |   |        |  

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





|                            |                               
|--------------------------- | ------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    5



---



##### Table of Contents






Hub International Limited

Consolidated Statements of Cash
Flows


For the three months and six months ended
June 30, 2004 and 2003

(in thousands of U.S. dollars)


(Unaudited)


|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |        |  
|---------------------------------------------------------------- | --------------------------------------------------------------------------------- | -------------- | ------- | ---------------- | - | ---- | ------- | ------- | - | - | ------- | ------ | - | - | ------- | ------ | -
|                                                                 |                                                                                   |                |         |                 
|                                                                 |                                                                                   | Second quarter |         | First six months
|                                                                 |                                                                                   |                |         |                 
|                                                                 |                                                                                   | 2004           |         | 2003             |   | 2004 |         | 2003   
|                                                                 |                                                                                   |                |         |                  |   |      |         |        
|OPERATING ACTIVITIES                                             |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Net earnings                                                     |                                                                                   | $              | 11,591  |                  |   | $    | 10,109  |         |   | $ | 21,214  |        |   | $ | 19,013  |       
|Items not affecting working capital                              |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|                                                                 | Amortization and depreciation                                                     |                |         | 2,666            |   |      |         | 2,273   |   |   |         | 5,034  |   |   |         | 4,468  |  
|                                                                 | (Gain)/loss on disposal of subsidiaries,
    property, equipment and other assets |                |         | (597             | ) |      |         | 65      |   |   |         | (559   | ) |   |         | 9      |  
|                                                                 | Loss on write-off of trademarks                                                   |                |         |                 |   |      |         |        |   |   |         | 2,587  |   |   |         |       |  
|                                                                 | (Gain) on put option liability                                                    |                |         |                 |   |      |         | (267    | ) |   |         |       |   |   |         | (240   | )
|                                                                 | Non-cash stock based compensation                                                 |                |         | 1,701            |   |      |         | 1,258   |   |   |         | 3,315  |   |   |         | 2,220  |  
|                                                                 | Future income taxes                                                               |                |         | 1,976            |   |      |         | 1,912   |   |   |         | 507    |   |   |         | 1,611  |  
|Non-cash working capital items                                   |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|                                                                 | Trust cash                                                                        |                |         | (10,373          | ) |      |         | (6,154  | ) |   |         | 30     |   |   |         | 9,567  |  
|                                                                 | Accounts and other receivables                                                    |                |         | (60,051          | ) |      |         | (44,801 | ) |   |         | (8,773 | ) |   |         | (6,834 | )
|                                                                 | Prepaid expenses                                                                  |                |         | (3,520           | ) |      |         | (2,435  | ) |   |         | (3,366 | ) |   |         | (3,724 | )
|                                                                 | Accounts payable and accrued liabilities                                          |                |         | 67,209           |   |      |         | 55,105  |   |   |         | (2,925 | ) |   |         | 4,277  |  
|                                                                 | Other assets                                                                      |                |         | 128              |   |      |         | (2,420  | ) |   |         | 256    |   |   |         | (2,320 | )
|                                                                 | Income taxes                                                                      |                |         | (1,566           | ) |      |         | (4,662  | ) |   |         | (176   | ) |   |         | (2,844 | )
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Net cash flows from operating activities                         |                                                                                   |                | 9,164   |                  |   |      | 9,983   |         |   |   | 17,144  |        |   |   | 25,203  |       
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|INVESTING ACTIVITIES                                             |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Property and equipment  purchases                               |                                                                                   |                | (1,465  | )                |   |      | (1,458  | )       |   |   | (2,850  | )      |   |   | (3,036  | )     
|Property and equipment  proceeds on
    sale                    |                                                                                   |                | 14      |                  |   |      | 20      |         |   |   | 81      |        |   |   | 27      |       
|Purchase of subsidiaries, net of cash received                   |                                                                                   |                | (11,621 | )                |   |      | (1,161  | )       |   |   | (11,878 | )      |   |   | (12,385 | )     
|Sale of subsidiaries                                             |                                                                                   |                | 3,929   |                  |   |      | 160     |         |   |   | 3,929   |        |   |   | 451     |       
|Other assets                                                     |                                                                                   |                | (302    | )                |   |      | (705    | )       |   |   | 255     |        |   |   | (721    | )     
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Net cash flows used for investing activities                     |                                                                                   |                | (9,445  | )                |   |      | (3,144  | )       |   |   | (10,463 | )      |   |   | (15,664 | )     
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|FINANCING ACTIVITIES                                             |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Long-term debt  advances                                        |                                                                                   |                | 65,000  |                  |   |      | 65,000  |         |   |   | 65,000  |        |   |   | 65,000  |       
|Long-term debt and capital leases  
    repayments              |                                                                                   |                | (3,680  | )                |   |      | (50,597 | )       |   |   | (4,690  | )      |   |   | (51,313 | )     
|Share capital  issued for cash, net of
    issue costs          |                                                                                   |                | 412     |                  |   |      |        |         |   |   | 480     |        |   |   | (32     | )     
|Dividends paid                                                   |                                                                                   |                | (3,043  | )                |   |      | (3,038  | )       |   |   | (3,043  | )      |   |   | (3,038  | )     
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Net cash flows from financing activities                         |                                                                                   |                | 58,689  |                  |   |      | 11,365  |         |   |   | 57,747  |        |   |   | 10,617  |       
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Effect of exchange rate changes on cash and
    cash equivalents |                                                                                   |                | (1,185  | )                |   |      | 1,651   |         |   |   | (1,953  | )      |   |   | 2,280   |       
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Change in cash and cash equivalents                              |                                                                                   |                | 57,223  |                  |   |      | 19,855  |         |   |   | 62,475  |        |   |   | 22,436  |       
|Cash and cash equivalents 
    Beginning of period              |                                                                                   |                | 87,304  |                  |   |      | 43,223  |         |   |   | 82,052  |        |   |   | 40,642  |       
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       
|Cash and cash equivalents  End of
    period                    |                                                                                   | $              | 144,527 |                  |   | $    | 63,078  |         |   | $ | 144,527 |        |   | $ | 63,078  |       
|                                                                 |                                                                                   |                |         |                  |   |      |         |         |   |   |         |        |   |   |         |       

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





|                              |                            
|----------------------------- | ---------------------------
|6   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Hub International Limited

Notes to Interim Consolidated Financial
Statements


For the three months and six months ended
June 30, 2004 and 2003 (unaudited)
(in thousands of U.S. dollars, except per
share amounts or as otherwise indicated)

1.  Nature of Operations

Hub International Limited (the
Company) is an international insurance brokerage
that provides a variety of property and casualty, life and
health, employee benefits, investment and risk management
products and services. The Companys shares are listed on
both the New York Stock Exchange (NYSE: HBG) and the Toronto
Stock Exchange (TSX: HBG).


2.  Summary of Significant
Accounting Policies

The interim consolidated financial statements do
not include all disclosures required by Canadian generally
accepted accounting principles (Canadian GAAP) for annual
financial statements and accordingly, should be read in
conjunction with the Companys consolidated financial
statements for the year ended December 31, 2003 as set out
on pages 39 to 68 of the Companys 2003 Annual Report
on Form 10-K. In the opinion of management, all adjustments
(consisting of items of a normal recurring nature) considered
necessary for a fair presentation of the accompanying financial
statements have been reflected therein. These interim
consolidated financial statements of the Company are expressed
in United States (U.S.) dollars and have been prepared in
accordance with Canadian GAAP using the same accounting
principles as were used for the Companys consolidated
financial statements for the year ended December 31, 2003.
These principles differ in certain respects from United States
generally accepted accounting principles (U.S. GAAP) and,
to the extent that they affect the Company, the differences are
described in note 13 Reconciliation to
U.S. GAAP. Certain reclassifications have been made
to prior years financial statements to conform to the
current year presentation. The results of operations are not
necessarily indicative of the operating results for the fiscal
year or any future period.


3.  Recent Acquisitions

During the second quarter 2004, the Company
purchased all of the issued and outstanding membership interests
of Bush, Cotton and Scott, LLC, as well as the assets of one
other insurance brokerage, both 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.


|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  
|---------------------------------------------------- |  | ---------------- | ------ | ----------- |  | ----- | ----- |  |  | - | ------ | -
|                                                     |  |                  |        |            
|                                                     |  | Acquisition Date |        |            
|                                                     |  |                  |        |            
|                                                     |  | April 1, 2004    |        | May 1, 2004 |  |      
|                                                     |  |                  |        |             |  |      
|                                                     |  | Bush,            |        |             |  |      
|                                                     |  | Cotton & Scott   |        | Other       |  | Total
|                                                     |  |                  |        |             |  |      
|Current assets                                       |  | $                | 4,702  |             |  | $     |      |  |  | $ | 4,702  |  
|Current liabilities                                  |  |                  | (4,803 | )           |  |       |      |  |  |   | (4,803 | )
|Property, equipment and other assets                 |  |                  | 96     |             |  |       | 8     |  |  |   | 104    |  
|Long-term debt and capital leases                    |  |                  | (2,826 | )           |  |       |      |  |  |   | (2,826 | )
|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  
|Net assets (liabilities) at fair
    value           |  | $                | (2,831 | )           |  | $     | 8     |  |  | $ | (2,823 | )
|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  
|Consideration                                        |  |                  |        |             |  |       |       |  |  |   |        |  
|Cash                                                 |  | $                | 10,368 |             |  | $     | 1,177 |  |  | $ | 11,545 |  
|Payable                                              |  |                  | 1,016  |             |  |       | 544   |  |  |   | 1,560  |  
|Shares (at market value)                             |  |                  | 3,463  |             |  |       |      |  |  |   | 3,463  |  
|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  
|                                                     |  | $                | 14,847 |             |  | $     | 1,721 |  |  | $ | 16,568 |  
|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  
|Goodwill                                             |  | $                | 10,013 |             |  | $     | 1,466 |  |  | $ | 11,479 |  
|Customer relationships                               |  |                  | 6,891  |             |  |       | 247   |  |  |   | 7,138  |  
|Non-competition covenants                            |  |                  | 774    |             |  |       |      |  |  |   | 774    |  
|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  
|                                                     |  | $                | 17,678 |             |  | $     | 1,713 |  |  | $ | 19,391 |  
|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  
|Number of shares issued as consideration
    (000s) |  |                  | 187    |             |  |       | 3     |  |  |   | 190    |  
|                                                     |  |                  |        |             |  |       |       |  |  |   |        |  





|                            |                               
|--------------------------- | ------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    7



---



##### Table of Contents



Of the goodwill acquired $11,092 is deductible
for tax purposes including $187 associated with contingent
consideration relating to prior period acquisitions.

Dispositions

During the second quarter of 2004, the Company
sold assets and shares of certain insurance brokerages for
approximately $4,699 resulting in a gain of approximately $632.


4.  Intangible Assets

As of June 30, 2004 and December 31,
2003 the gross carrying amount and accumulated amortization of
intangible assets other than goodwill were as follows:


|                                   |                           |                     |         |                         |  |       |        |          |  |              |         |         |  |  |         |         |  |   |       |       |  |  |         |         | 
|---------------------------------- | ------------------------- | ------------------- | ------- | ----------------------- |  | ----- | ------ | -------- |  | ------------ | ------- | ------- |  |  | ------- | ------- |  | - | ----- | ----- |  |  | ------- | ------- | 
|                                   |                           |                     |         |                        
|                                   |                           | As of June 30, 2004 |         | As of December 31, 2003
|                                   |                           |                     |         |                        
|                                   |                           | Gross               |         |                         |  | Gross |        |         
|                                   |                           | carrying            |         | Accumulated             |  |       |        | carrying |  | Accumulated  |         |        
|                                   |                           | amount              |         | amortization            |  | Total |        | amount   |  | amortization |         | Total  
|                                   |                           |                     |         |                         |  |       |        |          |  |              |         |        
|Definite life intangible assets:   |                           |                     |         |                         |  |       |        |          |  |              |         |         |  |  |         |         |  |   |       |       |  |  |         |        
|                                   | Customer relationships    |                     |         | $50,580                 |  |       |        | $7,130   |  |              |         | $43,450 |  |  |         | $43,422 |  |   | $     | 5,480 |  |  |         | $37,942 | 
|                                   | Non-competition covenants |                     |         | 759                     |  |       |        | 328      |  |              |         | 431     |  |  |         | 476     |  |   |       | 269   |  |  |         | 207     | 
|                                   | Trademarks                |                     |         |                        |  |       |        |         |  |              |         |        |  |  |         | 2,587   |  |   |       |      |  |  |         | 2,587   | 
|                                   |                           |                     |         |                         |  |       |        |          |  |              |         |         |  |  |         |         |  |   |       |       |  |  |         |        
|                                   |                           |                     | 51,339  |                         |  |       | 7,458  |          |  |              | 43,881  |         |  |  | 46,485  |         |  |   | 5,749 |       |  |  | 40,736  |        
|Indefinite life intangible assets: |                           |                     |         |                         |  |       |        |          |  |              |         |         |  |  |         |         |  |   |       |       |  |  |         |        
|                                   | Non-competition covenants |                     |         | 2,657                   |  |       |        |         |  |              |         | 2,657   |  |  |         | 2,167   |  |   |       |      |  |  |         | 2,167   | 
|                                   |                           |                     |         |                         |  |       |        |          |  |              |         |         |  |  |         |         |  |   |       |       |  |  |         |        
|Total                              |                           |                     | $53,996 |                         |  |       | $7,458 |          |  |              | $46,538 |         |  |  | $48,652 |         |  | $ | 5,749 |       |  |  | $42,903 |        
|                                   |                           |                     |         |                         |  |       |        |          |  |              |         |         |  |  |         |         |  |   |       |       |  |  |         |        

During the first quarter 2004 the Company adopted
a strategic plan to make use of the Hub brand
throughout the Company. Certain of the Companys
subsidiaries have decided to change their names and as a result
the Company recognized a non-cash loss on the write-off of
trademarks of $2,587, before income taxes.

Additions to intangible assets during the six
months ended June 30, 2004 and 2003 were as follows:

|                                   |                           |      |       |       |  |   |     |     | 
|---------------------------------- | ------------------------- | ---- | ----- | ----- |  | - | --- | --- | 
|                                   |                           | 2004 |       | 2003 
|                                   |                           |      |       |      
|Definite life intangible assets:   |                           |      |       |       |  |   |     |    
|                                   | Customer relationships    |      | $     | 7,204 |  |   | $   | 582 | 
|Indefinite life intangible assets: |                           |      |       |       |  |   |     |    
|                                   | Non-competition covenants |      |       | 781   |  |   |     | 67  | 
|                                   |                           |      |       |       |  |   |     |    
|Total                              |                           | $    | 7,985 |       |  | $ | 649 |    
|                                   |                           |      |       |       |  |   |     |    

The Company is unable to estimate the useful life
of certain non-competition covenants. These indefinite life
intangible assets are reviewed annually for impairment. Once a
non-competition covenant is triggered, following the departure
of an employee from the Company, the Companys policy is to
amortize the related intangible asset over the period of the
contractual obligation.





|                              |                            
|----------------------------- | ---------------------------
|8   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



The changes in the carrying amount of goodwill
for the six months ended June 30, 2004 and the year ended
December 31, 2003, are as follows:

|                                  |  |            |        |            |  |       |         |   |  |   |         |  
|--------------------------------- |  | ---------- | ------ | ---------- |  | ----- | ------- | - |  | - | ------- | -
|                                  |  | 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     |  |            | 344    |            |  |       | 12,115  |   |  |   | 12,459  |  
|Goodwill disposed during 2004     |  |            | (3,089 | )          |  |       |        |   |  |   | (3,089  | )
|Cumulative translation adjustment |  |            | (3,297 | )          |  |       |        |   |  |   | (3,297  | )
|                                  |  |            |        |            |  |       |         |   |  |   |         |  
|Balance as of June 30, 2004       |  | $          | 86,037 |            |  | $     | 225,898 |   |  | $ | 311,935 |  
|                                  |  |            |        |            |  |       |         |   |  |   |         |  

For the three months and six months ended
June 30, 2004, and 2003, amortization has been comprised of
the following:

|                          |  |               |     |              |  |      |     |      |  |   |       |  |  |   |       | 
|------------------------- |  | ------------- | --- | ------------ |  | ---- | --- | ---- |  | - | ----- |  |  | - | ----- | 
|                          |  |               |     |             
|                          |  | For the three |     | For the six 
|                          |  | months ended  |     | months ended
|                          |  | June 30,      |     | June 30,    
|                          |  |               |     |             
|                          |  | 2004          |     | 2003         |  | 2004 |     | 2003
|                          |  |               |     |              |  |      |     |     
|Customer relationships    |  | $             | 893 |              |  | $    | 721 |      |  | $ | 1,657 |  |  | $ | 1,502 | 
|Non-competition covenants |  |               | 43  |              |  |      | 35  |      |  |   | 60    |  |  |   | 55    | 
|                          |  |               |     |              |  |      |     |      |  |   |       |  |  |   |       | 
|Total                     |  | $             | 936 |              |  | $    | 756 |      |  | $ | 1,717 |  |  | $ | 1,557 | 
|                          |  |               |     |              |  |      |     |      |  |   |       |  |  |   |       | 

