##### 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: September 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 November 4, 200430,551,530





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HUB INTERNATIONAL LIMITED

INDEX

|                                                                                                                     |  |      |    | 
|-------------------------------------------------------------------------------------------------------------------- |  | ---- | -- | 
|                                                                                                                     |  | Page
|                                                                                                                     |  |     
|PART I. FINANCIAL
    INFORMATION                                                                                    |  |      |    | 
|                                                                                                                    
|Item 1. Financial
    Statements (Unaudited)                                                                         |  |      | 3  | 
|                                                                                                                    
|Consolidated Balance Sheets
    as of September 30, 2004 and December 31, 2003                                       |  |      | 3  | 
|                                                                                                                    
|Consolidated Statements of
    Earnings for the three months and nine months ended
    September 30, 2004 and 2003   |  |      | 4  | 
|                                                                                                                    
|Consolidated Statements of
    Retained Earnings for the nine months ended September 30,
    2004 and 2003           |  |      | 5  | 
|                                                                                                                    
|Consolidated Statements of
    Cash Flows for the three months and nine months ended
    September 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                |  |      | 24 | 
|                                                                                                                    
|Item 3. Quantitative
    and Qualitative Disclosures about Market Risk                                               |  |      | 40 | 
|                                                                                                                    
|Item 4. Controls
    and Procedures                                                                                  |  |      | 40 | 
|                                                                                                                    
|PART II. OTHER
    INFORMATION                                                                                       |  |      |    | 
|                                                                                                                    
|Item 1. Legal
    Proceedings                                                                                        |  |      | 40 | 
|                                                                                                                    
|Item 2. Unregistered
    Sales of Equity Securities and Use of Proceeds                                              |  |      | 41 | 
|                                                                                                                    
|Item 5. Other
    Information                                                                                        |  |      | 41 | 
|                                                                                                                    
|Item 6. Exhibits                                                                                                     |  |      | 43 | 
|                                                                                                                    
|SIGNATURE                                                                                                            |  |      | 44 | 
|EX-31.1                                                                                                             
|EX-31.2                                                                                                             
|EX-32.1                                                                                                             
|EX-32.2                                                                                                             







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



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##### Table of Contents






PART I. FINANCIAL INFORMATION



Item 1. Financial Statements
(Unaudited)

Hub International Limited




Consolidated Balance Sheets

As of September 30, 2004 and
December 31, 2003

(in thousands of U.S. dollars)


|                                                  |  |             |         |      |  |   |         | 
|------------------------------------------------- |  | ----------- | ------- | ---- |  | - | ------- | 
|                                                  |  | 2004        |         | 2003
|                                                  |  |             |         |     
|                                                  |  | (Unaudited) |         |     
|ASSETS                                            |  |             |         |      |  |   |         | 
|Current assets:                                   |  |             |         |      |  |   |         | 
|Cash and cash equivalents                         |  | $           | 78,108  |      |  | $ | 82,052  | 
|Trust cash                                        |  |             | 65,671  |      |  |   | 54,534  | 
|Accounts and other receivables                    |  |             | 140,585 |      |  |   | 163,728 | 
|Income taxes receivable                           |  |             | 6,668   |      |  |   | 6,768   | 
|Future income taxes                               |  |             | 5,389   |      |  |   | 2,865   | 
|Prepaid expenses                                  |  |             | 8,371   |      |  |   | 4,449   | 
|                                                  |  |             |         |      |  |   |         | 
|Total current assets                              |  |             | 304,792 |      |  |   | 314,396 | 
|Goodwill                                          |  |             | 368,881 |      |  |   | 305,862 | 
|Other intangible assets                           |  |             | 90,635  |      |  |   | 42,903  | 
|Property and equipment                            |  |             | 27,442  |      |  |   | 24,181  | 
|Future income taxes                               |  |             | 7,578   |      |  |   | 6,458   | 
|Other assets                                      |  |             | 10,945  |      |  |   | 6,803   | 
|                                                  |  |             |         |      |  |   |         | 
|Total assets                                      |  | $           | 810,273 |      |  | $ | 700,603 | 
|                                                  |  |             |         |      |  |   |         | 
|LIABILITIES AND SHAREHOLDERS
    EQUITY          |  |             |         |      |  |   |         | 
|Current liabilities:                              |  |             |         |      |  |   |         | 
|Accounts payable and accrued liabilities          |  | $           | 226,521 |      |  | $ | 226,168 | 
|Income taxes payable                              |  |             | 4,370   |      |  |   | 3,804   | 
|Future income taxes                               |  |             | 322     |      |  |   | 114     | 
|Current portion long-term debt and capital leases |  |             | 6,602   |      |  |   | 3,362   | 
|                                                  |  |             |         |      |  |   |         | 
|Total current liabilities                         |  |             | 237,815 |      |  |   | 233,448 | 
|Long-term debt and capital leases                 |  |             | 148,272 |      |  |   | 75,437  | 
|Subordinated convertible debentures               |  |             | 35,000  |      |  |   | 35,000  | 
|Future income taxes                               |  |             | 16,597  |      |  |   | 13,928  | 
|                                                  |  |             |         |      |  |   |         | 
|Total liabilities                                 |  |             | 437,684 |      |  |   | 357,813 | 
|                                                  |  |             |         |      |  |   |         | 
|Commitments and contingencies                     |  |             |         |      |  |   |         | 
|Shareholders equity                              |  |             |         |      |  |   |         | 
|Share capital                                     |  |             | 259,445 |      |  |   | 254,845 | 
|Issuable shares                                   |  |             | 51      |      |  |   | 721     | 
|Contributed surplus                               |  |             | 11,053  |      |  |   | 4,806   | 
|Cumulative translation account                    |  |             | 21,894  |      |  |   | 20,062  | 
|Retained earnings                                 |  |             | 80,146  |      |  |   | 62,356  | 
|                                                  |  |             |         |      |  |   |         | 
|Total shareholders equity                        |  |             | 372,589 |      |  |   | 342,790 | 
|                                                  |  |             |         |      |  |   |         | 
|Total liabilities and shareholders
    equity    |  | $           | 810,273 |      |  | $ | 700,603 | 
|                                                  |  |             |         |      |  |   |         | 

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





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



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##### Table of Contents



Hub International Limited




Consolidated Statements of Earnings

For the three months and nine months ended
September 30, 2004 and 2003

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


(Unaudited)


|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |         |  
|--------------------------------------------------------- | -------------------------------------------------------------------------- | ------------- | ------ | ----------------- | - | ---- | ------ | ------ | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                          |                                                                            |               |        |                  
|                                                          |                                                                            | Third quarter |        | First nine months
|                                                          |                                                                            |               |        |                  
|                                                          |                                                                            | 2004          |        | 2003              |   | 2004 |        | 2003  
|                                                          |                                                                            |               |        |                   |   |      |        |       
|Revenue                                                   |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Commission income                                                          |               | $      | 90,269            |   |      | $      | 60,772 |   |   | $       | 228,858 |   |   | $       | 184,755 |  
|                                                          | Contingent commissions and volume overrides                                |               |        | 1,865             |   |      |        | 1,884  |   |   |         | 19,940  |   |   |         | 17,150  |  
|                                                          | Other                                                                      |               |        | 2,768             |   |      |        | 2,015  |   |   |         | 7,684   |   |   |         | 5,798   |  
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                                            |               | 94,902 |                   |   |      | 64,671 |        |   |   | 256,482 |         |   |   | 207,703 |        
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|Expenses                                                  |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Compensation                                                               |               |        | 57,593            |   |      |        | 36,855 |   |   |         | 140,344 |   |   |         | 113,744 |  
|                                                          | Selling, occupancy and administration                                      |               |        | 19,647            |   |      |        | 13,974 |   |   |         | 51,286  |   |   |         | 40,888  |  
|                                                          | Depreciation                                                               |               |        | 1,962             |   |      |        | 1,551  |   |   |         | 5,279   |   |   |         | 4,462   |  
|                                                          | Interest expense                                                           |               |        | 2,330             |   |      |        | 1,269  |   |   |         | 5,692   |   |   |         | 4,152   |  
|                                                          | Intangible asset amortization                                              |               |        | 1,904             |   |      |        | 840    |   |   |         | 3,621   |   |   |         | 2,397   |  
|                                                          | Gain on disposal of subsidiaries, property,
    equipment and other assets |               |        | (981              | ) |      |        | (290   | ) |   |         | (1,540  | ) |   |         | (281    | )
|                                                          | Non-cash stock based compensation                                          |               |        | 8,346             |   |      |        | 1,355  |   |   |         | 11,661  |   |   |         | 3,575   |  
|                                                          | Loss on write-off of trademarks                                            |               |        |                  |   |      |        |       |   |   |         | 2,587   |   |   |         |        |  
|                                                          | Loss/(gain) on put option liability                                        |               |        |                  |   |      |        | 73     |   |   |         |        |   |   |         | (167    | )
|                                                          | Proceeds from life insurance                                               |               |        |                  |   |      |        | (1,000 | ) |   |         |        |   |   |         | (1,000  | )
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                                            |               | 90,801 |                   |   |      | 54,627 |        |   |   | 218,930 |         |   |   | 167,770 |        
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|Net earnings before income taxes                          |                                                                            |               | 4,101  |                   |   |      | 10,044 |        |   |   | 37,552  |         |   |   | 39,933  |        
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|Provision for income tax expense
    (benefit)            |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Current                                                                    |               |        | 5,032             |   |      |        | 6,074  |   |   |         | 16,762  |   |   |         | 15,339  |  
|                                                          | Future                                                                     |               |        | (2,077            | ) |      |        | (2,850 | ) |   |         | (1,570  | ) |   |         | (1,239  | )
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          |                                                                            |               | 2,955  |                   |   |      | 3,224  |        |   |   | 15,192  |         |   |   | 14,100  |        
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|Net earnings                                              |                                                                            | $             | 1,146  |                   |   | $    | 6,820  |        |   | $ | 22,360  |         |   | $ | 25,833  |        
|                                                          |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|Earnings per share                                        |                                                                            |               |        |                   |   |      |        |        |   |   |         |         |   |   |         |        
|                                                          | Basic                                                                      |               | $      | 0.04              |   |      | $      | 0.23   |   |   | $       | 0.74    |   |   | $       | 0.88    |  
|                                                          | Diluted                                                                    |               | $      | 0.04              |   |      | $      | 0.22   |   |   | $       | 0.68    |   |   | $       | 0.81    |  
|Weighted average shares outstanding
     Basic (000s)   |                                                                            |               | 30,292 |                   |   |      | 29,327 |        |   |   | 30,192  |         |   |   | 29,326  |        
|Weighted average shares outstanding
     Diluted (000s) |                                                                            |               | 32,666 |                   |   |      | 33,830 |        |   |   | 35,006  |         |   |   | 33,927  |        