The Company estimates the amortization charges
for 2004 through 2008 for all acquisitions consummated to date
will be:

|                          |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|------------------------- |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|                          |  | 2004 |       | 2005 |  | 2006 |       | 2007 |  | 2008
|                          |  |      |       |      |  |      |       |      |  |     
|Year ended December 31,   |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Customer relationships    |  | $    | 3,438 |      |  | $    | 3,553 |      |  | $    | 3,553 |  |  | $ | 3,553 |  |  | $ | 3,553 | 
|Non-competition covenants |  |      | 206   |      |  |      | 164   |      |  |      | 80    |  |  |   | 79    |  |  |   | 3     | 
|                          |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Total                     |  | $    | 3,644 |      |  | $    | 3,717 |      |  | $    | 3,633 |  |  | $ | 3,632 |  |  | $ | 3,556 | 
|                          |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 





|                            |                               
|--------------------------- | ------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    9



---



##### Table of Contents



5.  Debt

Long-term debt and capital leases


|                                                           |  |          |         |      |              |   |        |  
|---------------------------------------------------------- |  | -------- | ------- | ---- | ------------ | - | ------ | -
|                                                           |  | June 30, |         |      | 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  |  
|Various other notes payable and debt (4)                   |  |          | 4,863   |      |              |   | 5,649  |  
|Capital leases (4)                                         |  |          | 532     |      |              |   | 650    |  
|                                                           |  |          |         |      |              |   |        |  
|Long-term debt and capital leases                          |  |          | 142,895 |      |              |   | 78,799 |  
|Less current portion                                       |  |          | (2,428  | )    |              |   | (3,362 | )
|                                                           |  |          |         |      |              |   |        |  
|                                                           |  | $        | 140,467 |      |              | $ | 75,437 |  
|                                                           |  |          |         |      |              |   |        |  

Future repayments of long-term debt and capital
leases are as follows:

|                                         |  |   |         | 
|---------------------------------------- |  | - | ------- | 
|For the twelve months ended
    June 30, |  |   |         | 
|2005                                     |  | $ | 2,428   | 
|2006                                     |  |   | 1,699   | 
|2007                                     |  |   | 8,183   | 
|2008                                     |  |   | 68,557  | 
|2009                                     |  |   | 14,695  | 
|2010 and thereafter                      |  |   | 47,333  | 
|                                         |  |   |         | 
|                                         |  | $ | 142,895 | 
|                                         |  |   |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Senior Notes  As of June 30, 2004
    the Company has $65 million aggregate principal amount of
    unsecured senior notes outstanding. 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 due
    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, which may include future 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 June 30, 2004, $65 million was
    outstanding under these senior notes. The Company is in
    compliance with all financial covenants governing these notes.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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, in order to ensure that the
    Company pays a current market interest rate on that portion of
    its borrowings. 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 of June 30, 2004, the Company estimated the
    fair value of the swap was $5.5 million, which is not
    recognized in these financial statements. Accordingly,
    $5.5 million is the estimated amount that the Company would
    need to pay to terminate the swap as of June 30, 2004.



|    |                                                                                                                                                                                                                                                                                                                                                           
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Revolving U.S. dollar LIBOR loan  This
    facility was renegotiated in April 2004. Under the new terms,
    the unsecured facility totals $75 million, bears interest
    at a floating rate of prime plus 1% or 112.5 basis points above
    LIBOR, which was 1.37% and 1.12% at June 30, 2004 and
    December 31, 2003, respectively. The facility is





|                               |                            
|------------------------------ | ---------------------------
|10   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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 June 30, 2004 and
    December 31, 2003, respectively. The Company is 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) and reduce 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
    earned for the year ended December 31, 2003 reduced
    interest payments to zero from $750. It is not yet determinable
    if a credit has been earned for 2004. Interest on this loan
    totaled $188 and $375 for the three months and six months ended
    June 30, 2004 and 2003, respectively.
|   
|(4) | Certain property and equipment have been pledged
    as collateral in amounts not less than the outstanding balance
    of the loan at June 30, 2004 and December 31, 2003,
    respectively.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  




Demand U.S. dollar base rate
loan

The Company has an undrawn $9 million
facility which bears interest at the banks U.S. rate
plus 50 basis points. Borrowings on the facility are repayable
on demand.

Subordinated convertible debentures

In connection with the acquisition of Kaye Group
Inc. (Kaye) on June 28, 2001, the Company issued
$35 million aggregate principal amount, 8.5% convertible
subordinated debentures (the Fairfax notes) due June 28,
2007 to certain subsidiaries of Fairfax Financial Holdings
Limited (Fairfax). The Fairfax notes are convertible by the
holders at any time into the Companys common shares at
C$17.00 per share. Beginning June 28, 2006, the Company may
require conversion of the Fairfax notes into common shares at
C$17.00 per share if, at any time, the weighted average closing
price of the Companys common shares on the TSX for twenty
consecutive trading days equals or exceeds C$19.00 per share.
Fairfax owns approximately 26% of the Companys outstanding
common shares as of June 30, 2004. If converted, Fairfax
would have owned approximately 33% of the Companys
outstanding common shares as of June 30, 2004.

6.  Commitments and
Contingencies



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | In connection with the Companys executive
    share purchase plan, under certain circumstances the Company may
    be obligated to purchase loans for officers and employees from a
    Canadian chartered bank totaling $4,103 and $4,513 as of
    June 30, 2004 and December 31, 2003, respectively, to
    assist in purchasing common shares of the Company. As
    collateral, the employees have pledged 456,000 and 478,000
    common shares as of June 30, 2004 and December 31,
    2003, respectively, which have a market value of $8,688 and
    $8,105 as of June 30, 2004 and December 31, 2003,
    respectively. Interest on the loans in the amount of $45 and $80
    for the three months ended June 30, 2004 and 2003,
    respectively, and $96 and $148 for the six months ended
    June 30, 2004 and 2003, respectively, was paid by the
    Company and is included in compensation expense.
|   
|(b) | In connection with the acquisition of Hooper
    Hayes and Associates, Inc., in 2002 the Company issued 196,000
    shares (the Retractable Shares) that are being held
    in escrow subject to release over a period of three years upon
    the satisfaction of certain performance targets. As of
    June 30, 2004, 63,000 shares have been released from escrow.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                



| |                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In connection with various other acquisitions
    completed through June 30, 2004, the Company may be
    obligated to pay contingent consideration of approximately
    $8.8 million cash and $3.1 million in common shares
    based upon managements best estimate of acquired
    brokerages achieving certain targets. The contingent payments





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    11



---



##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | are payable on various dates through April 2009
    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
    June 30, 2004, the financial statements reflect a liability
    to pay cash of $1.0 million and to issue common shares
    valued at approximately $0.9 million as of June 30,
    2004.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(c) | In April 2004, Kaye Insurance Associates, Inc.
    (Kaye Insurance), a subsidiary of the Company,
    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 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. Kaye Insurance has a practice of disclosing
    such agreements to its clients, including on its invoices to
    clients and on its web site. In addition, the Company discloses
    the arrangements in its public filings. The Company is fully
    cooperating with this inquiry. While it is not possible to
    predict the outcome of this investigation, if such compensation
    agreements were to be restricted or no longer permitted, the
    Companys revenue and profitability may be materially
    adversely affected.
|   
|(d) | 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.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

7.  Shareholders
Equity

Share capital


At June 30, 2004 and December 31, 2003,
there were an unlimited number of non-voting, preferred shares
authorized, issuable in series on such terms and conditions as
set by the Board of Directors, of which no shares were issued.
At June 30, 2004 and December 31, 2003, there were an
unlimited number of common shares authorized, of which 30,358
and 30,143 were issued and outstanding as at June 30, 2004
and December 31, 2003, respectively.

|                                                                                   |  |               |        |   |        |   |         |  
|---------------------------------------------------------------------------------- |  | ------------- | ------ | - | ------ | - | ------- | -
|                                                                                   |  |              
|                                                                                   |  | Common Shares
|                                                                                   |  | Outstanding  
|                                                                                   |  |              
|                                                                                   |  |              
|                                                                                   |  | (000s)       |        |   | Amount
|                                                                                   |  |               |        |  
|Balance, December 31, 2003                                                         |  |               | 30,143 |   |        | $ | 254,845 |  
|Shares issued                                                                      |  |               | 137    |   |        |   | 2,524   |  
|Repurchases of executive share purchase plan
    shares, net of loan cancellations |  |               | 1      |   |        |   | 21      |  
|Shares issued for contingent consideration                                         |  |               | 45     |   |        |   | 765     |  
|Cancellation of shares                                                             |  |               | (2     | ) |        |   | (26     | )
|Stock options exercised                                                            |  |               | 32     |   |        |   | 482     |  
|Restricted share units exercised                                                   |  |               | 2      |   |        |   | 27      |  
|                                                                                   |  |               |        |   |        |   |         |  
|Balance, June 30, 2004                                                             |  |               | 30,358 |   |        | $ | 258,638 |  
|                                                                                   |  |               |        |   |        |   |         |  





|                               |                            
|------------------------------ | ---------------------------
|12   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Issuable shares

|                                      |  |               |     |        |  |   |      |  
|------------------------------------- |  | ------------- | --- | ------ |  | - | ---- | -
|                                      |  |              
|                                      |  | Common Shares
|                                      |  |              
|                                      |  | (000s)       |     | Amount
|                                      |  |               |     |       
|Balance, December 31, 2003            |  |               | 43  |        |  | $ | 721  |  
|Issued                                |  |               | (45 | )      |  |   | (765 | )
|Issuable for contingent consideration |  |               | 53  |        |  |   | 984  |  
|                                      |  |               |     |        |  |   |      |  
|Balance, June 30, 2004                |  |               | 51  |        |  | $ | 940  |  
|                                      |  |               |     |        |  |   |      |  

Contributed surplus

|                                  |  |        |       | 
|--------------------------------- |  | ------ | ----- | 
|                                  |  | Amount
|                                  |  |       
|Balance, December 31, 2003        |  | $      | 4,806 | 
|Non-cash stock based compensation |  |        | 4,693 | 
|Other                             |  |        | 90    | 
|                                  |  |        |       | 
|Balance, June 30, 2004            |  | $      | 9,589 | 
|                                  |  |        |       | 

Cumulative translation account

|                                                                        |  |        |        |  
|----------------------------------------------------------------------- |  | ------ | ------ | -
|                                                                        |  | Amount
|                                                                        |  |       
|Balance December 31, 2003                                               |  | $      | 20,062 |  
|Translation of self-sustaining foreign operations                       |  |        | (3,671 | )
|Translation of debt financing of self-sustaining
    foreign operations |  |        | 29     |  
|                                                                        |  |        |        |  
|Balance, June 30, 2004                                                  |  | $      | 16,420 |  
|                                                                        |  |        |        |  

8.  Equity Incentive Plan

A summary of the stock option activity and
related information for the six months ended June 30, 2004
consists of the following:


|                           |  |         |       |                |                  |   |       | 
|-------------------------- |  | ------- | ----- | -------------- | ---------------- | - | ----- | 
|                           |  | Number  |       |                | Weighted-Average
|                           |  | (000s) |       | Exercise Price
|                           |  |         |       |               
|Balance, December 31, 2003 |  |         | 1,498 |                |                  | $ | 15.64 | 
|Granted                    |  |         |      |                |                  | $ |      | 
|Exercised                  |  |         | (32   | )              |                  | $ | 15.02 | 
|Forfeited                  |  |         | (3    | )              |                  | $ | 15.67 | 
|                           |  |         |       |                |                  |   |       | 
|Balance, June 30, 2004     |  |         | 1,463 |                |                  | $ | 15.49 | 
|                           |  |         |       |                |                  |   |       | 

The following table summarizes information about
the stock options outstanding at:

|               |  |               |       |                   |  |             |            |             |  |                  |     |             |  |  |       |  |  |  |            |  |  |  |     | 
|-------------- |  | ------------- | ----- | ----------------- |  | ----------- | ---------- | ----------- |  | ---------------- | --- | ----------- |  |  | ----- |  |  |  | ---------- |  |  |  | --- | 
|               |  |               |       |                  
|               |  | June 30, 2004 |       | December 31, 2003
|               |  |               |       |                  
|               |  | Number        |       | Weighted-average  |  | Number      |            | Number      |  | Weighted-average |     | Number     
|               |  | outstanding   |       | remaining         |  | exercisable |            | outstanding |  | remaining        |     | exercisable
|               |  | (000s)       |       | contractual life  |  | (000s)     |            | (000s)     |  | contractual life |     | (000s)    
|Exercise price |  |               |       |                   |  |             |            |             |  |                  |     |            
|$15.67         |  |               | 1,207 |                   |  |             | 4.96 years |             |  |                  | 814 |             |  |  | 1,230 |  |  |  | 5.43 years |  |  |  | 417 | 
|$13.79         |  |               | 256   |                   |  |             | 5.67 years |             |  |                  | 85  |             |  |  | 268   |  |  |  | 6.08 years |  |  |  | 6   | 
|               |  |               |       |                   |  |             |            |             |  |                  |     |             |  |  |       |  |  |  |            |  |  |  |     | 
|               |  |               | 1,463 |                   |  |             | 5.05 years |             |  |                  | 899 |             |  |  | 1,498 |  |  |  | 5.55 years |  |  |  | 423 | 
|               |  |               |       |                   |  |             |            |             |  |                  |     |             |  |  |       |  |  |  |            |  |  |  |     | 





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    13



---



##### Table of Contents



Non-cash stock based compensation related to
stock options of $1,701 and $1,258 for the three months ended
June 30, 2004 and 2003, respectively, and $3,315 and $2,220
for the six months ended June 30, 2004 and 2003,
respectively, was expensed with offsetting credits to
contributed surplus. The Company recognizes the fair value of
non-cash stock based compensation as an expense over the period
in which entitlement to the compensation vests.