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





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



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##### Table of Contents



Hub International Limited




Consolidated Statements of Retained
Earnings

For the nine months ended September 30,
2004 and 2003

(in thousands of U.S. dollars)


(Unaudited)


|                                            |  |      |        |      |  |   |        |  
|------------------------------------------- |  | ---- | ------ | ---- |  | - | ------ | -
|                                            |  | 2004 |        | 2003
|                                            |  |      |        |     
|Retained earnings  Beginning of
    period |  | $    | 62,356 |      |  | $ | 31,915 |  
|Net earnings                                |  |      | 22,360 |      |  |   | 25,833 |  
|Dividends                                   |  |      | (4,570 | )    |  |   | (4,552 | )
|                                            |  |      |        |      |  |   |        |  
|Retained earnings  End of
    period       |  | $    | 80,146 |      |  | $ | 53,196 |  
|                                            |  |      |        |      |  |   |        |  

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





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



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##### Table of Contents



Hub International Limited




Consolidated Statements of Cash
Flows

For the three months and nine months ended
September 30, 2004 and 2003

(in thousands of U.S. dollars)


(Unaudited)


|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |         |  
|---------------------------------------------------------------- | -------------------------------------------------------------------------- | ------------- | ------- | ----------------- | - | ---- | ------ | ------- | - | - | ------- | ------- | - | - | ------- | ------- | -
|                                                                 |                                                                            |               |         |                  
|                                                                 |                                                                            | Third quarter |         | First nine months
|                                                                 |                                                                            |               |         |                  
|                                                                 |                                                                            | 2004          |         | 2003              |   | 2004 |        | 2003   
|                                                                 |                                                                            |               |         |                   |   |      |        |        
|OPERATING ACTIVITIES                                             |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Net earnings                                                     |                                                                            | $             | 1,146   |                   |   | $    | 6,820  |         |   | $ | 22,360  |         |   | $ | 25,833  |        
|Items not affecting working capital                              |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|                                                                 | Amortization and depreciation                                              |               |         | 3,866             |   |      |        | 2,391   |   |   |         | 8,900   |   |   |         | 6,859   |  
|                                                                 | Gain on disposal of subsidiaries, property,
    equipment and other assets |               |         | (981              | ) |      |        | (290    | ) |   |         | (1,540  | ) |   |         | (281    | )
|                                                                 | Non-cash stock based compensation                                          |               |         | 8,346             |   |      |        | 1,355   |   |   |         | 11,661  |   |   |         | 3,575   |  
|                                                                 | Loss on write-off of trademarks                                            |               |         |                  |   |      |        |        |   |   |         | 2,587   |   |   |         |        |  
|                                                                 | Loss/(gain) on put option liability                                        |               |         |                  |   |      |        | 73      |   |   |         |        |   |   |         | (167    | )
|                                                                 | Future income taxes                                                        |               |         | (2,077            | ) |      |        | (2,850  | ) |   |         | (1,570  | ) |   |         | (1,239  | )
|Non-cash working capital items                                   |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|                                                                 | Trust cash                                                                 |               |         | 1,850             |   |      |        | 106     |   |   |         | 1,867   |   |   |         | 9,673   |  
|                                                                 | Accounts and other receivables                                             |               |         | 54,259            |   |      |        | 50,028  |   |   |         | 40,669  |   |   |         | 38,626  |  
|                                                                 | Prepaid expenses                                                           |               |         | (203              | ) |      |        | 283     |   |   |         | (3,837  | ) |   |         | (185    | )
|                                                                 | Accounts payable and accrued liabilities                                   |               |         | (50,118           | ) |      |        | (44,340 | ) |   |         | (49,628 | ) |   |         | (38,463 | )
|                                                                 | Other assets                                                               |               |         | 128               |   |      |        | 129     |   |   |         | 384     |   |   |         | (2,191  | )
|                                                                 | Income taxes                                                               |               |         | (837              | ) |      |        | 4,165   |   |   |         | (981    | ) |   |         | 1,318   |  
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Net cash flows from operating activities                         |                                                                            |               | 15,379  |                   |   |      | 17,870 |         |   |   | 30,872  |         |   |   | 43,358  |        
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|INVESTING ACTIVITIES                                             |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Property and equipment  purchases                               |                                                                            |               | (2,086  | )                 |   |      | (1,547 | )       |   |   | (4,993  | )       |   |   | (4,589  | )      
|Property and equipment  proceeds on
    sale                    |                                                                            |               | 60      |                   |   |      | 17     |         |   |   | 142     |         |   |   | 44      |        
|Purchase of subsidiaries, net of cash received                   |                                                                            |               | (78,495 | )                 |   |      | 452    |         |   |   | (90,385 | )       |   |   | (11,935 | )      
|Sale of subsidiaries                                             |                                                                            |               | 1,895   |                   |   |      | 613    |         |   |   | 6,062   |         |   |   | 1,064   |        
|Other assets                                                     |                                                                            |               | 34      |                   |   |      | 176    |         |   |   | 388     |         |   |   | (539    | )      
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Net cash flows used for investing activities                     |                                                                            |               | (78,592 | )                 |   |      | (289   | )       |   |   | (88,786 | )       |   |   | (15,955 | )      
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|FINANCING ACTIVITIES                                             |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Long-term debt  advances                                        |                                                                            |               |        |                   |   |      | 250    |         |   |   | 65,000  |         |   |   | 65,250  |        
|Long-term debt and capital leases 
    repayments               |                                                                            |               | (3,449  | )                 |   |      | (688   | )       |   |   | (8,169  | )       |   |   | (52,184 | )      
|Share capital  issued for cash, net of
    issue costs          |                                                                            |               |        |                   |   |      | (28    | )       |   |   | 480     |         |   |   | (59     | )      
|Proceeds from sale of executive plan shares                      |                                                                            |               |        |                   |   |      | 222    |         |   |   |        |         |   |   | 222     |        
|Dividends paid                                                   |                                                                            |               | (1,527  | )                 |   |      | (1,514 | )       |   |   | (4,570  | )       |   |   | (4,552  | )      
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Net cash flows from (used for) financing
    activities          |                                                                            |               | (4,976  | )                 |   |      | (1,758 | )       |   |   | 52,741  |         |   |   | 8,677   |        
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Effect of exchange rate changes on cash and
    cash equivalents |                                                                            |               | 1,770   |                   |   |      | 160    |         |   |   | 1,229   |         |   |   | 2,339   |        
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Change in cash and cash equivalents                              |                                                                            |               | (66,419 | )                 |   |      | 15,983 |         |   |   | (3,944  | )       |   |   | 38,419  |        
|Cash and cash equivalents 
    Beginning of period              |                                                                            |               | 144,527 |                   |   |      | 63,078 |         |   |   | 82,052  |         |   |   | 40,642  |        
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        
|Cash and cash equivalents  End of
    period                    |                                                                            | $             | 78,108  |                   |   | $    | 79,061 |         |   | $ | 78,108  |         |   | $ | 79,061  |        
|                                                                 |                                                                            |               |         |                   |   |      |        |         |   |   |         |         |   |   |         |        

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





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



---



##### Table of Contents



Hub International Limited




Notes to Interim Consolidated Financial
Statements

For the three months and nine months ended
September 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 15 Reconciliation to
U.S. GAAP. The results of operations are not
necessarily indicative of the operating results for the fiscal
year or any future period.


3.  Subsequent Events

In October 2004, the Company was joined as a
defendant in a class action lawsuit against 30 different
insurance brokers and insurance companies. The lawsuit was
originally filed in August 2004 in the U.S. District Court
for the Southern District of New York by OptiCare Health
Systems Inc., a client of a Marsh & McLennan
subsidiary. It now names the ten largest U.S. insurance
brokers and four of the largest commercial insurers. The amended
complaint alleges that the defendants used the contingent
commission structure of placement service agreements in a
conspiracy to deprive policyholders of independent and
unbiased brokerage services, as well as free and open
competition in the market for insurance. The Company
disputes the allegations of the complaint and intends to
vigorously defend against the suit. However, a finding that the
contingent commission structure conflicts with an insurance
brokers duty to its clients, as well as the cost of
defending against the lawsuit and the diversion of
managements attention, could have a material adverse
effect on the Companys revenue, profitability and
liquidity.


Several state and provincial authorities in
jurisdictions in which the Company operates have also commenced
investigations of the structure of sales commissions paid by
insurance companies to insurance brokers and other relationships
between insurance companies and insurance brokers. On
November 8, 2004, the Companys Illinois based
subsidiary received a subpoena from the Department of Financial
and Professional Regulation, Division of Insurance, of the State
of Illinois. The Company is reviewing that subpoena. On
November 9, 2004, the Company received a request from the
Texas Department of Insurance seeking information on premiums
earned on risks placed in that state. The Florida Attorney
General also very recently announced the commencement of an
investigation. The Company expects that it may receive a
subpoena from the Florida Attorney General in the near future.