Non-cash stock based compensation for the three
months and six months ended June 30, 2004 and 2003 is
comprised of the following:

|                                   |                                                   |               |       |              |  |      |       |      |  |   |       |       |  |   |       |       | 
|---------------------------------- | ------------------------------------------------- | ------------- | ----- | ------------ |  | ---- | ----- | ---- |  | - | ----- | ----- |  | - | ----- | ----- | 
|                                   |                                                   |               |       |             
|                                   |                                                   | For the three |       | For the six 
|                                   |                                                   | months ended  |       | months ended
|                                   |                                                   | June 30,      |       | June 30,    
|                                   |                                                   |               |       |             
|                                   |                                                   | 2004          |       | 2003         |  | 2004 |       | 2003
|                                   |                                                   |               |       |              |  |      |       |     
|Non-cash stock based compensation: |                                                   |               |       |              |  |      |       |      |  |   |       |       |  |   |       |      
|                                   | Stock options granted June 2002                   |               | $     | 510          |  |      | $     | 555  |  |   | $     | 1,001 |  |   | $     | 1,064 | 
|                                   | Stock options granted February 2003               |               |       | 128          |  |      |       | 110  |  |   |       | 230   |  |   |       | 214   | 
|                                   | Stock based compensation granted for 2003 bonuses |               |       | 634          |  |      |       | 381  |  |   |       | 1,267 |  |   |       | 730   | 
|                                   | Restricted share units                            |               |       | 429          |  |      |       | 212  |  |   |       | 817   |  |   |       | 212   | 
|                                   |                                                   |               |       |              |  |      |       |      |  |   |       |       |  |   |       |      
|                                   |                                                   | $             | 1,701 |              |  | $    | 1,258 |      |  | $ | 3,315 |       |  | $ | 2,220 |      
|                                   |                                                   |               |       |              |  |      |       |      |  |   |       |       |  |   |       |      





|                               |                            
|------------------------------ | ---------------------------
|14   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



9.  Earnings Per Share

Basic earnings per share, excluding the dilutive
effect of common share equivalents, is calculated by dividing
net earnings by the weighted average number of common shares
outstanding for the period. Diluted earnings per share is
calculated using the treasury stock method and includes the
effects of all potentially dilutive securities. Certain stock
options under the equity incentive plan in which the average
market price exceeds the exercise price of the Companys
common shares for the period that the options were outstanding
were dilutive for the six months ended June 30, 2004 and
were included in the calculation of diluted earnings per share.
Earnings per common share have been calculated as follows:


|                                                                |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |       | 
|--------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------- | ------ | ------------ |  | ---- | ------ | ----- |  | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                |                                                                              |               |        |             
|                                                                |                                                                              | For the three |        | For the six 
|                                                                |                                                                              | months ended  |        | months ended
|                                                                |                                                                              | June 30,      |        | June 30,    
|                                                                |                                                                              |               |        |             
|                                                                |                                                                              | 2004          |        | 2003         |  | 2004 |        | 2003 
|                                                                |                                                                              |               |        |              |  |      |        |      
|Net earnings (numerator)                                        |                                                                              | $             | 11,591 |              |  | $    | 10,109 |       |  | $ | 21,214 |       |  | $ | 19,013 |      
|Effect of dilutive securities:                                  |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |      
|                                                                | Interest on 8.5% subordinated convertible
    debentures (net of income tax) |               |        | 475          |  |      |        | 472   |  |   |        | 950   |  |   |        | 943   | 
|                                                                | Dividends in lieu of restricted share units                                  |               |        | 65           |  |      |        | 40    |  |   |        | 65    |  |   |        | 40    | 
|                                                                |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |      
|Net earnings plus assumed conversions (numerator)               |                                                                              | $             | 12,131 |              |  | $    | 10,621 |       |  | $ | 22,229 |       |  | $ | 19,996 |      
|                                                                |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |      
|Weighted average shares outstanding  Basic
    (denominator)   |                                                                              |               | 30,189 |              |  |      | 29,326 |       |  |   | 30,102 |       |  |   | 29,326 |      
|Effect of dilutive securities:                                  |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |      
|                                                                | 8.5% subordinated convertible debentures                                     |               |        | 2,731        |  |      |        | 3,040 |  |   |        | 2,705 |  |   |        | 3,210 | 
|                                                                | Stock options                                                                |               |        | 1,153        |  |      |        | 28    |  |   |        | 1,142 |  |   |        | 18    | 
|                                                                | Put options                                                                  |               |        |             |  |      |        | 730   |  |   |        |      |  |   |        | 730   | 
|                                                                | Restricted share units                                                       |               |        | 649          |  |      |        | 610   |  |   |        | 615   |  |   |        | 152   | 
|                                                                | Retractable shares                                                           |               |        | 133          |  |      |        | 196   |  |   |        | 133   |  |   |        | 196   | 
|                                                                | Issuable shares                                                              |               |        | 50           |  |      |        |      |  |   |        | 14    |  |   |        |      | 
|                                                                |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |      
|Weighted average shares outstanding 
    Diluted (denominator) |                                                                              |               | 34,905 |              |  |      | 33,930 |       |  |   | 34,711 |       |  |   | 33,632 |      
|                                                                |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |      
|Earnings per common share:                                      |                                                                              |               |        |              |  |      |        |       |  |   |        |       |  |   |        |      
|                                                                | Basic                                                                        |               | $      | 0.38         |  |      | $      | 0.34  |  |   | $      | 0.70  |  |   | $      | 0.65  | 
|                                                                | Diluted                                                                      |               | $      | 0.35         |  |      | $      | 0.31  |  |   | $      | 0.64  |  |   | $      | 0.59  | 

10. Interest and Income Taxes
Paid

Interest and income taxes paid for the three
months and six months ended June 30, 2004 and 2003 were:


|                  |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 
|----------------- |  | ------------- | ----- | ------------ |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                  |  |               |       |             
|                  |  | For the three |       | For the six 
|                  |  | months ended  |       | months ended
|                  |  | June 30,      |       | June 30,    
|                  |  |               |       |             
|                  |  | 2004          |       | 2003         |  | 2004 |       | 2003
|                  |  |               |       |              |  |      |       |     
|Interest paid     |  | $             | 2,844 |              |  | $    | 523   |      |  | $ | 3,005  |  |  | $ | 1,055  | 
|Income taxes paid |  | $             | 6,464 |              |  | $    | 7,328 |      |  | $ | 11,845 |  |  | $ | 11,772 | 

11. Segmented Information

The Company is an international insurance
brokerage, which provides a variety of property, casualty, life
and health, employee benefits, investment and risk management
products and services. In addition to its Corporate Operations,
the Company has identified two operating segments within its
insurance brokerage business: Canadian Operations and
U.S. Operations. Corporate Operations consist primarily of
investment income, unallocated administrative costs, interest
expense and the income tax expense or benefit which is not
allocated to the Companys operating






|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    15



---



##### Table of Contents



segments. The elimination of intra-segment
revenue relates to intra-company interest charges, management
fees and dividends.


Geographic revenue is determined based upon the
functional currency of the various subsidiaries. Financial
information by operating and geographic segment is as follows:

|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|------------------------------------------- |  | ----------------------------------- | ------ | ---- | ---- | - | ------ | ------------ |  | - | ------ | - |  | ---- | ------ | - | ------------ | - | ------ | - |  | - | ------ | -
|                                            |  |                                    
|                                            |  | For the three months ended June 30,
|                                            |  |                                    
|                                            |  |                                     |        |     
|                                            |  | 2004                                |        | 2003
|                                            |  |                                     |        |     
|                                            |  | Canada                              |        |      | U.S. |   |        | Consolidated |  |   | Canada |   |  | U.S. |        |   | Consolidated |  
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |  
|Revenue                                     |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                   | 31,455 |      |      | $ | 50,734 |              |  | $ | 82,189 |   |  | $    | 29,541 |   |              | $ | 44,728 |   |  | $ | 74,269 |  
|Corporate                                   |  |                                     | 5,152  |      |      |   | 475    |              |  |   | 5,627  |   |  |      | 4,891  |   |              |   | 477    |   |  |   | 5,368  |  
|Elimination of intra-segment revenue        |  |                                     | (5,078 | )    |      |   | (507   | )            |  |   | (5,585 | ) |  |      | (4,949 | ) |              |   | (533   | ) |  |   | (5,482 | )
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                   | 31,529 |      |      | $ | 50,702 |              |  | $ | 82,231 |   |  | $    | 29,483 |   |              | $ | 44,672 |   |  | $ | 74,155 |  
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Net earnings (loss) before income
    taxes |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                   | 8,003  |      |      | $ | 12,536 |              |  | $ | 20,539 |   |  | $    | 5,656  |   |              | $ | 11,200 |   |  | $ | 16,856 |  
|Corporate                                   |  |                                     | 492    |      |      |   | (2,472 | )            |  |   | (1,980 | ) |  |      | 1,812  |   |              |   | (3,043 | ) |  |   | (1,231 | )
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                   | 8,495  |      |      | $ | 10,064 |              |  | $ | 18,559 |   |  | $    | 7,468  |   |              | $ | 8,157  |   |  | $ | 15,625 |  
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Income tax expense (benefit) 
    current  |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                   | 2,848  |      |      | $ | 3,298  |              |  | $ | 6,146  |   |  | $    | 2,384  |   |              | $ | 2,347  |   |  | $ | 4,731  |  
|Corporate                                   |  |                                     | (180   | )    |      |   | (974   | )            |  |   | (1,154 | ) |  |      | (82    | ) |              |   | (1,045 | ) |  |   | (1,127 | )
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                   | 2,668  |      |      | $ | 2,324  |              |  | $ | 4,992  |   |  | $    | 2,302  |   |              | $ | 1,302  |   |  | $ | 3,604  |  
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Income tax expense (benefit) 
    future   |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                   | (357   | )    |      | $ | 2,173  |              |  | $ | 1,816  |   |  | $    | (356   | ) |              | $ | 2,036  |   |  | $ | 1,680  |  
|Corporate                                   |  |                                     | 150    |      |      |   | 10     |              |  |   | 160    |   |  |      | 230    |   |              |   | 2      |   |  |   | 232    |  
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                   | (207   | )    |      | $ | 2,183  |              |  | $ | 1,976  |   |  | $    | (126   | ) |              | $ | 2,038  |   |  | $ | 1,912  |  
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Net earnings (loss)                         |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                   | 5,512  |      |      | $ | 7,065  |              |  | $ | 12,577 |   |  | $    | 3,628  |   |              | $ | 6,817  |   |  | $ | 10,445 |  
|Corporate                                   |  |                                     | 522    |      |      |   | (1,508 | )            |  |   | (986   | ) |  |      | 1,664  |   |              |   | (2,000 | ) |  |   | (336   | )
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                   | 6,034  |      |      | $ | 5,557  |              |  | $ | 11,591 |   |  | $    | 5,292  |   |              | $ | 4,817  |   |  | $ | 10,109 |  
|                                            |  |                                     |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Amortization of intangible assets           |  | $                                   | 28     |      |      | $ | 908    |              |  | $ | 936    |   |  | $    | 17     |   |              | $ | 739    |   |  | $ | 756    |  
|Additions to property and equipment         |  | $                                   | 434    |      |      | $ | 1,123  |              |  | $ | 1,557  |   |  | $    | 610    |   |              | $ | 932    |   |  | $ | 1,542  |  
|Depreciation                                |  | $                                   | 628    |      |      | $ | 1,102  |              |  | $ | 1,730  |   |  | $    | 547    |   |              | $ | 970    |   |  | $ | 1,517  |  
|Interest income                             |  | $                                   | 204    |      |      | $ | 192    |              |  | $ | 396    |   |  | $    | 178    |   |              | $ | 173    |   |  | $ | 351    |  
|Interest expense                            |  | $                                   | 1,441  |      |      | $ | 261    |              |  | $ | 1,702  |   |  | $    | 1,215  |   |              | $ | 301    |   |  | $ | 1,516  |  





|                               |                            
|------------------------------ | ---------------------------
|16   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|------------------------------------------- |  | --------------------------------- | ------- | ---- | ---- | - | ------ | ------------ |  | - | ------- | - |  | ---- | ------- | - | ------------ | - | ------ | - |  | - | ------- | -
|                                            |  |                                  
|                                            |  | For the six months ended June 30,
|                                            |  |                                  
|                                            |  |                                   |         |     
|                                            |  | 2004                              |         | 2003
|                                            |  |                                   |         |     
|                                            |  | Canada                            |         |      | U.S. |   |        | Consolidated |  |   | Canada  |   |  | U.S. |         |   | Consolidated |  
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |  
|Revenue                                     |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Brokerage                                   |  | $                                 | 61,924  |      |      | $ | 99,510 |              |  | $ | 161,434 |   |  | $    | 53,105  |   |              | $ | 90,020 |   |  | $ | 143,125 |  
|Corporate                                   |  |                                   | 10,636  |      |      |   | 1,028  |              |  |   | 11,664  |   |  |      | 10,541  |   |              |   | 1,012  |   |  |   | 11,553  |  
|Elimination of intra-segment revenue        |  |                                   | (10,466 | )    |      |   | (1,052 | )            |  |   | (11,518 | ) |  |      | (10,565 | ) |              |   | (1,081 | ) |  |   | (11,646 | )
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|                                            |  | $                                 | 62,094  |      |      | $ | 99,486 |              |  | $ | 161,580 |   |  | $    | 53,081  |   |              | $ | 89,951 |   |  | $ | 143,032 |  
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Net earnings (loss) before income
    taxes |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Brokerage                                   |  | $                                 | 14,380  |      |      | $ | 23,529 |              |  | $ | 37,909  |   |  | $    | 7,605   |   |              | $ | 24,195 |   |  | $ | 31,800  |  
|Corporate                                   |  |                                   | 1,706   |      |      |   | (6,164 | )            |  |   | (4,458  | ) |  |      | 4,324   |   |              |   | (6,235 | ) |  |   | (1,911  | )
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|                                            |  | $                                 | 16,086  |      |      | $ | 17,365 |              |  | $ | 33,451  |   |  | $    | 11,929  |   |              | $ | 17,960 |   |  | $ | 29,889  |  
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Income tax expense (benefit) 
    current  |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Brokerage                                   |  | $                                 | 5,125   |      |      | $ | 9,123  |              |  | $ | 14,248  |   |  | $    | 3,052   |   |              | $ | 8,118  |   |  | $ | 11,170  |  
|Corporate                                   |  |                                   | (113    | )    |      |   | (2,405 | )            |  |   | (2,518  | ) |  |      | 382     |   |              |   | (2,287 | ) |  |   | (1,905  | )
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|                                            |  | $                                 | 5,012   |      |      | $ | 6,718  |              |  | $ | 11,730  |   |  | $    | 3,434   |   |              | $ | 5,831  |   |  | $ | 9,265   |  
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Income tax expense (benefit) 
    future   |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Brokerage                                   |  | $                                 | (404    | )    |      | $ | 811    |              |  | $ | 407     |   |  | $    | (203    | ) |              | $ | 1,476  |   |  | $ | 1,273   |  
|Corporate                                   |  |                                   | 89      |      |      |   | 11     |              |  |   | 100     |   |  |      | 211     |   |              |   | 127    |   |  |   | 338     |  
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|                                            |  | $                                 | (315    | )    |      | $ | 822    |              |  | $ | 507     |   |  | $    | 8       |   |              | $ | 1,603  |   |  | $ | 1,611   |  
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Net earnings (loss)                         |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Brokerage                                   |  | $                                 | 9,659   |      |      | $ | 13,595 |              |  | $ | 23,254  |   |  | $    | 4,756   |   |              | $ | 14,601 |   |  | $ | 19,357  |  
|Corporate                                   |  |                                   | 1,730   |      |      |   | (3,770 | )            |  |   | (2,040  | ) |  |      | 3,731   |   |              |   | (4,075 | ) |  |   | (344    | )
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|                                            |  | $                                 | 11,389  |      |      | $ | 9,825  |              |  | $ | 21,214  |   |  | $    | 8,487   |   |              | $ | 10,526 |   |  | $ | 19,013  |  
|                                            |  |                                   |         |      |      |   |        |              |  |   |         |   |  |      |         |   |              |   |        |   |  |   |         |  
|Amortization of intangible assets           |  | $                                 | 55      |      |      | $ | 1,662  |              |  | $ | 1,717   |   |  | $    | 28      |   |              | $ | 1,529  |   |  | $ | 1,557   |  
|Additions to property and equipment         |  | $                                 | 947     |      |      | $ | 2,006  |              |  | $ | 2,953   |   |  | $    | 1,610   |   |              | $ | 1,206  |   |  | $ | 2,816   |  
|Depreciation                                |  | $                                 | 1,270   |      |      | $ | 2,047  |              |  | $ | 3,317   |   |  | $    | 1,029   |   |              | $ | 1,882  |   |  | $ | 2,911   |  
|Interest income                             |  | $                                 | 501     |      |      | $ | 357    |              |  | $ | 858     |   |  | $    | 364     |   |              | $ | 415    |   |  | $ | 779     |  
|Interest expense                            |  | $                                 | 2,834   |      |      | $ | 528    |              |  | $ | 3,362   |   |  | $    | 2,274   |   |              | $ | 609    |   |  | $ | 2,883   |  

|                    |  |                                           |         |      |      |   |         |              |  |   |         |  |  |      |         |  |              |   |         |  |  |   |         | 
|------------------- |  | ----------------------------------------- | ------- | ---- | ---- | - | ------- | ------------ |  | - | ------- |  |  | ---- | ------- |  | ------------ | - | ------- |  |  | - | ------- | 
|                    |  |                                          
|                    |  | As of June 30, 2004 and December 31, 2003
|                    |  |                                          
|                    |  |                                           |         |     
|                    |  | 2004                                      |         | 2003
|                    |  |                                           |         |     
|                    |  | Canada                                    |         |      | U.S. |   |         | Consolidated |  |   | Canada  |  |  | U.S. |         |  | Consolidated |  
|                    |  |                                           |         |      |      |   |         |              |  |   |         | 
|Identifiable assets |  |                                           |         |      |      |   |         |              |  |   |         |  |  |      |         |  |              |   |         |  |  |   |         | 
|Brokerage           |  | $                                         | 171,058 |      |      | $ | 477,244 |              |  | $ | 648,302 |  |  | $    | 176,653 |  |              | $ | 442,517 |  |  | $ | 619,170 | 
|Corporate           |  |                                           | 39,387  |      |      |   | 100,769 |              |  |   | 140,156 |  |  |      | 65,316  |  |              |   | 16,117  |  |  |   | 81,433  | 
|                    |  |                                           |         |      |      |   |         |              |  |   |         |  |  |      |         |  |              |   |         |  |  |   |         | 
|                    |  | $                                         | 210,445 |      |      | $ | 578,013 |              |  | $ | 788,458 |  |  | $    | 241,969 |  |              | $ | 458,634 |  |  | $ | 700,603 | 
|                    |  |                                           |         |      |      |   |         |              |  |   |         |  |  |      |         |  |              |   |         |  |  |   |         | 





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    17



---



##### Table of Contents



12. Related Party Transactions

In the three months and six months ended
June 30, 2004 and 2003, respectively, the Company had
transactions with and recorded revenue from the following
related parties:


|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 
|---------------------------------------- |  | ------------- | ----- | ------------ |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                                         |  |               |       |             
|                                         |  | For the three |       | For the six 
|                                         |  | months ended  |       | months ended
|                                         |  | June 30,      |       | June 30,    
|                                         |  |               |       |             
|                                         |  | 2004          |       | 2003         |  | 2004 |       | 2003
|                                         |  |               |       |              |  |      |       |     
|Northbridge Financial Corporation        |  | $             | 6,493 |              |  | $    | 3,203 |      |  | $ | 10,951 |  |  | $ | 6,622  | 
|Crum & Forster Holdings, Inc.            |  |               | 176   |              |  |      | 614   |      |  |   | 359    |  |  |   | 831    | 
|Fairfax Inc.                             |  |               | 1,158 |              |  |      | 2,169 |      |  |   | 2,590  |  |  |   | 4,263  | 
|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  |               | 7,827 |              |  |      | 5,986 |      |  |   | 13,900 |  |  |   | 11,716 | 
|Old Lyme Insurance Company, Ltd (OLIC) |  |               | 231   |              |  |      |      |      |  |   | 231    |  |  |   |       | 
|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  | $             | 8,058 |              |  | $    | 5,986 |      |  | $ | 14,131 |  |  | $ | 11,716 | 
|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 

The Company had accounts receivable and accounts
payable balances with the above related parties in the amounts
of $3,579 and $16,420 respectively, at June 30, 2004 and
$3,185 and $17,999 respectively, at December 31, 2003. All
revenue and related accounts receivable and accounts payable are
the result of transactions in the normal course of business. The
companies listed above, except for OLIC, are related through
common ownership by Fairfax, which owns approximately 26% of the
Companys common shares as of June 30, 2004. Old Lyme
Insurance Group, Ltd, a company owned primarily by a group of
Hub employees, purchased OLIC from Fairfax during the second
quarter 2004.