4.  Commitments and
Contingencies

|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(a) | 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 and insurance companies as well. Such
    compensation agreements, also known as contingent agreements,
    between





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



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##### Table of Contents



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | insurance companies and brokers are a
    long-standing and common practice within the insurance industry.
    Kaye Insurance discloses such agreements on its invoices to
    clients and on its web site. In addition, the Company discloses
    the arrangements in its public filings. In August 2004, Kaye
    Insurance received a second subpoena from the Office of the
    Attorney General of the State of New York seeking information
    regarding all revenue that Kaye Insurance may have derived from
    insurance companies. In September 2004, Kaye Insurance received
    a third subpoena from the Office of the Attorney General of the
    State of New York seeking information regarding any fictitious
    and inflated insurance quotes to which Kaye may have been a
    party. The Company retained external counsel to assist it in
    responding to the New York Attorney Generals inquiries
    and, among other things, has requested that such external
    counsel conduct an investigation to determine whether any
    current or former employee of the Company engaged in the
    practice of falsifying or inflating insurance quotes.
    Substantial progress has been made with respect to such
    investigation at Kaye Insurance and such investigation is
    otherwise ongoing as to Kaye and other subsidiaries. To date,
    management is unaware of any such wrongdoing. The Company
    continues to fully cooperate with the Attorney Generals
    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,
    profitability and liquidity may be materially adversely affected.



| |                                                                                                                                                                                                                                                                                                                                                        
| | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | In August 2004, Talbot Agency of Illinois, Inc.,
    a subsidiary of the Company, received a letter and questionnaire
    from the Attorney General of the State of Connecticut regarding
    certain compensation agreements between insurance brokers and
    insurance companies. The Company has responded to the
    Connecticut Attorney General.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(b) | 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 $4,212 and $4,513 as of
    September 30, 2004 and December 31, 2003,
    respectively, to assist in purchasing common shares of the
    Company. As collateral, the employees have pledged 446,000 and
    478,000 common shares as of September 30, 2004 and
    December 31, 2003, respectively, which have a market value
    of $8,021 and $8,105 as of September 30, 2004 and
    December 31, 2003, respectively. Interest on the loans in
    the amount of $45 and $74 for the three months ended
    September 30, 2004 and 2003, respectively, and $141 and
    $222 for the nine months ended September 30, 2004 and 2003,
    respectively, was paid by the Company and is included in
    compensation expense.                                                                                                                                                                                                                                                                                                                     
|   
|(c) | In connection with the acquisition of Talbot
    Financial Corporation (Talbot) on July 1, 2004,
    the Company will purchase Talbot managements special
    shares of Satellite Acquisition Corporation
    (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 1, 2005,
    March 31, 2006 and March 31, 2007 based upon
    Talbots earnings for the 12 month periods ending
    December 31, 2004, 2005 and 2006, respectively. The
    contingent payment to management will be recorded by the Company
    as a charge to earnings in the form of non-cash stock based
    compensation expense over the period in which the payments are
    earned. For the quarter ended September 30, 2004, the
    Company recorded $6.9 million of non-cash stock based
    compensation with an offsetting credit to accrued liabilities
    for the same amount. Based on Talbots financial
    performance projected for 2004, management estimates the Company
    may be obligated to pay contingent payments of approximately
    $41 million in common shares of the Company in addition to
    the $6.9 million of payments mentioned above.



| |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
| | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 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 September 30, 2004, 103,000 shares have
    been released from escrow.                                                                                                                                                                                                                                                                                                           
|
| | In connection with various other acquisitions
    completed through September 30, 2004, the Company may be
    obligated to pay contingent consideration of approximately
    $8.5 million cash and $3.1 million in common shares
    based upon managements best estimate of 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 September 30, 2004, the





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



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##### Table of Contents



| |                                                                                                                                                                       
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | financial statements reflect a liability to pay
    cash of $1.1 million and to issue common shares valued at
    approximately $0.1 million as of September 30, 2004.



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(d) | In the ordinary course of business, the Company
    and its subsidiaries are subject to various other 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 such other 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.

5.  Recent Acquisitions

The Companys strategic business plan
includes the regular and systematic evaluation and acquisition
of insurance brokerages in new and existing markets. Insurance
brokerages, due to their nature, typically maintain very low
capital to earnings ratio. As a result, the Company records a
substantial amount of goodwill and other intangible assets in
connection with acquisitions.


During the third quarter of 2004, the Company
purchased Talbot, as described below, as well as the assets of
two other insurance brokerages, all of which were accounted for
using the purchase method of accounting. Accordingly, the
results of operations and cash flows of the acquired companies
have been included in the Companys consolidated results
from their respective acquisition dates.

The Company purchased Talbot based in New Mexico
on July 1, 2004 as follows: The Company purchased all of
the common shares of Satellite, a corporation formed by senior
management at Talbot. In turn, Satellite purchased 100% of
Talbot from Safeco Corporation. The Company will purchase 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 1, 2005, March 31, 2006 and
March 31, 2007 based upon Talbots earnings for the
12 month periods ending December 31, 2004, 2005 and
2006, respectively. The contingent payment to management will be
recorded by the Company as a charge to earnings in the form of
non-cash stock based compensation expense over the period in
which the payments are earned. For the quarter ended
September 30, 2004, the Company recorded $6.9 million
of non-cash stock based compensation relating to the Talbot
acquisition with an offsetting credit to accrued liabilities for
the same amount. Based on Talbots financial performance
projected for 2004 and further improvements anticipated through
2006, the Company anticipates total earnout payments in the
$45-$50 million range.

|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  
|---------------------------------------------------- |  | ---------------- | ------- | ------- |  | ----- | ----- | - |  | - | ------- | -
|                                                     |  |                  |         |        
|                                                     |  | Acquisition Date |         |        
|                                                     |  |                  |         |        
|                                                     |  | July 1, 2004     |         | Various |  |      
|                                                     |  |                  |         |         |  |      
|                                                     |  | Talbot           |         | Other   |  | Total
|                                                     |  |                  |         |         |  |      
|Current assets                                       |  | $                | 50,867  |         |  | $     | 256   |   |  | $ | 51,123  |  
|Current liabilities                                  |  |                  | (41,003 | )       |  |       | (113  | ) |  |   | (41,116 | )
|Property, equipment and other assets                 |  |                  | 8,017   |         |  |       | 69    |   |  |   | 8,086   |  
|Long-term debt and capital leases                    |  |                  | (15,564 | )       |  |       |      |   |  |   | (15,564 | )
|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  
|Net assets at fair value                             |  | $                | 2,317   |         |  | $     | 212   |   |  | $ | 2,529   |  
|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  
|Consideration                                        |  |                  |         |         |  |       |       |   |  |   |         |  
|Cash                                                 |  | $                | 93,946  |         |  | $     | 6,716 |   |  | $ | 100,662 |  
|Shares (at market value)                             |  |                  |        |         |  |       | 488   |   |  |   | 488     |  
|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  
|                                                     |  | $                | 93,946  |         |  | $     | 7,204 |   |  | $ | 101,150 |  
|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  
|Goodwill                                             |  | $                | 46,897  |         |  | $     | 5,721 |   |  | $ | 52,618  |  
|Customer relationships                               |  |                  | 44,163  |         |  |       | 1,170 |   |  |   | 45,333  |  
|Non-competition covenants                            |  |                  | 569     |         |  |       | 101   |   |  |   | 670     |  
|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  
|                                                     |  | $                | 91,629  |         |  | $     | 6,992 |   |  | $ | 98,621  |  
|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  
|Number of shares issued as consideration
    (000s) |  |                  |        |         |  |       | 27    |   |  |   | 27      |  
|                                                     |  |                  |         |         |  |       |       |   |  |   |         |  

Of the goodwill acquired $52,238 is deductible
for tax purposes including $618 associated with contingent
consideration relating to prior period acquisitions.





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



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##### Table of Contents



Dispositions

During the third quarter of 2004, the Company
sold assets and shares of certain insurance brokerages for
approximately $3,093 resulting in a gain of approximately $1,004.


6.  Intangible Assets

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


|                                   |                           |                          |        |                         |  |       |       |          |  |              |        |        |  |   |        |        |  |   |       |       |  |   |        |        | 
|---------------------------------- | ------------------------- | ------------------------ | ------ | ----------------------- |  | ----- | ----- | -------- |  | ------------ | ------ | ------ |  | - | ------ | ------ |  | - | ----- | ----- |  | - | ------ | ------ | 
|                                   |                           |                          |        |                        
|                                   |                           | As of September 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    |                          | $      | 95,894                  |  |       | $     | 8,969    |  |              | $      | 86,925 |  |   | $      | 43,422 |  |   | $     | 5,480 |  |   | $      | 37,942 | 
|                                   | Non-competition covenants |                          |        | 771                     |  |       |       | 389      |  |              |        | 382    |  |   |        | 476    |  |   |       | 269   |  |   |        | 207    | 
|                                   | Trademarks                |                          |        |                        |  |       |       |         |  |              |        |       |  |   |        | 2,587  |  |   |       |      |  |   |        | 2,587  | 
|                                   |                           |                          |        |                         |  |       |       |          |  |              |        |        |  |   |        |        |  |   |       |       |  |   |        |       
|                                   |                           |                          | 96,665 |                         |  |       | 9,358 |          |  |              | 87,307 |        |  |   | 46,485 |        |  |   | 5,749 |       |  |   | 40,736 |       
|Indefinite life intangible assets: |                           |                          |        |                         |  |       |       |          |  |              |        |        |  |   |        |        |  |   |       |       |  |   |        |       
|                                   | Non-competition covenants |                          |        | 3,328                   |  |       |       |         |  |              |        | 3,328  |  |   |        | 2,167  |  |   |       |      |  |   |        | 2,167  | 
|                                   |                           |                          |        |                         |  |       |       |          |  |              |        |        |  |   |        |        |  |   |       |       |  |   |        |       
|Total                              |                           | $                        | 99,993 |                         |  | $     | 9,358 |          |  | $            | 90,635 |        |  | $ | 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 during the first quarter 2004 of $2,587, before
income taxes.

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

|                                   |                           |      |        |        |  |   |     |     | 
|---------------------------------- | ------------------------- | ---- | ------ | ------ |  | - | --- | --- | 
|                                   |                           | 2004 |        | 2003  
|                                   |                           |      |        |       
|Definite life intangible assets:   |                           |      |        |        |  |   |     |    
|                                   | Customer relationships    |      | $      | 52,537 |  |   | $   | 648 | 
|Indefinite life intangible assets: |                           |      |        |        |  |   |     |    
|                                   | Non-competition covenants |      |        | 1,451  |  |   |     | 247 | 
|                                   |                           |      |        |        |  |   |     |    
|Total                              |                           | $    | 53,988 |        |  | $ | 895 |    
|                                   |                           |      |        |        |  |   |     |    

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.





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



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##### Table of Contents



The changes in the carrying amount of goodwill
for the nine months ended September 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     |  |            | 427    |            |  |       | 64,899  |   |  |   | 65,326  |  
|Goodwill disposed during 2004     |  |            | (4,385 | )          |  |       |        |   |  |   | (4,385  | )
|Cumulative translation adjustment |  |            | 2,078  |            |  |       |        |   |  |   | 2,078   |  
|                                  |  |            |        |            |  |       |         |   |  |   |         |  
|Balance as of September 30, 2004  |  | $          | 90,199 |            |  | $     | 278,682 |   |  | $ | 368,881 |  
|                                  |  |            |        |            |  |       |         |   |  |   |         |  

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

|                          |  |               |       |               |  |      |     |      |  |   |       |  |  |   |       | 
|------------------------- |  | ------------- | ----- | ------------- |  | ---- | --- | ---- |  | - | ----- |  |  | - | ----- | 
|                          |  |               |       |              
|                          |  | For the three |       | For the nine 
|                          |  | months ended  |       | months ended 
|                          |  | September 30, |       | September 30,
|                          |  |               |       |              
|                          |  | 2004          |       | 2003          |  | 2004 |     | 2003
|                          |  |               |       |               |  |      |     |     
|Customer relationships    |  | $             | 1,846 |               |  | $    | 748 |      |  | $ | 3,503 |  |  | $ | 2,250 | 
|Non-competition covenants |  |               | 58    |               |  |      | 92  |      |  |   | 118   |  |  |   | 147   | 
|                          |  |               |       |               |  |      |     |      |  |   |       |  |  |   |       | 
|Total                     |  | $             | 1,904 |               |  | $    | 840 |      |  | $ | 3,621 |  |  | $ | 2,397 | 
|                          |  |               |       |               |  |      |     |      |  |   |       |  |  |   |       | 

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    |  | $    | 5,375 |      |  | $    | 7,377 |      |  | $    | 7,376 |  |  | $ | 7,376 |  |  | $ | 7,376 | 
|Non-competition covenants |  |      | 190   |      |  |      | 110   |      |  |      | 84    |  |  |   | 76    |  |  |   |      | 
|                          |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Total                     |  | $    | 5,565 |      |  | $    | 7,487 |      |  | $    | 7,460 |  |  | $ | 7,452 |  |  | $ | 7,376 | 
|                          |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 





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



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##### Table of Contents



7.  Debt

Long-term debt and capital leases


|                                                           |  |               |         |              |  |   |        |  
|---------------------------------------------------------- |  | ------------- | ------- | ------------ |  | - | ------ | -
|                                                           |  | September 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  |  
|Term loan, variable interest due December 2007             |  |               | 3,800   |              |  |   |       |  
|Various other notes payable and debt (4)                   |  |               | 13,007  |              |  |   | 5,649  |  
|Capital leases (4)                                         |  |               | 567     |              |  |   | 650    |  
|                                                           |  |               |         |              |  |   |        |  
|Long-term debt and capital leases                          |  |               | 154,874 |              |  |   | 78,799 |  
|Less current portion                                       |  |               | (6,602  | )            |  |   | (3,362 | )
|                                                           |  |               |         |              |  |   |        |  
|                                                           |  | $             | 148,272 |              |  | $ | 75,437 |  
|                                                           |  |               |         |              |  |   |        |  

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

|                                              |  |   |         | 
|--------------------------------------------- |  | - | ------- | 
|For the twelve months ended
    September 30, |  |   |         | 
|2005                                          |  | $ | 6,602   | 
|2006                                          |  |   | 4,751   | 
|2007                                          |  |   | 10,817  | 
|2008                                          |  |   | 70,042  | 
|2009                                          |  |   | 15,266  | 
|2010 and thereafter                           |  |   | 47,396  | 
|                                              |  |   |         | 
|                                              |  | $ | 154,874 | 
|                                              |  |   |         | 






|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Senior Notes  As of September 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 and acquisitions. The Company incurred
    approximately $0.7 million in fees and expenses related to
    the offering of these notes, which were capitalized and are
    being amortized to expense over the term of the notes. At
    September 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 September 30, 2004, the Company estimated
    the fair value of the swap was $1.7 million, which is not
    recognized in these financial statements. Accordingly,
    $1.7 million is the estimated amount that the Company would
    need to pay to terminate the swap as of September 30, 2004.



|    |                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | Revolving U.S. dollar LIBOR loan 
    This unsecured facility totals $75 million, bears interest
    at a floating rate of prime plus 1% or 112.5 basis points
    above LIBOR, which was 1.84% and 1.12% at September 30,
    2004 and





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



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##### Table of Contents



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|--- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    | 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, 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 September 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 with
    which we place insurance. 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 $563 for the three
    months and nine months ended September 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 loans at September 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
September 30, 2004. If converted, Fairfax would have owned
approximately 32% of the Companys outstanding common
shares as of September 30, 2004.

8.  Shareholders
Equity

Share capital


At September 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 September 30, 2004 and December 31,
2003, there were an unlimited number of common shares
authorized, of which 30,402 and 30,143 were issued and
outstanding as at September 30, 2004 and December 31,
2003, respectively.





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



---



##### Table of Contents



|                                                                                   |  |               |        |        |  |   |         |  
|---------------------------------------------------------------------------------- |  | ------------- | ------ | ------ |  | - | ------- | -
|                                                                                   |  |              
|                                                                                   |  | Common Shares
|                                                                                   |  | Outstanding  
|                                                                                   |  |              
|                                                                                   |  | (000s)       |        | Amount
|                                                                                   |  |               |        |       
|Balance, December 31, 2003                                                         |  |               | 30,143 |        |  | $ | 254,845 |  
|Shares issued                                                                      |  |               | 181    |        |  |   | 3,337   |  
|Repurchases of executive share purchase plan
    shares, net of loan cancellations |  |               | 1      |        |  |   | 15      |  
|Shares issued for contingent consideration                                         |  |               | 45     |        |  |   | 765     |  
|Cancellation of shares                                                             |  |               | (2     | )      |  |   | (26     | )
|Stock options exercised                                                            |  |               | 32     |        |  |   | 482     |  
|Restricted share units released                                                    |  |               | 2      |        |  |   | 27      |  
|                                                                                   |  |               |        |        |  |   |         |  
|Balance, September 30, 2004                                                        |  |               | 30,402 |        |  | $ | 259,445 |  
|                                                                                   |  |               |        |        |  |   |         |  

Issuable shares

|                                      |  |               |     |        |  |   |        |  
|------------------------------------- |  | ------------- | --- | ------ |  | - | ------ | -
|                                      |  |              
|                                      |  | Common Shares
|                                      |  |              
|                                      |  | (000s)       |     | Amount
|                                      |  |               |     |       
|Balance, December 31, 2003            |  |               | 43  |        |  | $ | 721    |  
|Issued                                |  |               | (96 | )      |  |   | (1,705 | )
|Issuable for contingent consideration |  |               | 56  |        |  |   | 1,035  |  
|                                      |  |               |     |        |  |   |        |  
|Balance, September 30, 2004           |  |               | 3   |        |  | $ | 51     |  
|                                      |  |               |     |        |  |   |        |  

Contributed surplus

|                                  |  |        |        | 
|--------------------------------- |  | ------ | ------ | 
|                                  |  | Amount
|                                  |  |       
|Balance, December 31, 2003        |  | $      | 4,806  | 
|Non-cash stock based compensation |  |        | 6,150  | 
|Other                             |  |        | 97     | 
|                                  |  |        |        | 
|Balance, September 30, 2004       |  | $      | 11,053 | 
|                                  |  |        |        | 

Cumulative translation account

|                                                                        |  |        |        |  
|----------------------------------------------------------------------- |  | ------ | ------ | -
|                                                                        |  | Amount
|                                                                        |  |       
|Balance December 31, 2003                                               |  | $      | 20,062 |  
|Translation of self-sustaining foreign operations                       |  |        | 1,850  |  
|Translation of debt financing of self-sustaining
    foreign operations |  |        | (18    | )
|                                                                        |  |        |        |  
|Balance, September 30, 2004                                             |  | $      | 21,894 |  
|                                                                        |  |        |        |  





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



---



##### Table of Contents



9.  Equity Incentive Plan

A summary of the stock option activity and
related information for the nine months ended September 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                   |  |         | (8    | )              |                  | $ | 15.67 | 
|                            |  |         |       |                |                  |   |       | 
|Balance, September 30, 2004 |  |         | 1,458 |                |                  | $ | 15.47 | 
|                            |  |         |       |                |                  |   |       | 

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

|               |  |                    |       |                   |  |             |            |             |  |                  |     |             |  |  |       |  |  |  |            |  |  |  |     | 
|-------------- |  | ------------------ | ----- | ----------------- |  | ----------- | ---------- | ----------- |  | ---------------- | --- | ----------- |  |  | ----- |  |  |  | ---------- |  |  |  | --- | 
|               |  |                    |       |                  
|               |  | September 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         |  |                    | 1,202 |                   |  |             | 4.71 years |             |  |                  | 814 |             |  |  | 1,230 |  |  |  | 5.43 years |  |  |  | 417 | 
|$13.79         |  |                    | 256   |                   |  |             | 5.41 years |             |  |                  | 96  |             |  |  | 268   |  |  |  | 6.08 years |  |  |  | 6   | 
|               |  |                    |       |                   |  |             |            |             |  |                  |     |             |  |  |       |  |  |  |            |  |  |  |     | 
|               |  |                    | 1,458 |                   |  |             | 4.80 years |             |  |                  | 910 |             |  |  | 1,498 |  |  |  | 5.55 years |  |  |  | 423 | 
|               |  |                    |       |                   |  |             |            |             |  |                  |     |             |  |  |       |  |  |  |            |  |  |  |     | 