As of June 30, 2004 and December 31,
2003 subordinated convertible debentures of $35,000 were held by
certain subsidiaries of Fairfax.

During the three months and six months ended
June 30, 2004 and 2003, the Company incurred expenses
related to rental of premises from related parties in the amount
of $446 and $876 for 2004 and $510 and $996 for the respective
periods in 2003. At June 30, 2004 and December 31,
2003 the Company also had receivables due from related parties
in the amount of $2,777 and $3,530, respectively, of which the
majority were loans to employees to enable them to purchase the
Companys common shares. Of these accounts receivable, as
of June 30, 2004 and December 31, 2003, $1,834 and
$1,918, respectively, were related to Company loans to employees
to purchase shares under the executive share purchase plan. As
collateral, the employees have pledged 146,000 and 153,000
common shares as of June 30, 2004 and December 31,
2003, respectively, which have a market value of $2,785 and
$2,590 as of June 30, 2004 and December 31, 2003,
respectively.

13. Reconciliation to
U.S. GAAP

The consolidated financial statements have been
prepared in accordance with Canadian GAAP, which differs in
certain respects from U.S. GAAP.






|                               |                            
|------------------------------ | ---------------------------
|18   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Net earnings and comprehensive
income

The table below presents the differences between
Canadian and U.S. GAAP affecting net earnings and
comprehensive income for the three months and six months ended
June 30, 2004 and 2003:

|                                                       |                                                                                                                 |               |        |              |   |      |        |       |   |   |        |        |   |   |        |        |  
|------------------------------------------------------ | --------------------------------------------------------------------------------------------------------------- | ------------- | ------ | ------------ | - | ---- | ------ | ----- | - | - | ------ | ------ | - | - | ------ | ------ | -
|                                                       |                                                                                                                 |               |        |             
|                                                       |                                                                                                                 | For the three |        | For the six 
|                                                       |                                                                                                                 | months ended  |        | months ended
|                                                       |                                                                                                                 | June 30,      |        | June 30,    
|                                                       |                                                                                                                 |               |        |             
|                                                       |                                                                                                                 | 2004          |        | 2003         |   | 2004 |        | 2003 
|                                                       |                                                                                                                 |               |        |              |   |      |        |      
|Net earnings for the period based on Canadian GAAP     |                                                                                                                 | $             | 11,591 |              |   | $    | 10,109 |       |   | $ | 21,214 |        |   | $ | 19,013 |       
|Adjustment to put option liability (2)                 |                                                                                                                 |               |       |              |   |      | (234   | )     |   |   |       |        |   |   | (275   | )     
|                                                       |                                                                                                                 |               |        |              |   |      |        |       |   |   |        |        |   |   |        |       
|Net earnings for the period based on
    U.S. GAAP (3) |                                                                                                                 | $             | 11,591 |              |   | $    | 9,875  |       |   | $ | 21,214 |        |   | $ | 18,738 |       
|Other comprehensive income: (4)                        |                                                                                                                 |               |        |              |   |      |        |       |   |   |        |        |   |   |        |       
|                                                       | Unrealized gain (loss), net of tax of
    $(17)  Q2/04, $(32)  Q2/03,
    $(40)  Q2/04 YTD, $22  Q2/03 YTD  |               |        | 27           |   |      |        | 50    |   |   |        | 62     |   |   |        | (35    | )
|                                                       | Reclassification adjustment, net of tax of
    $NIL  Q2/04, $49  Q2/03, $NIL 
    Q2/04 YTD, $49  Q2/03 YTD |               |        |             |   |      |        | (78   | ) |   |        |       |   |   |        | (78    | )
|                                                       | Foreign currency translation adjustment                                                                         |               |        | (2,350       | ) |      |        | 9,135 |   |   |        | (3,642 | ) |   |        | 16,533 |  
|                                                       |                                                                                                                 |               |        |              |   |      |        |       |   |   |        |        |   |   |        |       
|Comprehensive income based on
    U.S. GAAP (4)        |                                                                                                                 | $             | 9,268  |              |   | $    | 18,982 |       |   | $ | 17,634 |        |   | $ | 35,158 |       
|                                                       |                                                                                                                 |               |        |              |   |      |        |       |   |   |        |        |   |   |        |       
|Basic earnings per share based on U.S. GAAP            |                                                                                                                 | $             | 0.38   |              |   | $    | 0.34   |       |   | $ | 0.70   |        |   | $ | 0.64   |       
|Diluted earnings per share based on U.S. GAAP          |                                                                                                                 | $             | 0.35   |              |   | $    | 0.30   |       |   | $ | 0.64   |        |   | $ | 0.59   |       

Shareholders equity

The table below sets out the differences between
Canadian GAAP and U.S. GAAP that affect shareholders
equity at June 30, 2004 and December 31, 2003:

|                                                |                                                               |          |         |      |              |   |         |    | 
|----------------------------------------------- | ------------------------------------------------------------- | -------- | ------- | ---- | ------------ | - | ------- | -- | 
|                                                |                                                               | June 30, |         |      | December 31, |  
|                                                |                                                               | 2004     |         | 2003
|                                                |                                                               |          |         |     
|Shareholders equity based on Canadian GAAP     |                                                               | $        | 366,114 |      |              | $ | 342,790 |   
|Adjustment to investment held for sale (1)      |                                                               |          | (1,716  | )    |              |   | (1,716  | ) 
|Accumulated other comprehensive income:         |                                                               |          |         |      |              |   |         |   
|                                                | Unrealized gain net of tax of $(101) 
    2004, $(56)  2003 |          |         | 159  |              |   |         | 90 | 
|                                                |                                                               |          |         |      |              |   |         |   
|Shareholders equity based on
    U.S. GAAP (3) |                                                               | $        | 364,557 |      |              | $ | 341,164 |   
|                                                |                                                               |          |         |      |              |   |         |   






|    |                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Under Canadian GAAP, an investment held for sale
    is recorded at its cost. No further adjustments are made to the
    carrying value of the investment until it is sold at which time
    a gain or loss is recorded equal to the difference between the
    sale proceeds and its carrying value. Interest on debt financing
    the purchase of an investment is charged to income as accrued.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | Under U.S. GAAP, an investment held for sale
    is recorded at its fair market value. The carrying value of the
    investment is adjusted for increases in fair value due to
    changes in its U.S. GAAP net asset value and interest
    accretion. Interest on debt financing the purchase of an
    investment is debited to its carrying value and does not impact
    earnings. The difference between the carrying value of the
    investment and the sale proceeds is reflected as an adjustment
    to goodwill with no gain or loss recorded in income.
|
| | The adjustment to shareholders equity of
    $1,716 above reflects the differences described above related to
    the Companys investment and subsequent sale of certain
    insurance companies acquired as part of the 2001 acquisition of
    Kaye Group Inc.                                                                                                                                                                                                                                                                                                  





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    19



---



##### Table of Contents





|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Under Canadian GAAP, the fair value of the put
    options (determined using the Black-Scholes model) issued in
    connection with the Flanagan acquisition on May 31, 2001
    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. Only July 1, 2003, we 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 the Flanagan
    acquisition. 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 June 30,
    2004 no put options were outstanding on our common shares.                                                                                                                              



|    |                                                                                                                                                                                                                                                                          
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(3) | The condensed consolidated statements of earnings
    and cash flows for the three months and six months ended
    June 30, 2004 and 2003 and the condensed consolidated
    balance sheets as at June 30, 2004 and December 31,
    2003 under U.S. GAAP are as follows:

|                                                                 |  |               |        |              |  |      |        |      |  |   |         |   |  |   |         |  
|---------------------------------------------------------------- |  | ------------- | ------ | ------------ |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                 |  |               |        |             
|                                                                 |  | For the three |        | For the six 
|                                                                 |  | months ended  |        | months ended
|                                                                 |  | June 30,      |        | June 30,    
|                                                                 |  |               |        |             
|                                                                 |  | 2004          |        | 2003         |  | 2004 |        | 2003
|                                                                 |  |               |        |              |  |      |        |     
|Condensed consolidated statements of
    earnings:               |  |               |        |              |  |      |        |      |  |   |         |   |  |   |         |  
|Revenue                                                          |  | $             | 82,231 |              |  | $    | 74,155 |      |  | $ | 161,580 |   |  | $ | 143,032 |  
|Net earnings before income taxes                                 |  | $             | 18,558 |              |  | $    | 15,293 |      |  | $ | 33,450  |   |  | $ | 29,525  |  
|Net earnings                                                     |  | $             | 11,591 |              |  | $    | 9,875  |      |  | $ | 21,214  |   |  | $ | 18,738  |  
|Condensed consolidated statements of cash
    flows:             |  |               |        |              |  |      |        |      |  |   |         |   |  |   |         |  
|Cash provided by operating activities                            |  | $             | 9,164  |              |  | $    | 9,988  |      |  | $ | 17,144  |   |  | $ | 25,203  |  
|Cash used in investing activities                                |  | $             | (9,445 | )            |  | $    | (3,144 | )    |  | $ | (10,463 | ) |  | $ | (15,664 | )
|Cash provided by financing activities                            |  | $             | 58,689 |              |  | $    | 11,360 |      |  | $ | 57,747  |   |  | $ | 10,617  |  
|Effect of exchange rate changes on cash and cash
    equivalents |  | $             | (1,185 | )            |  | $    | 1,651  |      |  | $ | (1,953  | ) |  | $ | 2,280   |  





|                               |                            
|------------------------------ | ---------------------------
|20   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



|                                           |  |          |         |              |  |   |         | 
|------------------------------------------ |  | -------- | ------- | ------------ |  | - | ------- | 
|                                           |  | June 30, |         | December 31,
|                                           |  | 2004     |         | 2003        
|                                           |  |          |         |             
|Condensed consolidated balance
    sheets: |  |          |         |              |  |   |         | 
|Total current assets                       |  | $        | 392,850 |              |  | $ | 314,396 | 
|Total assets (5)                           |  | $        | 781,487 |              |  | $ | 696,440 | 
|Total current liabilities                  |  | $        | 231,994 |              |  | $ | 233,448 | 
|Total liabilities (5)                      |  | $        | 416,930 |              |  | $ | 355,276 | 
|Total shareholders equity                 |  | $        | 364,557 |              |  | $ | 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
    $5.5 million, is not recognized in the Companys
    Canadian GAAP financial statements. Under US GAAP, the Company
    has designated the swap transaction as 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 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.

14. Subsequent Event

On July 1, 2004 the Company purchased Talbot
Financial Corporation, (Talbot) based in New Mexico
at a cost of $90 million in cash. The Company purchased all
of the common shares of Satellite Acquisition Corporation,
(Satellite) a corporation formed by senior
management at Talbot. In turn, Satellite purchased 100% of
Talbot from Safeco Corporation for $90 million in cash. The
Company will purchase Talbot managements special shares of
Satellite over the next three years, using a combination of both
restricted and unrestricted common shares of the Company.
Payments will be made on September 30, 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 payments to
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. Based
on Talbots pro forma financial performance through the
first half of 2004 and further improvements anticipated through
2006, the Company anticipates earnout payments in the
$45-$50 million range.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    21



---



##### Table of Contents








|        |                                                                                          
|------- | -----------------------------------------------------------------------------------------
|Item 2. | Managements Discussion and Analysis of
    Financial Condition and Results of Operations

The following discussion and analysis should
be read in conjunction with our unaudited 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-Q. 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 affect us are described in
Note 13 to our unaudited consolidated financial
statements.

Overview

Hub is a leading North American insurance
brokerage that has grown rapidly since its formation in 1998
through mergers, acquisitions and organic growth. We provide a
broad array of property and casualty, life and health, employee
benefits, investment and risk management products and services
through offices located in the United States and Canada. We are
pursuing a growth strategy that includes expansion of our
geographic footprint across the United States and deeper
penetration of the insurance brokerage market in both the United
States and Canada. Both acquisitions and internal growth are
core components of our strategic plan for revenue expansion.

We anticipate that increases in revenue, higher
revenue per employee, expense control and more advantageous
commission arrangements with insurance companies will be
instrumental in our margin expansion efforts.

As of June 30, 2004, our operations included
11 regional hub brokerages  six in the
United States (including Bush, Cotton & Scott, LLC,
based in Washington, acquired in April 2004) and five in
Canada  and more than 150 offices staffed by
approximately 2,500 people. Our strategic plan calls for
the addition of approximately nine additional U.S. hubs to
extend our geographic footprint. Brokerages large enough to be
considered hubs will generally have annual revenue in excess of
$10 million. In addition to larger, hub
acquisitions by the parent corporation, each regional hub is
tasked with pursuing smaller, fold-in acquisitions that either
expand its geographic penetration or add new specialization or
expertise to the regional operation.

In accordance with our strategic plan, on
July 1, 2004 we purchased Talbot Financial Corporation,
(Talbot) based in New Mexico at cost of
$90 million in cash. We purchased all of the common shares
of Satellite Acquisition Corporation, (Satellite) a
corporation formed by senior management at Talbot. In turn,
Satellite purchased 100% of Talbot from Safeco Corporation for
$90 million in cash. We will purchase Talbot
managements special shares of Satellite over the next
three years, using a combination of both our restricted and
unrestricted common shares. Payments will be made on
September 30, 2005, March 31, 2006 and March 31,
2007 based upon Talbots earnings for the 12 month
period ending December 31, 2004, 2005 and 2006,
respectively. The contingent payments to management will be
recorded by us as a charge to earnings in the form of non-cash
stock based compensation expense over the period in which the
payments are earned. Based on Talbots pro forma financial
performance through the first half of 2004 and further
improvements anticipated through 2006, we anticipate earnout
payments in the $45-$50 million range.

We generally acquire larger hub
brokerages for a combination of cash and shares. Although there
are variations in the purchase terms for each hub, our goal is
to pay 30% - 70% of the hub purchase price
in our common shares, while setting escrow periods of up to
10 years for the sellers to hold these shares. We believe
the use of escrowed stock in major acquisitions creates
increased alignment of interests between senior managers and the
public shareholders of the corporation. We have paid all cash
for the acquisition of certain brokerages, and may pay an all
cash purchase price for brokerages in the future. As of
June 30, 2004, senior managers of the company and its hubs
owned approximately 2,195,911 shares, or 6.6%, of shares
outstanding, while all employees as a group held approximately
8,260,931 shares, or 24.8%, of total shares outstanding.





|                               |                            
|------------------------------ | ---------------------------
|22   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



We have acquired 97 brokerages in Canada and
the United States, with substantially all of our large
acquisitions focused in the United States over the past four
years. Accordingly, our revenue base has shifted increasingly to
the United States. United States revenue has grown to 62% of our
total in the second quarter 2004 from 13% in the second quarter
2000, reflecting primarily acquisition growth but also organic
growth. Organic growth is similar to the same-store-sales
calculation used by retailers. It includes revenue growth from
operations included in our financial statements for at least
12 months. Because we apply the purchase method of
accounting for acquisitions, acquired brokerages financial
results are included only from the date of acquisition.