Non-cash stock based compensation related to
stock options of $8,346 and $1,355 for the three months ended
September 30, 2004 and 2003, respectively, and $11,661 and
$3,575 for the nine months ended September 30, 2004 and
2003, respectively, was expensed with offsetting credits to
contributed surplus and accrued liabilities in the amount of
$4,772 and $6,889, respectively. 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 nine months ended September 30, 2004 and 2003 is
comprised of the following:

|                                   |                                                            |               |       |               |  |      |       |      |  |   |        |       |  |   |       |       | 
|---------------------------------- | ---------------------------------------------------------- | ------------- | ----- | ------------- |  | ---- | ----- | ---- |  | - | ------ | ----- |  | - | ----- | ----- | 
|                                   |                                                            |               |       |              
|                                   |                                                            | For the three |       | For the nine 
|                                   |                                                            | months ended  |       | months ended 
|                                   |                                                            | September 30, |       | September 30,
|                                   |                                                            |               |       |              
|                                   |                                                            | 2004          |       | 2003          |  | 2004 |       | 2003
|                                   |                                                            |               |       |               |  |      |       |     
|Non-cash stock based compensation: |                                                            |               |       |               |  |      |       |      |  |   |        |       |  |   |       |      
|                                   | Stock options granted June 2002                            |               | $     | 470           |  |      | $     | 483  |  |   | $      | 1,471 |  |   | $     | 1,546 | 
|                                   | Stock options granted February 2003                        |               |       | 99            |  |      |       | 110  |  |   |        | 329   |  |   |       | 324   | 
|                                   | Stock based compensation granted for 2003 bonuses          |               |       | 529           |  |      |       | 264  |  |   |        | 1,796 |  |   |       | 994   | 
|                                   | Stock based compensation related to Talbot
    acquisition |               |       | 6,889         |  |      |       |     |  |   |        | 6,889 |  |   |       |      | 
|                                   | Restricted share units                                     |               |       | 359           |  |      |       | 498  |  |   |        | 1,176 |  |   |       | 711   | 
|                                   |                                                            |               |       |               |  |      |       |      |  |   |        |       |  |   |       |      
|                                   |                                                            | $             | 8,346 |               |  | $    | 1,355 |      |  | $ | 11,661 |       |  | $ | 3,575 |      
|                                   |                                                            |               |       |               |  |      |       |      |  |   |        |       |  |   |       |      





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



---



##### Table of Contents



The Company estimates the non-cash stock based
compensation expense for 2004 through 2009 will be:

|                                                          |  |      |        |      |  |      |        |      |  |      |        |      |  |   |       |  |  |   |       |  |  |   |       | 
|--------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|                                                          |  | 2004 |        | 2005 |  | 2006 |        | 2007 |  | 2008 |        | 2009
|Year ended December 31,                                   |  |      |        |      |  |      |        |      |  |      |        |     
|Stock options granted June 2002                           |  | $    | 1,945  |      |  | $    | 861    |      |  | $    |       |      |  | $ |      |  |  | $ |      |  |  | $ |      | 
|Stock options granted February 2003                       |  |      | 427    |      |  |      | 393    |      |  |      |       |      |  |   |      |  |  |   |      |  |  |   |      | 
|Stock based compensation granted for 2003 bonuses         |  |      | 2,390  |      |  |      | 2,376  |      |  |      | 2,290  |      |  |   | 2,200 |  |  |   | 2,200 |  |  |   | 2,200 | 
|Stock based compensation regarding Talbot
    acquisition |  |      | 13,786 |      |  |      | 21,669 |      |  |      | 10,772 |      |  |   | 1,445 |  |  |   |      |  |  |   |      | 
|Restricted Share Units                                    |  |      | 1,566  |      |  |      | 1,560  |      |  |      | 1,553  |      |  |   | 1,517 |  |  |   | 1,517 |  |  |   | 255   | 
|                                                          |  |      |        |      |  |      |        |      |  |      |        |      |  |   |       |  |  |   |       |  |  |   |       | 
|                                                          |  | $    | 20,114 |      |  | $    | 26,859 |      |  | $    | 14,615 |      |  | $ | 5,162 |  |  | $ | 3,717 |  |  | $ | 2,455 | 
|                                                          |  |      |        |      |  |      |        |      |  |      |        |      |  |   |       |  |  |   |       |  |  |   |       | 

10. 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 three months and nine months ended
September 30, 2004 and 2003, respectively, and were included in
the calculation of diluted earnings per share. In the third
quarter 2004 the subordinated convertible debentures were not
dilutive. Earnings per common share have been calculated as
follows:


|                                                                |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |       | 
|--------------------------------------------------------------- | ---------------------------------------------------------------------------- | ------------- | ------ | ------------- |  | ---- | ------ | ----- |  | - | ------ | ----- |  | - | ------ | ----- | 
|                                                                |                                                                              |               |        |              
|                                                                |                                                                              | For the three |        | For the nine 
|                                                                |                                                                              | months ended  |        | months ended 
|                                                                |                                                                              | September 30, |        | September 30,
|                                                                |                                                                              |               |        |              
|                                                                |                                                                              | 2004          |        | 2003          |  | 2004 |        | 2003 
|                                                                |                                                                              |               |        |               |  |      |        |      
|Net earnings (numerator)                                        |                                                                              | $             | 1,146  |               |  | $    | 6,820  |       |  | $ | 22,360 |       |  | $ | 25,833 |      
|Effect of dilutive securities:                                  |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |      
|                                                                | Interest on 8.5% subordinated convertible
    debentures (net of income tax) |               |        |              |  |      |        | 471   |  |   |        | 1,425 |  |   |        | 1,414 | 
|                                                                | Dividends in lieu of restricted share units                                  |               |        | 23            |  |      |        | 36    |  |   |        | 88    |  |   |        | 76    | 
|                                                                |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |      
|Net earnings plus assumed conversions (numerator)               |                                                                              | $             | 1,169  |               |  | $    | 7,327  |       |  | $ | 23,873 |       |  | $ | 27,323 |      
|                                                                |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |      
|Weighted average shares outstanding  Basic
    (denominator)   |                                                                              |               | 30,292 |               |  |      | 29,327 |       |  |   | 30,192 |       |  |   | 29,326 |      
|Effect of dilutive securities:                                  |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |      
|                                                                | 8.5% subordinated convertible debentures                                     |               |        |              |  |      |        | 2,783 |  |   |        | 2,705 |  |   |        | 3,210 | 
|                                                                | Stock options                                                                |               |        | 1,221         |  |      |        | 188   |  |   |        | 1,219 |  |   |        | 63    | 
|                                                                | Restricted share units                                                       |               |        | 679           |  |      |        | 603   |  |   |        | 670   |  |   |        | 402   | 
|                                                                | Talbot earnout shares                                                        |               |        | 378           |  |      |        |      |  |   |        | 126   |  |   |        |      | 
|                                                                | Retractable shares                                                           |               |        | 93            |  |      |        | 196   |  |   |        | 93    |  |   |        | 196   | 
|                                                                | Issuable shares                                                              |               |        | 3             |  |      |        | 3     |  |   |        | 1     |  |   |        |      | 
|                                                                | Put options                                                                  |               |        |              |  |      |        | 730   |  |   |        |      |  |   |        | 730   | 
|                                                                |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |      
|Weighted average shares outstanding 
    Diluted (denominator) |                                                                              |               | 32,666 |               |  |      | 33,830 |       |  |   | 35,006 |       |  |   | 33,927 |      
|                                                                |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |      
|Earnings per common share:                                      |                                                                              |               |        |               |  |      |        |       |  |   |        |       |  |   |        |      
|                                                                | Basic                                                                        |               | $      | 0.04          |  |      | $      | 0.23  |  |   | $      | 0.74  |  |   | $      | 0.88  | 
|                                                                | Diluted                                                                      |               | $      | 0.04          |  |      | $      | 0.22  |  |   | $      | 0.68  |  |   | $      | 0.81  | 

11. Income taxes

Income taxes for the three months ended
September 30, 2004 and 2003 amounted to $3.0 million
and $3.2 million, respectively, resulting in an effective
tax rate of 72% and 32% for 2004 and 2003, respectively.






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



---



##### Table of Contents



Incomes taxes for the nine months ended
September 30, 2004 and 2003 amounted to $15.2 million
and $14.1 million, respectively, resulting in an effective
tax rate of 40% and 35% for 2004 and 2003, respectively.

The provision for income tax expense differs from
the result that would have been obtained by applying the
combined Canadian statutory federal and provincial income tax
rate of 36.12% and 36.62% in 2004 and 2003, respectively, as
follows:

|                                                |  |               |       |               |  |      |       |      |  |   |        |   |  |   |        |  
|----------------------------------------------- |  | ------------- | ----- | ------------- |  | ---- | ----- | ---- |  | - | ------ | - |  | - | ------ | -
|                                                |  |               |       |              
|                                                |  | For the three |       | For the nine 
|                                                |  | months ended  |       | months ended 
|                                                |  | September 30, |       | September 30,
|                                                |  |               |       |              
|                                                |  | 2004          |       | 2003          |  | 2004 |       | 2003
|                                                |  |               |       |               |  |      |       |     
|Provision for tax at statutory rates            |  | $             | 1,481 |               |  | $    | 3,678 |      |  | $ | 13,564 |   |  | $ | 14,623 |  
|Non-deductible stock based compensation expense |  |               | 2,614 |               |  |      | 125   |      |  |   | 3,044  |   |  |   | 371    |  
|Effect of income outside Canada                 |  |               | (849  | )             |  |      | (266  | )    |  |   | (1,271 | ) |  |   | (672   | )
|Gains on sale of subsidiaries                   |  |               | (177  | )             |  |      | (77   | )    |  |   | (370   | ) |  |   | (110   | )
|Non-taxable life insurance proceeds             |  |               |      |               |  |      | (365  | )    |  |   |       |   |  |   | (365   | )
|Other                                           |  |               | (114  | )             |  |      | 129   |      |  |   | 225    |   |  |   | 253    |  
|                                                |  |               |       |               |  |      |       |      |  |   |        |   |  |   |        |  
|Provision for tax                               |  | $             | 2,955 |               |  | $    | 3,224 |      |  | $ | 15,192 |   |  | $ | 14,100 |  
|                                                |  |               |       |               |  |      |       |      |  |   |        |   |  |   |        |  

12. Interest and Income Taxes
Paid

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


|                  |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 
|----------------- |  | ------------- | ----- | ------------- |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                  |  |               |       |              
|                  |  | For the three |       | For the nine 
|                  |  | months ended  |       | months ended 
|                  |  | September 30, |       | September 30,
|                  |  |               |       |              
|                  |  | 2004          |       | 2003          |  | 2004 |       | 2003
|                  |  |               |       |               |  |      |       |     
|Interest paid     |  | $             | 894   |               |  | $    | 206   |      |  | $ | 3,899  |  |  | $ | 1,261  | 
|Income taxes paid |  | $             | 6,572 |               |  | $    | 2,257 |      |  | $ | 18,417 |  |  | $ | 14,029 | 

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






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



---



##### Table of Contents



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 September 30,
|                                            |  |                                         
|                                            |  |                                          |        |     
|                                            |  | 2004                                     |        | 2003
|                                            |  |                                          |        |     
|                                            |  | Canada                                   |        |      | U.S. |   |        | Consolidated |  |   | Canada |   |  | U.S. |        |   | Consolidated |  
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |  
|Revenue                                     |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                        | 28,441 |      |      | $ | 66,572 |              |  | $ | 95,013 |   |  | $    | 26,731 |   |              | $ | 38,098 |   |  | $ | 64,829 |  
|Corporate                                   |  |                                          | 5,741  |      |      |   | 630    |              |  |   | 6,371  |   |  |      | 4,868  |   |              |   | 368    |   |  |   | 5,236  |  
|Elimination of intra-segment revenue        |  |                                          | (5,772 | )    |      |   | (710   | )            |  |   | (6,482 | ) |  |      | (4,908 | ) |              |   | (486   | ) |  |   | (5,394 | )
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                        | 28,410 |      |      | $ | 66,492 |              |  | $ | 94,902 |   |  | $    | 26,691 |   |              | $ | 37,980 |   |  | $ | 64,671 |  
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Net earnings (loss) before income
    taxes |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                        | 4,722  |      |      | $ | 9,205  |              |  | $ | 13,927 |   |  | $    | 4,493  |   |              | $ | 7,781  |   |  | $ | 12,274 |  
|Corporate                                   |  |                                          | (4,205 | )    |      |   | (5,621 | )            |  |   | (9,826 | ) |  |      | 1,338  |   |              |   | (3,568 | ) |  |   | (2,230 | )
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                        | 517    |      |      | $ | 3,584  |              |  | $ | 4,101  |   |  | $    | 5,831  |   |              | $ | 4,213  |   |  | $ | 10,044 |  
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Income tax expense (benefit) 
    current  |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                        | 1,805  |      |      | $ | 5,647  |              |  | $ | 7,452  |   |  | $    | 1,638  |   |              | $ | 5,491  |   |  | $ | 7,129  |  
|Corporate                                   |  |                                          | (213   | )    |      |   | (2,207 | )            |  |   | (2,420 | ) |  |      | 177    |   |              |   | (1,232 | ) |  |   | (1,055 | )
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                        | 1,592  |      |      | $ | 3,440  |              |  | $ | 5,032  |   |  | $    | 1,815  |   |              | $ | 4,259  |   |  | $ | 6,074  |  
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Income tax (benefit)  future               |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                        | (75    | )    |      | $ | (1,875 | )            |  | $ | (1,950 | ) |  | $    | (6     | ) |              | $ | (2,693 | ) |  | $ | (2,699 | )
|Corporate                                   |  |                                          | (125   | )    |      |   | (2     | )            |  |   | (127   | ) |  |      | (150   | ) |              |   | (1     | ) |  |   | (151   | )
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                        | (200   | )    |      | $ | (1,877 | )            |  | $ | (2,077 | ) |  | $    | (156   | ) |              | $ | (2,694 | ) |  | $ | (2,850 | )
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Net earnings (loss)                         |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Brokerage                                   |  | $                                        | 2,992  |      |      | $ | 5,433  |              |  | $ | 8,425  |   |  | $    | 2,861  |   |              | $ | 4,983  |   |  | $ | 7,844  |  
|Corporate                                   |  |                                          | (3,867 | )    |      |   | (3,412 | )            |  |   | (7,279 | ) |  |      | 1,311  |   |              |   | (2,335 | ) |  |   | (1,024 | )
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|                                            |  | $                                        | (875   | )    |      | $ | 2,021  |              |  | $ | 1,146  |   |  | $    | 4,172  |   |              | $ | 2,648  |   |  | $ | 6,820  |  
|                                            |  |                                          |        |      |      |   |        |              |  |   |        |   |  |      |        |   |              |   |        |   |  |   |        |  
|Amortization of intangible assets           |  | $                                        | 25     |      |      | $ | 1,879  |              |  | $ | 1,904  |   |  | $    | 21     |   |              | $ | 819    |   |  | $ | 840    |  
|Additions to property and equipment         |  | $                                        | 1,127  |      |      | $ | 4,778  |              |  | $ | 5,905  |   |  | $    | 655    |   |              | $ | 2,701  |   |  | $ | 3,356  |  
|Depreciation                                |  | $                                        | 685    |      |      | $ | 1,277  |              |  | $ | 1,962  |   |  | $    | 578    |   |              | $ | 973    |   |  | $ | 1,551  |  
|Interest income                             |  | $                                        | 216    |      |      | $ | 255    |              |  | $ | 471    |   |  | $    | 268    |   |              | $ | 156    |   |  | $ | 424    |  
|Interest expense                            |  | $                                        | 1,805  |      |      | $ | 525    |              |  | $ | 2,330  |   |  | $    | 976    |   |              | $ | 293    |   |  | $ | 1,269  |  





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



---



##### Table of Contents



|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|------------------------------------------- |  | --------------------------------------- | ------- | ---- | ---- | - | ------- | ------------ |  | - | ------- | - |  | ---- | ------- | - | ------------ | - | ------- | - |  | - | ------- | -
|                                            |  |                                        
|                                            |  | For the nine months ended September 30,
|                                            |  |                                        
|                                            |  |                                         |         |     
|                                            |  | 2004                                    |         | 2003
|                                            |  |                                         |         |     
|                                            |  | Canada                                  |         |      | U.S. |   |         | Consolidated |  |   | Canada  |   |  | U.S. |         |   | Consolidated |  
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |  
|Revenue                                     |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                                   |  | $                                       | 90,365  |      |      | $ | 166,082 |              |  | $ | 256,447 |   |  | $    | 79,836  |   |              | $ | 128,118 |   |  | $ | 207,954 |  
|Corporate                                   |  |                                         | 16,377  |      |      |   | 1,658   |              |  |   | 18,035  |   |  |      | 15,409  |   |              |   | 1,380   |   |  |   | 16,789  |  
|Elimination of intra-segment revenue        |  |                                         | (16,238 | )    |      |   | (1,762  | )            |  |   | (18,000 | ) |  |      | (15,473 | ) |              |   | (1,567  | ) |  |   | (17,040 | )
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|                                            |  | $                                       | 90,504  |      |      | $ | 165,978 |              |  | $ | 256,482 |   |  | $    | 79,772  |   |              | $ | 127,931 |   |  | $ | 207,703 |  
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Net earnings (loss) before income
    taxes |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                                   |  | $                                       | 19,102  |      |      | $ | 32,734  |              |  | $ | 51,836  |   |  | $    | 12,098  |   |              | $ | 31,976  |   |  | $ | 44,074  |  
|Corporate                                   |  |                                         | (2,499  | )    |      |   | (11,785 | )            |  |   | (14,284 | ) |  |      | 5,662   |   |              |   | (9,803  | ) |  |   | (4,141  | )
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|                                            |  | $                                       | 16,603  |      |      | $ | 20,949  |              |  | $ | 37,552  |   |  | $    | 17,760  |   |              | $ | 22,173  |   |  | $ | 39,933  |  
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Income tax expense (benefit) 
    current  |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                                   |  | $                                       | 6,930   |      |      | $ | 14,770  |              |  | $ | 21,700  |   |  | $    | 4,690   |   |              | $ | 13,609  |   |  | $ | 18,299  |  
|Corporate                                   |  |                                         | (326    | )    |      |   | (4,612  | )            |  |   | (4,938  | ) |  |      | 559     |   |              |   | (3,519  | ) |  |   | (2,960  | )
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|                                            |  | $                                       | 6,604   |      |      | $ | 10,158  |              |  | $ | 16,762  |   |  | $    | 5,249   |   |              | $ | 10,090  |   |  | $ | 15,339  |  
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Income tax expense (benefit) 
    future   |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                                   |  | $                                       | (479    | )    |      | $ | (1,064  | )            |  | $ | (1,543  | ) |  | $    | (209    | ) |              | $ | (1,217  | ) |  | $ | (1,426  | )
|Corporate                                   |  |                                         | (36     | )    |      |   | 9       |              |  |   | (27     | ) |  |      | 61      |   |              |   | 126     |   |  |   | 187     |  
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|                                            |  | $                                       | (515    | )    |      | $ | (1,055  | )            |  | $ | (1,570  | ) |  | $    | (148    | ) |              | $ | (1,091  | ) |  | $ | (1,239  | )
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Net earnings (loss)                         |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Brokerage                                   |  | $                                       | 12,651  |      |      | $ | 19,028  |              |  | $ | 31,679  |   |  | $    | 7,617   |   |              | $ | 19,584  |   |  | $ | 27,201  |  
|Corporate                                   |  |                                         | (2,137  | )    |      |   | (7,182  | )            |  |   | (9,319  | ) |  |      | 5,042   |   |              |   | (6,410  | ) |  |   | (1,368  | )
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|                                            |  | $                                       | 10,514  |      |      | $ | 11,846  |              |  | $ | 22,360  |   |  | $    | 12,659  |   |              | $ | 13,174  |   |  | $ | 25,833  |  
|                                            |  |                                         |         |      |      |   |         |              |  |   |         |   |  |      |         |   |              |   |         |   |  |   |         |  
|Amortization of intangible assets           |  | $                                       | 80      |      |      | $ | 3,541   |              |  | $ | 3,621   |   |  | $    | 49      |   |              | $ | 2,348   |   |  | $ | 2,397   |  
|Additions to property and equipment         |  | $                                       | 2,074   |      |      | $ | 6,784   |              |  | $ | 8,858   |   |  | $    | 2,265   |   |              | $ | 3,907   |   |  | $ | 6,172   |  
|Depreciation                                |  | $                                       | 1,955   |      |      | $ | 3,324   |              |  | $ | 5,279   |   |  | $    | 1,607   |   |              | $ | 2,855   |   |  | $ | 4,462   |  
|Interest income                             |  | $                                       | 717     |      |      | $ | 612     |              |  | $ | 1,329   |   |  | $    | 632     |   |              | $ | 571     |   |  | $ | 1,203   |  
|Interest expense                            |  | $                                       | 4,639   |      |      | $ | 1,053   |              |  | $ | 5,692   |   |  | $    | 3,250   |   |              | $ | 902     |   |  | $ | 4,152   |  