We have a diverse mix of products, services,
insurer relationships and distribution channels, and as a
result, our revenue and profitability levels are not usually
highly susceptible to major changes related to a single product
or service. However, general economic trends may influence both
overall insurance rates, commissions and availability or costs
of individual types of coverage, which in turn may affect our
revenue and profitability levels.

During the 1990s, for example, insurance rates
were generally considered low, or soft, as insurance
companies sought to maximize the flow of premium dollars that
they could invest profitably in a rising stock market and in
other investments. Beginning in 2000, as return on investment
began to shrink, insurance rates began to rise, or
harden, at a pace that accelerated rapidly after the
terrorist attacks of September 11, 2001. During the two
years after September 11, 2001, premium rates remained firm
for most types of coverage, rising 10% to 15% per year in many
cases. During the latter part of 2003, the Canadian market
remained firm, but the U.S. market experienced some
softening of premium rates for property and casualty coverage.
During the first six months of 2004 Canadian and
U.S. markets both softened. However, rates for certain
types of coverage continued to experience increases. Looking
toward the remainder of 2004, we anticipate some continued
softening in the U.S. and Canadian markets as the year
progresses.

For us, as for other brokers, rising rates can
present both positive and negative effects. Rising premiums
usually yield stronger commission levels, if the insurance buyer
maintains its coverage levels. However, many insurance buyers
will respond to rising rates by reducing total coverage, often
by raising deductibles, reducing limits of coverage, or by
leaving some risks uninsured. Conversely, softening premium
rates typically yield lower commissions, that may, however, be
offset if the insurance buyer increases coverage levels. In
addition, a weak economic environment often leads to lower sales
and employee headcounts at client companies, leading in turn to
reduced demand for employee benefits, liability and other types
of coverage tied to business activity levels. Our ability to
achieve organic revenue growth is not solely dependent on rising
or declining rates, but results from a more complex mixture of
general economic growth, access to coverage from insurers and
marketing/ sales expertise.

Our total revenue increased $8.1 million, or
11%, to $82.2 million for the quarter. Of this increase,
$3.8 million was attributable to acquisitions and
$4.3 million was attributable to organic growth. Of our
total organic growth of 6%, one percentage point resulted from
the strengthening of the Canadian dollar in the second quarter
2004. During the second quarter of 2004, we acquired two
insurance brokerages, including Bush, Cotton & Scott, LLC.
Total annual revenue of these brokerages for 2003 was
$9.7 million.

Results of Operations

Three months ended June 30, 2004 compared
with three months ended June 30, 2003

Revenue

We achieved growth in revenue and profitability
in the second quarter 2004. We benefited from strong organic
growth rates at most hubs and contributions from brokerages
acquired in 2003. As a result of these and other factors, we
reported an 11% revenue increase to $82.2 million in the
second quarter 2004, while net earnings increased 15% to
$11.6 million from $10.1 million. Diluted earnings per
share increased 13% to $0.35 from $0.31.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    23



---



##### Table of Contents



The table below shows a breakdown of our revenue
by segment and type for the three months ended June 30,
2004 including organic growth:

|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|------------------------------------------- |  | ------- | ------ | --------- |  | --------- | ------ | -------------- |  | ------------- | ----- | --------- |  | --------- | ----- |  |  | - | ------ | - |  | - | ----- | - |  |  | ----- | 
|                                            |  |         |        |           |  |           |        |                |  |               |       |          
|                                            |  | Revenue |        |           |  |           |        |                |  |               |       |          
|                                            |  |         |        |           |  |           |        |                |  |               |       |          
|                                            |  |         |        |           |  |           |        |                |  |               |       |          
|                                            |  | Second  |        |           |  |           |        |                |  |               |       |          
|                                            |  | Quarter |        |           |  |           |        | Adjustment     |  |               |       |          
|                                            |  |         |        |           |  |           |        | for            |  |               |       |          
|(in thousands of U.S. dollars,              |  |         |        | Total Net |  | Total Net |        | (Acquisitions) |  | Organic       |       | Organic  
|except percentages)                         |  | 2004    |        | 2003      |  | Change($) |        | Growth(%)      |  | and Disposals |       | Growth($) |  | Growth(%)
|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |          
|Total                                       |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|Commission Income                           |  | $       | 76,960 |           |  | $         | 69,442 |                |  | $             | 7,518 |           |  |           | 11%   |  |  | $ | (3,418 | ) |  | $ | 4,100 |   |  |  | 6%    | 
|Contingent Commissions and Volume Overrides |  |         | 3,038  |           |  |           | 2,889  |                |  |               | 149   |           |  |           | 5%    |  |  |   | (64    | ) |  |   | 85    |   |  |  | 3%    | 
|Other Income                                |  |         | 2,233  |           |  |           | 1,824  |                |  |               | 409   |           |  |           | 22%   |  |  |   | (299   | ) |  |   | 110   |   |  |  | 6%    | 
|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|Total                                       |  | $       | 82,231 |           |  | $         | 74,155 |                |  | $             | 8,076 |           |  |           | 11%   |  |  | $ | (3,781 | ) |  | $ | 4,295 |   |  |  | 6%    | 
|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|U.S.                                        |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|Commission Income                           |  | $       | 46,843 |           |  | $         | 41,307 |                |  | $             | 5,536 |           |  |           | 13%   |  |  | $ | (3,892 | ) |  | $ | 1,644 |   |  |  | 4%    | 
|Contingent Commissions and Volume Overrides |  |         | 2,189  |           |  |           | 2,195  |                |  |               | (6    | )         |  |           | %    |  |  |   | (64    | ) |  |   | (70   | ) |  |  | (3)%  | 
|Other Income                                |  |         | 1,670  |           |  |           | 1,170  |                |  |               | 500   |           |  |           | 43%   |  |  |   | (318   | ) |  |   | 182   |   |  |  | 16%   | 
|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|Total                                       |  | $       | 50,702 |           |  | $         | 44,672 |                |  | $             | 6,030 |           |  |           | 14%   |  |  | $ | (4,274 | ) |  | $ | 1,756 |   |  |  | 4%    | 
|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|Canada                                      |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|Commission Income                           |  | $       | 30,117 |           |  | $         | 28,135 |                |  | $             | 1,982 |           |  |           | 7%    |  |  | $ | 474    |   |  | $ | 2,456 |   |  |  | 9%    | 
|Contingent Commissions and Volume Overrides |  |         | 849    |           |  |           | 694    |                |  |               | 155   |           |  |           | 22%   |  |  |   |       |   |  |   | 155   |   |  |  | 22%   | 
|Other Income                                |  |         | 563    |           |  |           | 654    |                |  |               | (91   | )         |  |           | (14)% |  |  |   | 19     |   |  |   | (72   | ) |  |  | (11)% | 
|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 
|Total                                       |  | $       | 31,529 |           |  | $         | 29,483 |                |  | $             | 2,046 |           |  |           | 7%    |  |  | $ | 493    |   |  | $ | 2,539 |   |  |  | 9%    | 
|                                            |  |         |        |           |  |           |        |                |  |               |       |           |  |           |       |  |  |   |        |   |  |   |       |   |  |  |       | 

Of the $8.1 million in new revenue we
reported, $3.8 million, or 47%, reflected growth through
acquisition, while $4.3 million, or 53%, resulted from
organic growth. By comparison, acquired brokerages added
$9.3 million, or 55%, of second quarter 2003 sales growth,
while organic growth contributed $7.5 million, or 45%, of
our revenue increases. We expect future growth to shift
increasingly to acquisition growth as we complete acquisitions
in 2004. Organic growth figures for both revenue and earnings
include the impact of foreign exchange rate changes between the
U.S. and Canadian dollars. In the second quarter 2004, the
rise of the Canadian dollar versus the U.S. dollar
contributed one percentage point of our 6% organic growth rate
in revenue.

Commission income, which usually ranges from 5%
to 20% of the premium charged by insurers, provided
approximately 94% of our revenue base in the second quarter
2004. In addition to these core commissions, the
company derives revenue from:



| |   |                                                                                                                                                                                               
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | 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 of fees and
    interest income, including income earned while we hold client
    premiums on behalf of insurance companies.                                         

In addition to the variations that can result
from changes in organic growth rates, acquisitions and other
variables related to operations, the second quarter 2004 and
2003 results included a number of factors that complicate direct





|                               |                            
|------------------------------ | ---------------------------
|24   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



comparisons. The following chart shows the net
earnings and diluted earnings per share impact that currency
exchange rates had during second quarter in 2004 and 2003 to
increase investor understanding.


|                                                         |                                |              |        |             |   |   |      |       |  
|-------------------------------------------------------- | ------------------------------ | ------------ | ------ | ----------- | - | - | ---- | ----- | -
|(in thousands of U.S. dollars, except per share amounts) |                                | Net Earnings |        | Diluted EPS
|                                                         |                                |              |        |            
|June 30, 2004 reported net earnings
    (Canadian GAAP)  |                                | $            | 11,591 |             |   | $ | 0.35 |      
|                                                         | Impact of foreign exchange     |              |        | (172        | ) |   |      |      |  
|                                                         |                                |              |        |             |   |   |      |      
|                                                         | Adjusted June 30, 2004 results |              | $      | 11,419      |   |   | $    | 0.35  |  
|                                                         |                                |              |        |             |   |   |      |      
|June 30, 2003 reported net earnings
    (Canadian GAAP)  |                                | $            | 10,109 |             |   | $ | 0.31 |      
|                                                         | Impact of foreign exchange     |              |        | (578        | ) |   |      | (0.02 | )
|                                                         |                                |              |        |             |   |   |      |      
|                                                         | Adjusted June 30, 2003 results |              | $      | 9,531       |   |   | $    | 0.29  |  
|                                                         |                                |              |        |             |   |   |      |      

As shown above, we benefited less from a stronger
Canadian dollar in the second quarter 2004 as compared to 2003.
The impact of foreign exchange on second quarter 2004 earnings
generated an increase of $0.2 million as compared to an
increase of $0.6 million in the second quarter 2003.
Excluding the effects of changes in currency exchange rates,
adjusted net earnings would have increased 20% in second quarter
2004, versus a 15% increase in reported net earnings, and
adjusted diluted earnings per share would have increased 21% in
second quarter 2004, versus a 13% increase in reported diluted
earnings per share.

Changes in currency exchange rates are not an
unusual item. Because we derive our revenue from both the United
States and Canada and do not use derivatives to manage our
Canadian pre-tax income, foreign exchange fluctuations will
continue to impact our results. We have highlighted the impact
of these changes because currency translation effects can lead
to reported results that are less meaningful than local-currency
results as an indicator of underlying operations. In the second
quarter 2004, the strength of the Canadian dollar versus the
U.S. dollar had a less positive impact on our results than
in the second quarter 2003. Any decline in the Canadian dollar
relative to the U.S. dollar would have a negative effect on
our results. See Market Risk.

U.S. Results

U.S. revenue grew 14% to $50.7 million,
or 62% of consolidated revenue, in the second quarter 2004 as
compared to 2003, due to both acquisitions and organic growth.
Acquisitions added $4.3 million to revenue  71% of
the increase while organic growth provided $1.8 million, or
29% of revenue growth. Our U.S. operations posted an
organic growth rate of 4% in the second quarter 2004, a 33%
decrease from 6% in the second quarter 2003, reflecting some
softening of premium rates for property and casualty coverage.
Core commission income increased 13%, while contingent
commissions remained constant.

Canadian
Results

Canadian revenue grew 7% to $31.5 million,
or 38% of consolidated revenue, in the second quarter 2004 as
compared to 2003, primarily as a result of strong organic growth
as well as a strengthening of the Canadian dollar against the
U.S. dollar. Canadian brokerages posted organic growth of
9%, of which three percentage points reflected a stronger
Canadian dollar. Net dispositions lowered revenue by
$0.5 million reflecting the sale of certain fold-ins
acquired in prior years. Canadian premium rates have started to
soften and we expect them to continue softening for the
remainder of 2004. Because Canadian revenue includes a lower
percentage of commercial business and more personal lines, any
acceleration in economic growth that adds to employee payrolls
is not expected to have as strong a benefit in Canada as in the
United States. Our strong relationships with and access to
insurers in Canada continued to prove to be an important
competitive advantage in the second quarter of 2004, leading to
increased sales to clients who were unable to obtain coverage
from other sources. Canadian operations also benefited from an
increase in contingent commissions and volume overrides, which
grew 22% in the second quarter 2004, versus a decrease of 26% in
the second quarter 2003.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    25



---



##### Table of Contents



Compensation Expense

Cash compensation in the second quarter 2004
increased 6% to $42.1 million from $39.9 million,
while non-cash stock based compensation grew 35% to
$1.7 million from $1.3 million in the second quarter
2003. As a percentage of revenue, cash compensation expense
decreased to 51% from 54% a year earlier, benefiting from both
expense control and previously reported changes in Hubs
management bonus plan. The increase in non-cash stock based
compensation expense reflected the amortization of restricted
share units granted in the first quarter 2004 as part of the
change in the Companys management bonus plan.

Compensation Comparison

For the three months ended
June 30,


($ in thousands)


|                                  |  |      |        |      |  |          |        |         |  |      |     |  |  |  |     |  |  |  |     | 
|--------------------------------- |  | ---- | ------ | ---- |  | -------- | ------ | ------- |  | ---- | --- |  |  |  | --- |  |  |  | --- | 
|                                  |  |      |        |      |  |          |        |        
|                                  |  |      |        |      |  |          |        | % of   
|                                  |  |      |        |      |  |          |        | Revenue
|                                  |  |      |        |      |  |          |        |        
|                                  |  | 2004 |        | 2003 |  | % Change |        | 2004    |  | 2003
|                                  |  |      |        |      |  |          |        |         |  |     
|Compensation (cash)               |  | $    | 42,114 |      |  | $        | 39,877 |         |  |      | 6%  |  |  |  | 51% |  |  |  | 54% | 
|Non-cash stock based compensation |  |      | 1,701  |      |  |          | 1,258  |         |  |      | 35% |  |  |  | 2%  |  |  |  | 2%  | 
|                                  |  |      |        |      |  |          |        |         |  |      |     |  |  |  |     |  |  |  |     | 
|Total                             |  | $    | 43,815 |      |  | $        | 41,135 |         |  |      | 7%  |  |  |  | 53% |  |  |  | 56% | 
|                                  |  |      |        |      |  |          |        |         |  |      |     |  |  |  |     |  |  |  |     | 

Our non-cash stock based compensation includes
stock options and restricted share units for senior employees.
In response to investor interest in the true impact of these
costs, we began recognizing the expense of non-cash stock based
compensation during 2003. Options vest evenly over three years
and expire seven years from issuance. Shares derived from the
options are held in escrow for a period of five years from the
date the options are granted, subject to early release in
certain circumstances. Restricted share units vest over periods
ranging from 48 months to 95 months. Our policy is to
expense the fair value of non-cash stock based compensation to
employees over the period in which entitlement to the
compensation vests. The amount of expense recognized in each
quarter related to stock options will vary with respect to
exercise and forfeiture of options.

In total, as of June 30, 2004, we had issued
and outstanding approximately 1.5 million stock options at
a weighted average exercise price of $15.49. Our closing share
price on the New York Stock Exchange was $19.09 on June 30,
2004.

Selling, Occupancy and Administration
Expense

Selling, occupancy and administration expense
increased 17% to $16.1 million in the second quarter 2004
as compared to 2003. As a percentage of revenue, selling,
occupancy and administration expense increased slightly to 20%,
versus 19% in the second quarter 2003.

Depreciation

Depreciation remained consistent at 2% of revenue
in the second quarter 2004 and 2003.

Interest Expense

Interest expense increased 12% to
$1.7 million from $1.5 million in the second quarter
2004 as compared to 2003, primarily as a result of higher debt
levels, partially offset by the benefits of an interest rate
swap that was entered into during the third quarter of 2003. The
interest rate swap effectively converted $65 million of
fixed interest rate senior notes into floating rate instruments,
reducing interest expense on the senior notes by
$0.3 million in the second quarter 2004.





|                               |                            
|------------------------------ | ---------------------------
|26   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Intangible Asset Amortization

Intangible asset amortization increased 23% to
$0.9 million in the second quarter 2004. As a percentage of
revenue this expense remained unchanged at 1%.

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

The second quarter of 2004 included gains of
$0.6 million on the sale of the assets and shares of
certain brokerages compared with a loss of $0.1 million on
the sale of investments and assets of certain brokerages for the
same prior year period.