|                    |  |                                                |         |      |  |   |              |  |  |        |         |  |      |   |         |              |  |   |         |  |  |   |         | 
|------------------- |  | ---------------------------------------------- | ------- | ---- |  | - | ------------ |  |  | ------ | ------- |  | ---- | - | ------- | ------------ |  | - | ------- |  |  | - | ------- | 
|                    |  |                                               
|                    |  | As of September 30, 2004 and December 31, 2003
|                    |  |                                               
|                    |  |                                                |         |     
|                    |  | 2004                                           |         | 2003
|                    |  |                                                |         |     
|                    |  | Canada                                         |         | U.S. |  |   | Consolidated |  |  | Canada |         |  | U.S. |   |         | Consolidated | 
|                    |  |                                                |         |      |  |   |              |  |  |        |         | 
|Identifiable assets |  |                                                |         |      |  |   |              |  |  |        |         |  |      |   |         |              |  |   |         |  |  |   |         | 
|Brokerage           |  | $                                              | 163,236 |      |  | $ | 596,018      |  |  | $      | 759,254 |  |      | $ | 176,653 |              |  | $ | 442,517 |  |  | $ | 619,170 | 
|Corporate           |  |                                                | 44,703  |      |  |   | 6,316        |  |  |        | 51,019  |  |      |   | 65,316  |              |  |   | 16,117  |  |  |   | 81,433  | 
|                    |  |                                                |         |      |  |   |              |  |  |        |         |  |      |   |         |              |  |   |         |  |  |   |         | 
|                    |  | $                                              | 207,939 |      |  | $ | 602,334      |  |  | $      | 810,273 |  |      | $ | 241,969 |              |  | $ | 458,634 |  |  | $ | 700,603 | 
|                    |  |                                                |         |      |  |   |              |  |  |        |         |  |      |   |         |              |  |   |         |  |  |   |         | 





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



---



##### Table of Contents



14. Related Party Transactions

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


|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 
|---------------------------------------- |  | ------------- | ----- | ------------- |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                                         |  |               |       |              
|                                         |  | For the three |       | For the nine 
|                                         |  | months ended  |       | months ended 
|                                         |  | September 30, |       | September 30,
|                                         |  |               |       |              
|                                         |  | 2004          |       | 2003          |  | 2004 |       | 2003
|                                         |  |               |       |               |  |      |       |     
|Northbridge Financial Corporation        |  | $             | 4,953 |               |  | $    | 5,469 |      |  | $ | 15,904 |  |  | $ | 12,091 | 
|Crum & Forster Holdings, Inc.            |  |               | 84    |               |  |      | 221   |      |  |   | 443    |  |  |   | 1,052  | 
|Fairfax Inc.                             |  |               | 463   |               |  |      | 1,665 |      |  |   | 3,053  |  |  |   | 5,928  | 
|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  |               | 5,500 |               |  |      | 7,355 |      |  |   | 19,400 |  |  |   | 19,071 | 
|Old Lyme Insurance Company, Ltd (OLIC) |  |               | 1,066 |               |  |      |      |      |  |   | 1,297  |  |  |   |       | 
|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  | $             | 6,566 |               |  | $    | 7,355 |      |  | $ | 20,697 |  |  | $ | 19,071 | 
|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 

The Company had accounts receivable and accounts
payable balances with the above related parties in the amounts
of $3,941 and $11,173 respectively, at September 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 September 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 September 30, 2004 and
December 31, 2003 subordinated convertible debentures of
$35,000 were held by certain subsidiaries of Fairfax.

During the three months and nine months ended
September 30, 2004 and 2003, the Company incurred expenses
related to rental of premises from related parties in the amount
of $738 and $1,614 for 2004 and $560 and $1,556 for the
respective periods in 2003. At September 30, 2004 and
December 31, 2003 the Company also had receivables due from
related parties in the amount of $2,668 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 September 30, 2004 and
December 31, 2003, $1,832 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
September 30, 2004 and December 31, 2003,
respectively, which have a market value of $2,629 and $2,590 as
of September 30, 2004 and December 31, 2003, respectively.

15. 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.





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



---



##### Table of Contents



Net earnings and comprehensive
income

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

|                                                                         |                                                                                                                  |               |       |               |   |      |       |      |   |   |        |       |  |   |        |        |  
|------------------------------------------------------------------------ | ---------------------------------------------------------------------------------------------------------------- | ------------- | ----- | ------------- | - | ---- | ----- | ---- | - | - | ------ | ----- |  | - | ------ | ------ | -
|                                                                         |                                                                                                                  |               |       |              
|                                                                         |                                                                                                                  | For the three |       | For the nine 
|                                                                         |                                                                                                                  | months ended  |       | months ended 
|                                                                         |                                                                                                                  | September 30, |       | September 30,
|                                                                         |                                                                                                                  |               |       |              
|                                                                         |                                                                                                                  | 2004          |       | 2003          |   | 2004 |       | 2003
|                                                                         |                                                                                                                  |               |       |               |   |      |       |     
|Net earnings for the period based on Canadian GAAP                       |                                                                                                                  | $             | 1,146 |               |   | $    | 6,820 |      |   | $ | 22,360 |       |  | $ | 25,833 |       
|Cumulative effect of change in accounting policy
    for put options (2) |                                                                                                                  |               |      |               |   |      | 335   |      |   |   |       |       |  |   | 335    |       
|Adjustment to put option liability (2)                                   |                                                                                                                  |               |      |               |   |      | (65   | )    |   |   |       |       |  |   | (340   | )     
|                                                                         |                                                                                                                  |               |       |               |   |      |       |      |   |   |        |       |  |   |        |       
|Net earnings for the period based on U.S.
    GAAP (3)                   |                                                                                                                  | $             | 1,146 |               |   | $    | 7,090 |      |   | $ | 22,360 |       |  | $ | 25,828 |       
|Other comprehensive income: (4)                                          |                                                                                                                  |               |       |               |   |      |       |      |   |   |        |       |  |   |        |       
|                                                                         | Unrealized gain (loss), net of tax of
    $20  Q3/04, $NIL  Q3/03, $(19) 
    Q3/04 YTD, $22  Q3/03 YTD      |               |       | (32           | ) |      |       | (1   | ) |   |        | 30    |  |   |        | (36    | )
|                                                                         | Reclassification adjustment, net of tax of
    $(2)  Q3/04, $NIL  Q3/03, $(2) 
    Q3/04 YTD, $49  Q3/03 YTD |               |       | 4             |   |      |       |     |   |   |        | 4     |  |   |        | (78    | )
|                                                                         | Foreign currency translation adjustment                                                                          |               |       | 5,474         |   |      |       | 415  |   |   |        | 1,832 |  |   |        | 16,948 |  
|                                                                         |                                                                                                                  |               |       |               |   |      |       |      |   |   |        |       |  |   |        |       
|Comprehensive income based on U.S. GAAP (4)                              |                                                                                                                  | $             | 6,592 |               |   | $    | 7,504 |      |   | $ | 24,226 |       |  | $ | 42,662 |       
|                                                                         |                                                                                                                  |               |       |               |   |      |       |      |   |   |        |       |  |   |        |       
|Basic earnings per share based on U.S. GAAP                              |                                                                                                                  | $             | 0.04  |               |   | $    | 0.24  |      |   | $ | 0.74   |       |  | $ | 0.88   |       
|Diluted earnings per share based on U.S. GAAP                            |                                                                                                                  | $             | 0.04  |               |   | $    | 0.22  |      |   | $ | 0.68   |       |  | $ | 0.81   |       

Shareholders equity

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

|                                                |                                                               |               |         |      |              |   |         |    | 
|----------------------------------------------- | ------------------------------------------------------------- | ------------- | ------- | ---- | ------------ | - | ------- | -- | 
|                                                |                                                               | September 30, |         |      | December 31, |  
|                                                |                                                               | 2004          |         | 2003
|                                                |                                                               |               |         |     
|Shareholders equity based on Canadian GAAP     |                                                               | $             | 372,589 |      |              | $ | 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 |               |         | 131  |              |   |         | 90 | 
|                                                |                                                               |               |         |      |              |   |         |   
|Shareholders equity based on U.S.
    GAAP (3) |                                                               | $             | 371,004 |      |              | $ | 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 REPORTSEPTEMBER 30, 2004 | HUB INTERNATIONAL LIMITED    21