Provision for Income Tax Expense

Our effective tax rate increased in the second
quarter 2004 to 37.5% from 35.3%. The prior year tax rate was
lower for the quarter as a result of adjustments made in the
second quarter 2003 to reflect actual taxes paid versus amounts
previously accrued. The tax rate of 37.5% for the second quarter
2004 is in line with the companys previous guidance of 36%
to 39%.

Net Earnings and Earnings Per Share

Our net earnings increased 15% to
$11.6 million in the second quarter 2004, primarily as a
result of growth in revenue. As a percentage of revenue, net
earnings remained constant at 14%. Diluted earnings per share
increased 13% to $0.35.

As shown in the table on page 25, net
earnings increased $0.2 million as a result of the Canadian
dollar strengthening versus the U.S. dollar in the second
quarter 2004. In the second quarter 2003, net earnings increased
$0.6 million or $0.02 per diluted share due to foreign
exchange rates. Excluding this effect, our diluted earnings per
share would have increased $0.06 to $0.35 in the second quarter
of 2004 from $0.29 in the second quarter of 2003 on a comparable
basis.

Results of Operations

Six months ended June 30, 2004 compared
with six months ended June 30, 2003

Revenue

We achieved growth in revenue and profitability
in the first six months of 2004. We benefited from strong
organic growth rates at most hubs, contributions from brokerages
acquired in the last 12 months and a strengthening Canadian
dollar compared to the U.S. dollar.

As a result of these and other factors, we
reported a 13% revenue increase to $161.6 million in the
first six months of 2004, while net earnings increased 12% to
$21.2 million. Diluted earnings per share increased 8% to
$0.64 from $0.59.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    27



---



##### Table of Contents



The table below shows a breakdown of our revenue
by segment and type for the six months ended June 30, 2004
including organic growth:

|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |     | 
|----------------------------------------------- | -------------------------------- | ---------------- | ------- | --------- |  | ---------- | ------- | -------------- |  | ------------- | ------ | --------- |  | --------- | --- | --- |  | - | ------ | --- | - | - | ------ | ----- |  |  | --- | --- | 
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |          
|                                                |                                  | Revenue          |         |           |  |            |         |                |  |               |        |          
|                                                |                                  |                  |         |           |  |            |         | Adjustment     |  |               |        |          
|                                                |                                  |                  |         |           |  |            |         | for            |  |               |        |          
|(in thousands of U.S. dollars, except per share |                                  | First Six Months |         | Total Net |  | Total Net  |         | (Acquisitions) |  | Organic       |        | Organic  
|amounts)                                        |                                  | 2004             |         | 2003      |  | Changes($) |         | Growth(%)      |  | and Disposals |        | Growth($) |  | Growth(%)
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |          
|Total                                           |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|Commission Income                               |                                  | $                | 138,589 |           |  | $          | 123,983 |                |  | $             | 14,606 |           |  |           | 12% |     |  | $ | (4,704 | )   |   | $ | 9,902  |       |  |  | 8%  |    
|Contingent                                      |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|                                                | Commissions and Volume Overrides |                  |         | 18,075    |  |            |         | 15,266         |  |               |        | 2,809     |  |           |     | 18% |  |   |        | (65 | ) |   |        | 2,744 |  |  |     | 18% | 
|Other Income                                    |                                  |                  | 4,916   |           |  |            | 3,783   |                |  |               | 1,133  |           |  |           | 30% |     |  |   | (681   | )   |   |   | 452    |       |  |  | 12% |    
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|Total                                           |                                  | $                | 161,580 |           |  | $          | 143,032 |                |  | $             | 18,548 |           |  |           | 13% |     |  | $ | (5,450 | )   |   | $ | 13,098 |       |  |  | 9%  |    
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|U.S.                                            |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|Commission Income                               |                                  | $                | 83,935  |           |  | $          | 76,293  |                |  | $             | 7,642  |           |  |           | 10% |     |  | $ | (5,091 | )   |   | $ | 2,551  |       |  |  | 3%  |    
|Contingent                                      |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|                                                | Commissions and Volume Overrides |                  |         | 11,832    |  |            |         | 10,995         |  |               |        | 837       |  |           |     | 8%  |  |   |        | (65 | ) |   |        | 772   |  |  |     | 7%  | 
|Other Income                                    |                                  |                  | 3,719   |           |  |            | 2,663   |                |  |               | 1,056  |           |  |           | 40% |     |  |   | (695   | )   |   |   | 361    |       |  |  | 14% |    
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|Total                                           |                                  | $                | 99,486  |           |  | $          | 89,951  |                |  | $             | 9,535  |           |  |           | 11% |     |  | $ | (5,851 | )   |   | $ | 3,684  |       |  |  | 4%  |    
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|Canada                                          |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|Commission Income                               |                                  | $                | 54,654  |           |  | $          | 47,690  |                |  | $             | 6,964  |           |  |           | 15% |     |  | $ | 387    |     |   | $ | 7,351  |       |  |  | 15% |    
|Contingent                                      |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|                                                | Commissions and Volume Overrides |                  |         | 6,243     |  |            |         | 4,271          |  |               |        | 1,972     |  |           |     | 46% |  |   |        |    |   |   |        | 1,972 |  |  |     | 46% | 
|Other Income                                    |                                  |                  | 1,197   |           |  |            | 1,120   |                |  |               | 77     |           |  |           | 7%  |     |  |   | 14     |     |   |   | 91     |       |  |  | 8%  |    
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    
|Total                                           |                                  | $                | 62,094  |           |  | $          | 53,081  |                |  | $             | 9,013  |           |  |           | 17% |     |  | $ | 401    |     |   | $ | 9,414  |       |  |  | 18% |    
|                                                |                                  |                  |         |           |  |            |         |                |  |               |        |           |  |           |     |     |  |   |        |     |   |   |        |       |  |  |     |    

Of the $18.5 million in new revenue we
reported, $5.4 million, or 29%, reflected growth through
acquisition, while $13.1 million, or 71%, resulted from
organic growth. By comparison, acquired brokerages added
$21.4 million, or 59%, of the first six months 2003 sales
growth, while organic growth contributed $14.9 million, or
41%, of our revenue increases. We expect future growth to shift
increasingly to acquisition growth as we complete acquisitions
in 2004. Organic growth figures for both revenue and earnings
include the impact of foreign exchange rate changes between the
U.S. and Canadian dollars. In the first six months the rise
of the Canadian dollar versus the U.S. dollar contributed
three percentage points of our 9% organic growth rate in revenue.

Commission income, which usually ranges from 5%
to 20% of the premium charged by insurers, provided
approximately 86% of our revenue base in the first six months
2004. Core commissions expressed as a percentage of revenue are
anticipated to be lower in the first six months of 2004 because
typically we earn the majority of our contingent commissions and
volume overrides early in the year as they are based on prior
year performance. For the year ended December 31, 2003,
commission income provided approximately 91% of our revenue base.

In addition to the variations that can result
from changes in organic growth rates, acquisitions and other
variables related to operations, the first six months 2004 and
2003 results included a number of factors that complicate direct





|                               |                            
|------------------------------ | ---------------------------
|28   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



comparisons. The following chart shows the net
earnings and diluted earnings per share impact that several of
these factors had during first six months in 2004 and 2003 to
increase investor understanding.


|                                                         |                                             |              |        |             |   |   |      |       |  
|-------------------------------------------------------- | ------------------------------------------- | ------------ | ------ | ----------- | - | - | ---- | ----- | -
|(in thousands of U.S. dollars, except per share amounts) |                                             | Net Earnings |        | Diluted EPS
|                                                         |                                             |              |        |            
|June 30, 2004 reported net earnings
    (Canadian GAAP)  |                                             | $            | 21,214 |             |   | $ | 0.64 |      
|                                                         | Impact of foreign exchange                  |              |        | (831        | ) |   |      | (0.03 | )
|                                                         | Impact of write-off of trademarks           |              |        | 1,656       |   |   |      | 0.05  |  
|                                                         | Impact of non-cash stock based compensation |              |        | 2,440       |   |   |      | 0.07  |  
|                                                         |                                             |              |        |             |   |   |      |      
|                                                         | Adjusted June 30, 2004 results              |              | $      | 24,479      |   |   | $    | 0.73  |  
|                                                         |                                             |              |        |             |   |   |      |      
|June 30, 2003 reported net earnings
    (Canadian GAAP)  |                                             | $            | 19,013 |             |   | $ | 0.59 |      
|                                                         | Impact of foreign exchange                  |              |        | (712        | ) |   |      | (0.02 | )
|                                                         | Impact of non-cash stock based compensation |              |        | 1,755       |   |   |      | 0.05  |  
|                                                         |                                             |              |        |             |   |   |      |      
|                                                         | Adjusted June 30, 2003 results              |              | $      | 20,056      |   |   | $    | 0.62  |  
|                                                         |                                             |              |        |             |   |   |      |      

As shown above, we benefited slightly more from a
stronger Canadian dollar in the first six months 2004 as
compared to 2003. The impact of foreign exchange on the first
six months 2004 earnings generated an increase of
$0.8 million as compared to an increase of
$0.7 million in 2003. Also, 2004 included the write-off of
trademarks of $1.7 million, after tax. This non-cash
expense was incurred as a result of certain of our subsidiaries
having decided to change their names. In addition, non-cash
stock based compensation after tax increased 39% to
$2.4 million for the first six months of 2004 as compared
to $1.8 million in 2003, as a result of additional grants
of stock based compensation in 2004 and 2003. Excluding the
effects of these items, adjusted net earnings would have
increased 22% in the first six months of 2004, versus a 12%
increase in reported net earnings, and adjusted diluted earnings
per share would have increased 18% in the first six months of
2004, versus an 8% increase in reported diluted earnings per
share.

Changes in currency exchange rates are not an
unusual item. Because we derive our revenue from both the United
States and Canada and do not use derivatives to manage our
Canadian pre-tax income, foreign exchange fluctuations will
continue to impact our results. We have highlighted the impact
of these changes because currency translation effects can lead
to reported results that are less meaningful than local-currency
results as an indicator of underlying operations. In the first
six months 2004, the strength of the Canadian dollar versus the
U.S. dollar had a more positive impact on our results than
in the first six months 2003. Any decline in the Canadian dollar
relative to the US dollar would have a negative effect on our
results. See Market Risk.

U.S. Results

U.S. revenue grew 11% to $99.5 million,
or 62% of consolidated revenue, in the first six months 2004 as
compared to 2003, due to both the contributions of operations
acquired in the prior 12 months and organic growth.
Acquisitions added $5.8 million to revenue  61% of
the increase while organic growth provided $3.7 million, or
39% of revenue growth. Our U.S. operations posted an
organic growth rate of 4% in the first six months 2004, a 56%
decrease from 9% in the first six months 2003. Core commission
income increased 10%, while contingent commissions and volume
overrides grew 8%.

During the first six months 2004, the
U.S. market experienced some softening of premium rates for
property and casualty coverage. However, rates for liability,
health and other types of coverage continue to experience
increases. Hard insurance pricing in 2003 contributed strongly
to a significant increase in contingent profitability income
received from insurers in 2004, based on 2003 results.

Canadian
Results

Canadian revenue grew 17% to $62.1 million,
or 38% of consolidated revenue, in the first six months 2004 as
compared to 2003, primarily as a result of a strengthening of
the Canadian dollar against the U.S. dollar as well as
strong organic growth. Canadian brokerages posted organic growth
of 18%, of which nine percentage points





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    29



---



##### Table of Contents



reflected a stronger Canadian dollar. Net
dispositions lowered revenue by $0.4 million reflecting the
sale of certain fold-ins acquired in prior years. Canadian
premium rates have started to soften and we expect them to
continue softening for the remainder of 2004. Because Canadian
revenue includes a lower percentage of commercial business and
more personal lines, any acceleration in economic growth that
adds to employee payrolls is not expected to have as strong a
benefit in Canada as in the United States. Our strong
relationships with and access to insurers in Canada proved to be
an important competitive advantage in the first six months of
2004, leading to increased sales to clients who were unable to
obtain coverage from other sources. In addition, Canadian
operations benefited strongly from an increase in contingent
commissions and volume overrides, which grew 46% in the first
six months 2004, versus a 21% growth rate in first six months
2003.


Compensation Expense

Cash compensation expense for the six months 2004
increased 8% to $82.8 million from $76.9 million,
while non-cash stock based compensation grew 49% to
$3.3 million from $2.2 million in the first six months
2003. As a percentage of revenue, cash compensation expense
decreased to 51% from 54% a year earlier, reflecting the
benefits of higher contingent payments, which do not have
payroll cost associated with them, and changes to the
Companys management bonus plan.

Compensation Comparison

For the six months ended
June 30,


($ in thousands)


|                                  |  |      |        |      |  |          |        |              |  |      |     |  |  |  |     |  |  |  |     | 
|--------------------------------- |  | ---- | ------ | ---- |  | -------- | ------ | ------------ |  | ---- | --- |  |  |  | --- |  |  |  | --- | 
|                                  |  |      |        |      |  |          |        |             
|                                  |  |      |        |      |  |          |        | % of Revenue
|                                  |  |      |        |      |  |          |        |             
|                                  |  | 2004 |        | 2003 |  | % Change |        | 2004         |  | 2003
|                                  |  |      |        |      |  |          |        |              |  |     
|Compensation (cash)               |  | $    | 82,751 |      |  | $        | 76,889 |              |  |      | 8%  |  |  |  | 51% |  |  |  | 54% | 
|Non-cash stock based compensation |  |      | 3,315  |      |  |          | 2,220  |              |  |      | 49% |  |  |  | 2%  |  |  |  | 1%  | 
|                                  |  |      |        |      |  |          |        |              |  |      |     |  |  |  |     |  |  |  |     | 
|Total                             |  | $    | 86,066 |      |  | $        | 79,109 |              |  |      | 9%  |  |  |  | 53% |  |  |  | 55% | 
|                                  |  |      |        |      |  |          |        |              |  |      |     |  |  |  |     |  |  |  |     | 

Our non-cash compensation includes stock options
and restricted share units for senior employees. In response to
investor interest in the true impact of these costs, we began
recognizing the expense of non-cash stock based compensation
during 2003. Options vest evenly over three years and expire in
seven years from issuance. Shares derived from the options are
held in escrow for a period of five years from the date the
options are granted, subject to early release in certain
circumstances. Restricted share units vest over periods ranging
from 48 months to 95 months. Our policy is to expense
the fair value of non-cash stock based compensation to employees
over the period in which entitlement to the compensation vests.
The amount of expense recognized in each quarter related to
stock options will vary with respect to exercise and forfeiture
of options.

Selling, Occupancy and Administration
Expense

Selling, occupancy and administration expense
increased 18% to $31.6 million in the first six months 2004
as compared to 2003. As a percentage of revenue, selling,
occupancy and administration expense increased slightly to 20%,
versus 19% in the first six months 2003.

Depreciation

Depreciation remained consistent at 2% of revenue
in the first six months 2004 and 2003.

Interest Expense

Interest expense increased 17% to
$3.4 million from $2.9 million in the first six months
2004, primarily as a result of higher debt levels, partially
offset by the benefits of an interest rate swap that was entered
into during the third quarter of 2003. The interest rate swap
effectively converted $65 million of fixed interest rate
senior notes into floating rate instruments, reducing interest
expense on the senior notes by $0.7 million in the first
six months 2004.





|                               |                            
|------------------------------ | ---------------------------
|30   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Intangible Asset Amortization

Intangible asset amortization increased 10% to
$1.7 million in the first six months 2004. As a percentage
of revenue this expense remained unchanged at 1%.

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

The six months ended June 30, 2004 included
gains on the sale of the assets and shares of certain brokerages.

Loss on Write-Off of Trademarks

In January 2004, we adopted a corporate marketing
and positioning strategy to build awareness of the Hub brand
across all of our markets and to encourage greater coordination
and collegial identity among our employees. As part of this
corporate consolidation and identity development program, we
have reassigned a number of key executives to new or expanded
areas of responsibility and determined that future marketing and
communications will be conducted under the Hub International
name, rather than the traditional corporate names of acquired
brokerages. As a result, certain of our subsidiaries have
decided to change their names and we recognized a non-cash
expense of approximately $2.6 million before tax related to
the write-off of trademarks.

Provision for Income Tax Expense

Our effective tax rate remained relatively
unchanged in the first six months 2004 at 36.6% compared to
36.4% for the same prior year period.

Net Earnings and Earnings Per Share

Our net earnings increased 12% to
$21.2 million in the first six months 2004, primarily as a
result of growth in revenue. As a percentage of revenue, net
earnings remained constant at 13% in the first six months 2004
and 2003. Diluted earnings per share increased at a somewhat
slower rate than net earnings  8% to
$0.64  due to the write-off of trademarks.

As shown in the table on page 29, net
earnings increased $0.8 million or $0.03 per diluted share,
related to the strengthening Canadian dollar versus the
U.S. dollar and decreased $2.4 million or $0.07 per
diluted share related to the impact of non-cash stock based
compensation, in the first six months 2004. Also in 2004,
diluted earnings per share decreased $0.05 per diluted share
from the write-off of trademarks. In the first six months 2003,
net earnings increased $0.7 million from foreign exchange
rates and net earnings decreased $1.8 million or $0.05 per
diluted share due to non-cash stock based compensation.
Excluding these effects, our diluted earnings per share would
have increased to $0.73 in the first six months of 2004 from
$0.62 in the first six months of 2003 on a comparable basis.

Cash Flow, Liquidity and Capital
Resources

As of June 30, 2004, we had cash and cash
equivalents of $144.5 million, an increase of 76%, from
$82.1 million as of December 31, 2003. Operating
activities generated $17.1 million of cash in six months
ended June 30, 2004 compared to $25.2 million in 2003.
The amount of cash provided by operating activities is affected
by net earnings for the period, non-cash income and expenses,
the change in trust cash, the collection of accounts and other
receivables and the payment of accounts payable and accrued
liabilities. In 2004, $10.4 million of cash was used in
investing activities, primarily for the purchase of subsidiaries
and acquisitions of property and equipment compared to
$15.7 million in 2003. Also in 2004, $57.7 million of
cash was generated by financing activities, primarily resulting
from long-term debt compared to $10.6 million generated in
the first six months 2003. In 2004, the effect of exchange rate
changes on cash and cash equivalents was a decrease of
$2.0 million compared to an increase of $2.3 million
in 2003. Net debt, defined as long-term debt
($142.9 million) and subordinated convertible debentures
($35.0 million) less non-trust cash (cash and cash
equivalents of $144.5 million) as of June 30, 2004,
was $33.4 million compared with $31.7 million as of
December 31, 2003.

As a broker, we collect and hold premiums paid by
clients, deduct commissions and other expenses from these
payments, and hold the remainder in trust, which we remit to the
insurers who provide coverage to clients. We earn





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    31



---



##### Table of Contents



interest on these funds during the time between
receipt of the cash and the time the cash is paid to insurers.
The cash held in trust is shown separately on our balance sheet.
On the statement of cash flows, changes in trust cash are
included as part of the change in non-cash working capital and
the determination of cash provided from operating activities.


In addition to internally generated cash, we
maintain two separate credit facilities:



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Revolving U.S. dollar LIBOR loan 
    This facility was renegotiated in April 2004. Under the new
    terms, the unsecured facility totals $75 million and bears
    interest at a floating rate of prime plus 1% or 112.5 basis
    points above LIBOR, which were 1.37% and 1.12% at June 30,
    2004 and December 31, 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 June 30, 2004 and December 31, 2003,
    respectively. We are in compliance with all financial covenants
    governing this facility as of June 30, 2004 and
    December 31, 2003.
|   
|(2) | Demand U.S. dollar base rate
    loan  We have an undrawn $9 million facility
    which bears interest at the banks U.S. base rate plus
    50 bonus points. Borrowings under this facility are repayable on
    demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     

As of June 30, 2004 we had $65 million
aggregate principal amount of unsecured senior notes
outstanding. 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 our
revolving U.S. dollar LIBOR Loan with the balance for
general corporate purposes, which may include future
acquisitions. We 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.

On July 15, 2003, we 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, in order to ensure that we pay a
current market interest rate on that portion of its borrowings.
We account 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 of June 30,
2004, we estimated the fair value of the swap was
$5.5 million, which is not recognized in our financial
statements. Accordingly, $5.5 million is the estimated
amount that we would need to pay to terminate the swap as of
June 30, 2004.

Also at June 30, 2004 we had outstanding a
$7.5 million term loan 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) and 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).
Credits earned for the year ended December 31, 2003 reduced
interest payments to zero from $0.8 million. It is not yet
determinable if a credit has been earned for 2004.

In addition to these primary credit sources, we
ended June 30, 2004 with $5.2 million of subsidiary
debt comprised of various notes payable, term loans and capital
leases. We intend to repay these liabilities from internally
generated cash flow, existing cash balances and/or borrowings
under our credit facilities as the subsidiary debt becomes due
during 2004 through 2010. Of the outstanding subsidiary debt,
$1.0 million is secured by liens on certain assets of our
subsidiaries.

Also at June 30, 2004, we had outstanding
$35 million aggregate principal amount of 8.5% convertible
subordinated notes due June 28, 2007 held by certain
subsidiaries of Fairfax (the Fairfax notes). The Fairfax notes
are convertible by the holders at any time into our common
shares at C$17.00 per share. If Fairfax converted all of the
Fairfax notes,





|                               |                            
|------------------------------ | ---------------------------
|32   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Fairfax would own approximately 33% of our total
outstanding common shares as of June 30, 2004, versus the
26% of outstanding shares which it held on that date.


At June 30, 2004, our cash position included
approximately $41.6 million deployed as working capital at
the brokerage level and approximately $102.9 million
available for acquisitions. Included in the cash available for
acquisitions is $90 million paid on July 1, 2004 to
acquire Talbot leaving $12.9 million available for
acquisitions. It is impossible to define exactly how many
acquisitions or how much new revenue could be acquired through
the use of this cash, additional cash flow from operations and
application of credit facilities, as acquisition pricing and
other factors vary during the course of the year. However, we
intend to use common shares as compensation for approximately
30-70% of the value of a hub acquisition, and generally have
paid a multiple of 5-8 times earnings before interest, taxes,
depreciation and amortization (frequently referred to as EBITDA,
a non-GAAP measure) for acquired brokerages.

We believe that our capital resources, including
existing cash, funds generated from operations and borrowings
available under credit facilities, will be sufficient to satisfy
the companys financial requirements, including some
strategic acquisitions, during the next twelve months. We may
finance acquisitions with available cash or an existing credit
facility, but may, depending on the number and size of future
acquisitions, need to supplement our finance requirements with
the proceeds from debt financing, the issuance of additional
equity securities, or a combination of both.

Our debt to capitalization ratio (defined as debt
expressed as a percentage of debt and shareholders equity)
increased to 33% at June 30, 2004, compared with 25% at
December 31, 2003. If all lines of credit and other loan
facilities were fully utilized by the company at June 30,
2004 our ratio of debt to capitalization would have been 35%,
which is within the range of 35% to 38% that our management
believes is suitably conservative for our business model. Under
our loan covenants, our debt to capitalization ratio must be
less than 45%. As of June 30, 2004, we were in compliance
with the financial covenants under all of our debt instruments.

Contingent obligations

The table below summarizes our contractual
obligations and commercial commitments as of June 30, 2004:

|                                    |  |       |         |        |  |           |   |       |  |       |        |         |  |   |        |  |  |   |        |  |  |   |        | 
|----------------------------------- |  | ----- | ------- | ------ |  | --------- | - | ----- |  | ----- | ------ | ------- |  | - | ------ |  |  | - | ------ |  |  | - | ------ | 
|Payments due by period              |  |       |         | On     |  | Less than |   | 1-3   |  | 4-5   |        | After  
|(in thousands)                      |  | Total |         | Demand |  | 1 Year    |   | Years |  | Years |        | 5 Years
|                                    |  |       |         |        |  |           |   |       |  |       |        |        
|Contractual obligations             |  |       |         |        |  |           |   |       |  |       |        |         |  |   |        |  |  |   |        |  |  |   |        | 
|Long-term debt                      |  | $     | 142,363 |        |  | $         |  |       |  | $     | 2,200  |         |  | $ | 9,578  |  |  | $ | 83,252 |  |  | $ | 47,333 | 
|Capital lease obligations           |  |       | 532     |        |  |           |  |       |  |       | 228    |         |  |   | 304    |  |  |   |       |  |  |   |       | 
|Operating lease obligations         |  |       | 61,480  |        |  |           |  |       |  |       | 11,073 |         |  |   | 19,995 |  |  |   | 15,398 |  |  |   | 15,014 | 
|Executive share purchase plan loans |  |       | 472     |        |  |           |  |       |  |       |       |         |  |   |       |  |  |   | 472    |  |  |   |       | 
|                                    |  |       |         |        |  |           |   |       |  |       |        |         |  |   |        |  |  |   |        |  |  |   |        | 
|Total                               |  | $     | 204,847 |        |  | $         |  |       |  | $     | 13,501 |         |  | $ | 29,877 |  |  | $ | 99,122 |  |  | $ | 62,347 | 
|                                    |  |       |         |        |  |           |   |       |  |       |        |         |  |   |        |  |  |   |        |  |  |   |        | 

Acquisitions

In connection with the acquisition of Hooper
Hayes and Associates, Inc., in 2003 we issued 196,000 shares
(the Retractable Shares) that are being held in
escrow subject to release over a period of three years upon the
satisfaction of certain performance targets. As of June 30,
2004, 63,000 shares have been released from escrow.

In connection with various other acquisitions
completed through June 30, 2004, we may be obligated to pay
contingent consideration of approximately $8.8 million cash
and $3.1 million in common shares based upon
managements best estimate of the acquired brokerages
achieving certain targets. The contingent payments are payable
on various dates through April 2009 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 June 30, 2004, the financial
statements reflect a liability to pay cash of $1.0 million
and an obligation to issue common shares valued at approximately
$0.9 million as of June 30, 2004.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    33



---



##### Table of Contents



Other

In connection with our executive share purchase
plan, under certain circumstances, we may be obligated to
purchase loans for officers, directors and employees from a
Canadian chartered bank totaling $4.1 million and
$4.5 million as of June 30, 2004 and December 31,
2003, respectively, to assist in purchasing our common shares.
As collateral, the employees have pledged 456,000 and 478,000
common shares as of June 30, 2004 and December 31,
2003, respectively, which have a market value of
$8.7 million and $8.1 million as of June 30, 2004
and December 31, 2003, respectively. Interest on the loans
in the amount of $96,000 and $148,000 for the six months ended
June 30, 2004, and 2003, respectively, was paid by us and
is included in compensation expense. We no longer make loans to
our executive officers and directors.

In April 2004, Kaye Insurance Associates, Inc.
(Kaye Insurance), 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 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. Kaye Insurance has a practice of disclosing such
agreements to its clients, including on its invoices to clients
and on its web site. In addition, we disclose the arrangements
in our public filings. We are fully cooperating with this
inquiry. While it is not possible to predict the outcome of this
investigation, if such compensation agreements were to be
restricted or no longer permitted, our results of operations may
be materially adversely affected.

In the ordinary course of business, we 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 our management, the ultimate
resolution of all asserted and potential claims and lawsuits
will not have a material adverse effect on our consolidated
financial position or results of operations.

Shareholders Equity

Restricted share units.For the six months ended June 30,
2004, restricted share units totaling 983,000 were issued in
connection with the restructuring of our management bonus
agreement and 84,000 restricted share units were issued in
connection with the renegotiation of contingent consideration
for Flanagan.

Share repurchases.For the six months ended June 30,
2004, no common shares were repurchased by us, other than shares
equal in value to $60,000 under the executive purchase plan.

Shares reserved for issuance.As of June 30, 2004,
3.6 million common shares were reserved for issuance under
our equity incentive plan, of which approximately
3.2 million stock options and restricted share units were
outstanding.

Shareholders equity increased by
$23.3 million, or 7%, to $366.1 million as of
June 30, 2004 from $342.8 million as of
December 31, 2003. This increase resulted from net earnings
of $21.2 million, an increase in contributed surplus of
$4.8 million related primarily to non-cash stock based
compensation expense, shares issued to Bush, Cotton, & Scott
for $3.4 million and exercise of stock options for
$0.5 million. The increase in shareholders equity was
offset by the declaration of dividends of $3.0 million in
2004, and a decrease in the cumulative translation account of
$3.6 million, due mainly to the weakening of the Canadian
dollar compared to the U.S. dollar in 2004.

Market Risk

Interest rate risk

We are exposed to interest rate risk in
connection with our senior notes due to the interest rate swap
entered into in July 2003, which converted the fixed rate
interest payments on the $65 million aggregate principal
amount of senior notes into floating rate payments and our
Revolving U.S. dollar LIBOR loan. As a result each 100
basis point increase in interest rates charged on the balance of
our outstanding floating rate debt as of June 30, 2004 will
result in approximately $0.8 million decrease in our
earnings.





|                               |                            
|------------------------------ | ---------------------------
|34   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Exchange rate sensitivity

We report our revenue in U.S. dollars. Our
Canadian operations earn revenue and incur expenses in Canadian
dollars. Given our significant Canadian dollar revenue, we are
sensitive to the fluctuations in the value of the Canadian
dollar and are therefore exposed to foreign currency exchange
risk. Foreign currency exchange risk is the potential for loss
in revenue and net income as a result of a decline in the
U.S. dollar value of Canadian dollar revenue due to a
decline in the value of the Canadian dollar compared to the
U.S. dollar.

The Canadian dollar is subject to volatility. It
experienced a significant decline in its value compared to the
U.S. dollar in 2001, increased significantly in value
throughout 2003 and declined in value the first six months 2004.
At June 30, 2004 and 2003 one U.S. dollar equaled
$1.3404 and $1.3553 Canadian dollars, respectively. The table
below summarizes the effect that a $0.01 decline or increase in
the value of the Canadian dollar would have had on our revenue,
net earnings and cumulative translation account for the three
months ended June 30, 2004, and 2003.

|                               |  |      |     |      |  |      |     | 
|------------------------------ |  | ---- | --- | ---- |  | ---- | --- | 
|(in thousands of U.S. dollars) |  | 2004 |     | 2003
|                               |  |      |     |     
|Revenue                        |  | +/-$ | 401 |      |  | +/-$ | 412 | 
|Net earnings                   |  | +/-$ | 69  |      |  | +/-$ | 74  | 
|Cumulative translation account |  | +/-$ | 5   |      |  | +/-$ | 108 | 

The increasing proportion of our revenue derived
from our U.S. operations and earned in U.S. dollars
has, in part, offset the potential risk of a decline in the
Canadian dollar. We expect that the proportion of revenue earned
in U.S. dollars will continue to increase, further
mitigating our foreign currency exchange sensitivity. We have
not entered into, and do not intend to enter into, foreign
currency forward exchange agreements.

Goodwill and Other Intangible Assets

Intangible assets arising from acquisitions
consist of the following:

|                               |  |          |         |              |  |   |         |  
|------------------------------ |  | -------- | ------- | ------------ |  | - | ------- | -
|                               |  | June 30, |         | December 31,
|(in thousands of U.S. dollars) |  | 2004     |         | 2003        
|                               |  |          |         |             
|Customer relationships         |  | $        | 50,580  |              |  | $ | 43,422  |  
|Non-competition covenants      |  |          | 3,416   |              |  |   | 2,643   |  
|Trademarks                     |  |          |        |              |  |   | 2,587   |  
|Goodwill                       |  |          | 327,869 |              |  |   | 323,185 |  
|Accumulated amortization       |  |          | (23,392 | )            |  |   | (23,072 | )
|                               |  |          |         |              |  |   |         |  
|Total                          |  | $        | 358,473 |              |  | $ | 348,765 |  
|                               |  |          |         |              |  |   |         |  

We completed our impairment testing on the
balance of goodwill and intangible assets as of January 1,
2004 and 2003. Based on the testing performed, no impairment
losses were incurred.

The amounts allocated to customer relationships
were determined by discounting the expected future net cash
flows from commissions with consideration given to remaining
economic lives, renewals, and associated expenses. The amounts
allocated to non-competition covenants were determined using an
income approach with consideration given to economic benefits
associated with having the covenants in place versus damages
that would ensue absent the agreements; in the case of
trademarks, a cash flow royalty savings approach addressing the
economic benefits of the trademarks was used. The balance of the
purchase price is allocated to goodwill.

Customer relationships are amortized on a
straight-line basis over their periods of duration, normally
fifteen years. Many factors outside our control determine the
persistency of our customer relationships and we cannot be sure
that the value we have allocated will ultimately be realized.
Non-competition covenants are intangible assets that have an
indefinite life and accordingly, are not amortized but are
evaluated for impairment. When an employee leaves Hub, the
non-competition covenant becomes effective and the value
assigned is then amortized over the life of covenant. During the
first quarter of 2004 certain of our subsidiaries changed their
names and as a result we recognized a non-cash loss on the
write-off of trademarks of $2.6 million before tax. Prior
to 2003 we amortized





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    35



---



##### Table of Contents



goodwill primarily over a period of forty years.
Under the new accounting standards adopted in 2003, goodwill is
not amortized and is evaluated annually for impairment. For the
three months and six months ended June 30, 2004 and 2003,
our amortization has been comprised of the following:


|                               |  |               |     |              |  |      |     |      |  |   |       |  |  |   |       | 
|------------------------------ |  | ------------- | --- | ------------ |  | ---- | --- | ---- |  | - | ----- |  |  | - | ----- | 
|                               |  |               |     |             
|                               |  | For the three |     | For the six 
|                               |  | months ended  |     | months ended
|                               |  | June 30,      |     | June 30,    
|                               |  |               |     |             
|(in thousands of U.S. dollars) |  | 2004          |     | 2003         |  | 2004 |     | 2003
|                               |  |               |     |              |  |      |     |     
|Customer relationships         |  | $             | 893 |              |  | $    | 721 |      |  | $ | 1,657 |  |  | $ | 1,502 | 
|Non-competition covenants      |  |               | 43  |              |  |      | 35  |      |  |   | 60    |  |  |   | 55    | 
|                               |  |               |     |              |  |      |     |      |  |   |       |  |  |   |       | 
|Total                          |  | $             | 936 |              |  | $    | 756 |      |  | $ | 1,717 |  |  | $ | 1,557 | 
|                               |  |               |     |              |  |      |     |      |  |   |       |  |  |   |       | 

We estimate that our amortization charges for
intangible assets for 2004 through 2008 for all acquisitions
consummated to date will be:

|                               |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|------------------------------ |  | ---- | ----- | ---- |  | ---- | ----- | ---- |  | ---- | ----- |  |  | - | ----- |  |  | - | ----- | 
|Year ended December 31,        |  |      |       |      |  |      |       |      |  |     
|(in thousands of U.S. dollars) |  | 2004 |       | 2005 |  | 2006 |       | 2007 |  | 2008
|                               |  |      |       |      |  |      |       |      |  |     
|Customer relationships         |  | $    | 3,438 |      |  | $    | 3,553 |      |  | $    | 3,553 |  |  | $ | 3,553 |  |  | $ | 3,553 | 
|Non-competition covenants      |  |      | 206   |      |  |      | 164   |      |  |      | 80    |  |  |   | 79    |  |  |   | 3     | 
|                               |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Total                          |  | $    | 3,644 |      |  | $    | 3,717 |      |  |      | 3,633 |  |  | $ | 3,632 |  |  | $ | 3,556 | 
|                               |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 

Related Party Transactions

We had transactions with, and recorded revenue
from, the following related parties:

|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 
|---------------------------------------- |  | ------------- | ----- | ------------ |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                                         |  |               |       |             
|                                         |  | For the three |       | For the six 
|                                         |  | months ended  |       | months ended
|                                         |  | June 30,      |       | June 30,    
|                                         |  |               |       |             
|                                         |  | 2004          |       | 2003         |  | 2004 |       | 2003
|                                         |  |               |       |              |  |      |       |     
|Northbridge Financial Corporation        |  | $             | 6,493 |              |  | $    | 3,203 |      |  | $ | 10,951 |  |  | $ | 6,622  | 
|Crum & Forster Holdings, Inc.            |  |               | 176   |              |  |      | 614   |      |  |   | 359    |  |  |   | 831    | 
|Fairfax Inc.                             |  |               | 1,158 |              |  |      | 2,169 |      |  |   | 2,590  |  |  |   | 4,263  | 
|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  |               | 7,827 |              |  |      | 5,986 |      |  |   | 13,900 |  |  |   | 11,716 | 
|Old Lyme Insurance Company, Ltd (OLIC) |  |               | 231   |              |  |      |      |      |  |   | 231    |  |  |   |       | 
|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  | $             | 8,058 |              |  | $    | 5,986 |      |  | $ | 14,131 |  |  | $ | 11,716 | 
|                                         |  |               |       |              |  |      |       |      |  |   |        |  |  |   |        | 

As of June 30, 2004 and December 31,
2003, we had accounts receivable and accounts payable balances
with the above related parties in the amounts of
$3.6 million and $16.4 million, for June 30,
2004, respectively, and $3.2 million and $18.0 million
for December 31, 2003, respectively. All revenue and
related accounts receivable and accounts payable are the result
of transactions in the normal course of business. The companies
listed above except for OLIC, are related through common
ownership by Fairfax Financial Holdings Limited (Fairfax), which
owns approximately 26% of our common shares as of June 30,
2004. During the second quarter of 2004, Fairfax sold OLIC to
Old Lyme Insurance Group, Ltd, a company owned primarily by a
group of Hub employees, including Bruce Guthart, our Chief
Operating Officer and a director of Hub, and Michael Sabanos,
our Director, Mergers & Acquisitions. We continue to place
insurance with OLIC. The compensation that Hub earns from the
business placed with OLIC and the fees it earns from managing
OLIC are substantially the same as if Fairfax continued to own
the company.

As of June 30, 2004 and December 31,
2003 subordinated convertible debentures of $35.0 million
were held by certain subsidiaries of Fairfax.





|                               |                            
|------------------------------ | ---------------------------
|36   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



During the first six months of 2004 and 2003, we
incurred expenses related to rental of premises from related
parties in the amount of $0.9 million and $1.0 million
respectively. At June 30, 2004 and December 31, 2003,
we also had accounts receivable due from related parties in the
amount of $2.8 million and $3.5 million respectively,
of which the majority were loans to employees to enable them to
purchase our common shares. Of the accounts receivable, as of
June 30, 2004 and December 31, 2003, $1.8 million
and $1.9 was related to company loans to employees to purchase
shares under our executive share purchase plan. As collateral,
the employees have pledged 146,000 and 153,000 common shares as
of June 30, 2004 and December 31, 2003, respectively,
which have a market value of $2.8 million and
$2.6 million as of June 30, 2004 and December 31,
2003, respectively.

Off-Balance Sheet Transactions

Under Canadian GAAP, we account 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, we report 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 $5.5 million is
not recognized in our Canadian GAAP financial statements. Under
U.S. GAAP, we have designated the swap transaction as a
hedge of changes in the fair value of our fixed rate debt caused
by changes in interest rates and record the swap on our
U.S. GAAP balance sheet at is 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. We have no other material
off-balance sheet arrangements.

Effects of Recent Accounting
Pronouncements

We are not aware of any new accounting
pronouncements which will impact on our financial reporting.

Item 3. Quantitative and Qualitative
Disclosures about Market Risk

See Managements Discussion and
Analysis of Financial Condition and Results of
Operations  Market Risk.

Item 4. Controls and
Procedures

Under SEC rules, we are required to maintain
disclosure controls and procedures designed to ensure that
information required to be disclosed by us in the reports that
we file or submit under the Securities Exchange Act of 1934 is
recorded, processed, summarized and reported within the time
periods specified in the SECs rules and forms.

Our chief executive officer and chief financial
officer conducted an evaluation of our disclosure controls and
procedures, as such term is defined under Rules 13a-15(e)
and 15d-15(e) promulgated under the Securities Exchange Act of
1934, as amended (the Exchange Act) as of June 30, 2004
(the Evaluation Date). Based on that evaluation, our chief
executive officer and chief financial officer concluded that as
of the Evaluation Date, our disclosure controls and procedures
were effective in timely alerting them to material information
relating to us required to be disclosed in our reports filed or
submitted under the Exchange Act. In addition, there have been
no significant changes (including corrective actions with regard
to significant deficiencies or material weaknesses) in the
design or operation of our internal control over financial
reporting or in other factors that could significantly affect
our internal control over financial reporting during the second
quarter of 2004. Notwithstanding the foregoing, there can be no
assurance that our disclosure controls and procedures will
detect or uncover all failures within our company to disclose
all material information otherwise required to be set forth in
our periodic reports.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    37



---



##### Table of Contents



PART II. OTHER INFORMATION

Item 1. Legal Proceedings

In the second quarter of 2004, Kaye Insurance, 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 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. Kaye Insurance has a
practice of disclosing such agreements to its clients, including
on its invoices to clients and on its web site. In addition, we
disclose the arrangements in our public filings. We are fully
cooperating with this inquiry. While it is not possible to
predict the outcome of this investigation, if such compensation
agreements were to be restricted or no longer permitted, our
results of operations may be materially adversely affected.

In the normal course of business, we are involved
in various claims and legal proceedings relating to insurance
placed by us and other contractual matters. Our management does
not believe that any such pending or threatened proceedings will
have a material adverse effect on our consolidated financial
position or future results of operations.

Item 2. Changes in Securities, Use
of Proceeds and Issuer Purchases of Equity Securities

On April 15, 2004, we issued
2,607 common shares to former shareholders of C.S. Nenner,
Inc. as contingent consideration for contingent obligations
payable in connection with the acquisition of that brokerage. On
April 21, 2004, we issued 136,619 common shares to
former shareholders of Bush, Cotton & Scott, LLC.
in connection with our acquisition of the shares of that
brokerage.

All of the shares issued in transactions
described above were issued in transactions exempt from
registration pursuant to section 4(2) of the Securities Act
of 1933.

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

The Annual and Special Meeting of Shareholders of
Hub International Limited (the Meeting) was held on
May 11, 2004. At the Meeting, 19,655,004 shares of
Hubs common shares, or 64.8% of the total common shares
outstanding on the record date of the Meeting, were represented.

Continuance of the Corporation Under the
Canada Business Corporations Act.Shareholders were asked to consider, and if deemed appropriate,
pass a special resolution authorizing the continuance of Hub
from the Business Corporations Act (Ontario) to the Canada
Business Corporations Act (CBCA). To become
effective, the approval of at least 2/3 of the votes cast by
shareholders represented in person or by proxy at the Meeting
was required. The continuance was passed with 99.9% of the votes
cast, or 18,296,180 shares in favor of the resolution and 0.06%,
or 10,476 votes cast against the resolution.

Adoption of New
By-laws.The adoption of new by-laws
of the corporation effective upon the continuance was approved
by a majority of the votes cast on a vote by ballot. The results
of the ballot were 13,458,026 shares in favor and 4,982,568
votes against the proposal.

Election of Directors Upon the Continuance
Becoming Effective.The following nine
nominees were elected as directors of Hub for terms of one year
expiring on the date of Hubs Annual Meeting of
Shareholders to be held in 2005 effective upon the articles of
continuance being filed under the CBCA, by a resolution passed
by a majority of the votes cast in person or by proxy at the
Meeting. Since the continuance became effective the slate of
directors listed below did become our elected board members.





|                               |                            
|------------------------------ | ---------------------------
|38   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



The results were as follows:

|                     |  |           |            |          |  |  |        | 
|-------------------- |  | --------- | ---------- | -------- |  |  | ------ | 
|                     |  |           |            | Votes   
|Name                 |  | Votes For |            | Withheld
|                     |  |           |            |         
|Martin P. Hughes     |  |           | 19,467,596 |          |  |  | 44,570 | 
|Richard A. Gulliver  |  |           | 19,467,596 |          |  |  | 44,570 | 
|Bruce D. Guthart     |  |           | 19,467,596 |          |  |  | 44,570 | 
|Anthony F. Griffiths |  |           | 19,467,596 |          |  |  | 44,570 | 
|Edward W. Lyman Jr.  |  |           | 19,467,596 |          |  |  | 44,570 | 
|Paul Murray          |  |           | 19,467,596 |          |  |  | 44,570 | 
|Bradley P. Martin    |  |           | 19,467,596 |          |  |  | 44,570 | 
|Stuart Ross          |  |           | 19,467,596 |          |  |  | 44,570 | 
|Frank S. Wilkinson   |  |           | 19,467,596 |          |  |  | 44,570 | 

Election of Directors if the Continuance Did
Not Become Effective.The following
nine nominees were elected as directors of Hub for terms of one
year expiring on the date of Hubs Annual Meeting of
Shareholders to be held in 2005 should the board of directors of
Hub have decided not to proceed with the continuance, by a
resolution passed by a majority of the votes cast in person or
by proxy at the Meeting. Since the continuance became effective,
the slate of directors listed below did not become our elected
board members.

The results were as follows:

|                     |  |           |            |          |  |  |        | 
|-------------------- |  | --------- | ---------- | -------- |  |  | ------ | 
|                     |  |           |            | Votes   
|Name                 |  | Votes For |            | Withheld
|                     |  |           |            |         
|Martin P. Hughes     |  |           | 19,467,596 |          |  |  | 44,570 | 
|Richard A. Gulliver  |  |           | 19,467,596 |          |  |  | 44,570 | 
|Bruce D. Guthart     |  |           | 19,467,596 |          |  |  | 44,570 | 
|Scott Broome         |  |           | 19,467,596 |          |  |  | 44,570 | 
|Anthony F. Griffiths |  |           | 19,467,596 |          |  |  | 44,570 | 
|Paul Murray          |  |           | 19,467,596 |          |  |  | 44,570 | 
|Bradley P. Martin    |  |           | 19,467,596 |          |  |  | 44,570 | 
|Gil Ross             |  |           | 19,467,596 |          |  |  | 44,570 | 
|Frank S. Wilkinson   |  |           | 19,467,596 |          |  |  | 44,570 | 

Appointment of Auditors.PricewaterhouseCoopers LLP was
appointed as Hubs Auditors to serve until Hubs
Annual Meeting of Shareholders to be held in 2005, at a
remuneration to be fixed by our Board of Directors, with a
favorable vote of 19,467,172 of the common shares represented at
the Meeting and 45,269 common shares withholding their votes on
the appointment.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    39



---



##### Table of Contents



Item 5. Other Information

Information Concerning Forward-Looking
Statements

This Form 10-Q includes, and from time to
time management may make, forward-looking statements which
reflect our current views with respect to future events and
financial performance. These forward-looking statements relate,
among other things, to our plans and objectives for future
operations. These forward-looking statements are subject to
uncertainties and other factors that could cause actual results
to differ materially from such statements. These uncertainties
and other factors include, but are not limited to, risks
associated with:



| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | implementing our business strategies;                                                                                                                        
|
| |  | identifying and consummating acquisitions;                                                                                                                   
|
| |  | successfully integrating acquired businesses;                                                                                                                
|
| |  | attaining greater market share;                                                                                                                              
|
| |  | 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; and                                                                                                                   
|
| |  | the passage of new federal, state or provincial
    legislation subjecting our business to increased regulation in
    the jurisdictions in which we operate.

The words believe,
anticipate, project, expect,
intend, will likely result or will
continue and similar expressions identify forward-looking
statements. We caution readers not to place undue reliance on
these forward-looking statements, which speak only as of their
dates. Except as otherwise required by federal securities laws,
we undertake no obligation to publicly update or revise any
forward-looking statements, whether as a result of new
information, future events or otherwise.

Dividends

On February 19, 2004 the Board of Directors
declared a dividend of $0.05 on our common shares, payable
April 30, 2004 for the quarter ended March 31, 2004 to
shareholders of record on April 15, 2004.





|                               |                            
|------------------------------ | ---------------------------
|40   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004



---



##### Table of Contents



Item 6. Exhibits and Reports on
Form 8-K

(a)  Exhibits

|     |  |                                                                                                                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.1 |  | Amended and Restated Credit Agreement dated as of
    April 23, 2004 by and between Hub International Limited and
    Bank of Montreal.                                                                                                                                  
|10.2 |  | 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.                                                                                                              
|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.                                                                                     
|99.1 |  | Information under the caption Risks related
    to our business and Risks related to our common
    shares is incorporated by reference from the
    registrants Annual Report on Form 10-K filed with the
    Securities and Exchange Commission on March 15, 2004.

(b)  Current Reports on Form 8-K

We filed a Current Report on Form 8-K on
April 28, 2004 furnishing a press release which provided
the registrants earnings for the quarter ended
March 31, 2004.

We filed a Current Report on Form 8-K on
April 23, 2004 furnishing a press release regarding the
receipt of a subpoena by one of Hubs subsidiaries from the
attorney general of the State of New York.





|                            |                                
|--------------------------- | -------------------------------
|INTERIM REPORTJUNE 30, 2004 | HUB INTERNATIONAL LIMITED    41



---



##### Table of Contents



SIGNATURE

Pursuant to the requirements of the Securities
Exchange Act of 1934, the Registrant has caused this report to
be signed on its behalf by the undersigned thereunto duly
authorized.



| |                          
| | -------------------------
| | HUB INTERNATIONAL LIMITED



| |     |                    
| | --- | -------------------
| | By: | /s/ DENNIS J. PAULS

| |                                                              
| | -------------------------------------------------------------
| |                                                              
| | Dennis J. Pauls                                              
| | Vice President and Chief Financial Officer                   
| | (duly authorized officer and Principal Financial
    Officer)

DATE: August 5, 2004






|                               |                            
|------------------------------ | ---------------------------
|42   HUB INTERNATIONAL LIMITED | INTERIM REPORTJUNE 30, 2004