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | The Company issued put options on its shares
    which were issued in connection with the purchase of a business
    in 2001. These put options were relinquished by the holders on
    December 31, 2003. Under Canadian GAAP, changes in the fair
    value of the put options (determined using the Black-Scholes
    model) were recognized in earnings. Under U.S. GAAP the
    fair value of the put options at the date of issuance was
    recognized as a compensation expense using the straight-line
    method over the period from the issue date to their exercise
    date. On July 1, 2003, the Company adopted Statement of
    Financial Accountings Standards (SFAS) No. 150,
    Accounting for Certain Financial Instruments with
    Characteristics of both Liabilities and Equity. As a result
    of the adoption of this standard, the Company changed its
    accounting policy with respect to the put options and reported
    the difference between the estimated fair value of put options
    (determined using the Black-Scholes model) as at July 1,
    2003 and their issue date as a cumulative adjustment to net
    earnings under U.S. GAAP. Changes in the estimated fair
    value of the put options between July 1, 2003 and their
    cancellation on December 31, 2003 were included in
    U.S. GAAP net earnings.
|   
|(3) | The condensed consolidated statements of earnings
    and cash flows for the three months and nine months ended
    September 30, 2004 and 2003 and the condensed consolidated
    balance sheets as at September 30, 2004 and
    December 31, 2003 under U.S. GAAP are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              

|                                                                 |  |               |         |               |  |      |        |      |  |   |         |   |  |   |         |  
|---------------------------------------------------------------- |  | ------------- | ------- | ------------- |  | ---- | ------ | ---- |  | - | ------- | - |  | - | ------- | -
|                                                                 |  |               |         |              
|                                                                 |  | For the three |         | For the nine 
|                                                                 |  | months ended  |         | months ended 
|                                                                 |  | September 30, |         | September 30,
|                                                                 |  |               |         |              
|                                                                 |  | 2004          |         | 2003          |  | 2004 |        | 2003
|                                                                 |  |               |         |               |  |      |        |     
|Condensed consolidated statements of
    earnings:               |  |               |         |               |  |      |        |      |  |   |         |   |  |   |         |  
|Revenue                                                          |  | $             | 94,902  |               |  | $    | 64,671 |      |  | $ | 256,482 |   |  | $ | 207,703 |  
|Net earnings before income taxes                                 |  | $             | 4,101   |               |  | $    | 10,501 |      |  | $ | 37,552  |   |  | $ | 40,026  |  
|Net earnings                                                     |  | $             | 1,146   |               |  | $    | 7,090  |      |  | $ | 22,360  |   |  | $ | 25,828  |  
|Condensed consolidated statements of cash
    flows:             |  |               |         |               |  |      |        |      |  |   |         |   |  |   |         |  
|Cash provided by operating activities                            |  | $             | 15,379  |               |  | $    | 17,870 |      |  | $ | 30,872  |   |  | $ | 43,358  |  
|Cash used in investing activities                                |  | $             | (78,592 | )             |  | $    | (289   | )    |  | $ | (88,786 | ) |  | $ | (15,955 | )
|Cash (used) in provided by financing
    activities              |  | $             | (4,976  | )             |  | $    | (1,758 | )    |  | $ | 52,741  |   |  | $ | 8,677   |  
|Effect of exchange rate changes on cash and cash
    equivalents |  | $             | 1,770   |               |  | $    | 160    |      |  | $ | 1,229   |   |  | $ | 2,339   |  

|                                           |  |               |         |              |  |   |         | 
|------------------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | 
|                                           |  | September 30, |         | December 31,
|                                           |  | 2004          |         | 2003        
|                                           |  |               |         |             
|Condensed consolidated balance
    sheets: |  |               |         |              |  |   |         | 
|Total current assets                       |  | $             | 304,792 |              |  | $ | 314,396 | 
|Total assets (5)                           |  | $             | 807,126 |              |  | $ | 696,440 | 
|Total current liabilities                  |  | $             | 237,815 |              |  | $ | 233,448 | 
|Total liabilities (5)                      |  | $             | 436,122 |              |  | $ | 355,276 | 
|Total shareholders equity                 |  | $             | 371,004 |              |  | $ | 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.





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



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|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(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
    $1.7 million, is not recognized in the Companys
    Canadian GAAP financial statements. Under U.S. 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.

Pro forma results of Talbot
acquisition

The following unaudited pro forma condensed
consolidated statement of earnings information for the Company
and Talbot have been prepared as if the acquisition of Talbot
described in Note 5 occurred on January 1, 2003 and
reflect certain pro forma adjustments.

|                                                          |         |               |        |               |  |      |        |      |  |   |         |      |  |   |         |      | 
|--------------------------------------------------------- | ------- | ------------- | ------ | ------------- |  | ---- | ------ | ---- |  | - | ------- | ---- |  | - | ------- | ---- | 
|                                                          |         |               |        |              
|                                                          |         | For the three |        | For the nine 
|                                                          |         | months ended  |        | months ended 
|                                                          |         | September 30, |        | September 30,
|                                                          |         |               |        |              
|                                                          |         | 2004          |        | 2003          |  | 2004 |        | 2003
|                                                          |         |               |        |               |  |      |        |     
|Revenue                                                   |         | $             | 94,902 |               |  | $    | 89,123 |      |  | $ | 313,038 |      |  | $ | 283,727 |     
|Net income                                                |         | $             | 4,093  |               |  | $    | 500    |      |  | $ | 20,775  |      |  | $ | 9,958   |     
|Earnings per share                                        |         |               |        |               |  |      |        |      |  |   |         |      |  |   |         |     
|                                                          | Basic   |               | $      | 0.14          |  |      | $      | 0.02 |  |   | $       | 0.69 |  |   | $       | 0.34 | 
|                                                          | Diluted |               | $      | 0.12          |  |      | $      | 0.02 |  |   | $       | 0.61 |  |   | $       | 0.32 | 
|Weighted average shares outstanding 
    Basic (000s)   |         |               | 30,292 |               |  |      | 29,327 |      |  |   | 30,192  |      |  |   | 29,326  |     
|Weighted average shares outstanding 
    Diluted (000s) |         |               | 34,449 |               |  |      | 31,578 |      |  |   | 36,825  |      |  |   | 31,473  |     





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



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##### 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 15
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 and expense control will be instrumental in
our margin expansion efforts.

As of September 30, 2004, our operations
included 14 regional hub brokerages  nine
in the United States (including three from Talbot Financial
Corporation, acquired July 1, 2004) and five in
Canada  and nearly 200 offices staffed by
approximately 3,200 people. Our strategic plan calls for the
addition of approximately eight 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.

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
September 30, 2004, senior managers of the company and its
hubs owned approximately 2,160,733 shares, or 7.1%, of shares
outstanding, while all employees as a group held approximately
7,133,249 shares, or 23.5%, of total shares outstanding.

We have acquired 100 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, U.S. revenue has grown to 70% of our total in
the third quarter 2004 from 26% in the third quarter 2000,
reflecting primarily acquisition growth and 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.

In accordance with our strategic plan, on
July 1, 2004 we purchased Talbot Financial Corporation,
(Talbot) based in New Mexico. 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





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



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##### Table of Contents



September 1, 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 are 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 financial performance projected
for 2004 and further improvements anticipated through 2006, we
anticipate total earnout payments in the $45-$50 million
range. During the third quarter 2004 we expensed
$6.9 million of non-cash stock based compensation related
to this 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
overall insurance rates, commissions and availability or costs
of individual types of coverage, which in turn may affect our
revenue and profitability 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.

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, although rates for certain types of coverage continued
to increase. During the third quarter of 2004, however,
insurance rates began falling at a much more rapid pace than
during the first six months of the year. For many types of
coverage, the market place saw a decline in rates during the
quarter.

For us, as for other brokers, falling rates can
present both positive and negative effects. Falling premiums
usually yield weaker commission levels, if the insurance buyer
maintains its coverage levels. However, many insurance buyers
will respond to falling rates by increasing total coverage,
often by lowering deductibles, increasing limits of coverage, or
by adding new risks to those already insured. Although insurance
rates fell during the third quarter 2004 we have not yet
experienced any significant positive reactions from insurance
buyers, although we expect we may in the months ahead. In
addition, we are currently in a weak economic environment which
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.

Results of Operations

Three months ended September 30, 2004
compared with three months ended

September 30, 2003


Revenue

Our total revenue increased $30.2 million,
or 47%, to $94.9 million for the quarter. Of this increase,
$28.8 million was attributable to acquisitions and
$1.4 million was attributable to organic growth.

A significant portion of our growth in the third
quarter 2004 was the result of brokerages acquired in the
quarter as well as the previous twelve months. During the
third quarter of 2004, we acquired three insurance brokerages,
including Talbot Financial Corporation, and divested of one
small brokerage in Canada. Total annual revenue of these
acquired brokerages for 2003 was $115 million. As a result
of these acquisitions and 2% organic growth, we reported a 47%
increase in revenue to $94.9 million in the third quarter
2004. Essentially all of our organic growth of 2% resulted from
the strengthening of the Canadian dollar in the third quarter of
2004.





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



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##### Table of Contents



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

|                               |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |       | 
|------------------------------ | -------------------------------- | ------------- | ------ | --------- |  | --------- | ------ | -------------- |  | ------------- | ------ | --------- | - | --------- | ----- | ----- |  | - | ------- | ---- | - | - | ------ | ---- | - |  | ----- | ----- | 
|                               |                                  |               |        |           |  |           |        |                |  |               |        |          
|                               |                                  | Revenue       |        |           |  |           |        |                |  |               |        |          
|                               |                                  |               |        |           |  |           |        |                |  |               |        |          
|                               |                                  |               |        |           |  |           |        |                |  |               |        |          
|                               |                                  | Third 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              |                                  | $             | 90,269 |           |  | $         | 60,772 |                |  | $             | 29,497 |           |   |           | 49%   |       |  | $ | (27,534 | )    |   | $ | 1,963  |      |   |  | 3%    |      
|Contingent                     |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|                               | Commissions and Volume Overrides |               |        | 1,865     |  |           |        | 1,884          |  |               |        | (19       | ) |           |       | (1)%  |  |   |         | (465 | ) |   |        | (484 | ) |  |       | (26)% | 
|Other Income                   |                                  |               | 2,768  |           |  |           | 2,015  |                |  |               | 753    |           |   |           | 37%   |       |  |   | (803    | )    |   |   | (50    | )    |   |  | (2)%  |      
|                               |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|Total                          |                                  | $             | 94,902 |           |  | $         | 64,671 |                |  | $             | 30,231 |           |   |           | 47%   |       |  | $ | (28,802 | )    |   | $ | 1,429  |      |   |  | 2%    |      
|                               |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|U.S.                           |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|Commission Income              |                                  | $             | 62,658 |           |  | $         | 35,031 |                |  | $             | 27,627 |           |   |           | 79%   |       |  | $ | (28,305 | )    |   | $ | (678   | )    |   |  | (2)%  |      
|Contingent                     |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|                               | Commissions and Volume Overrides |               |        | 1,605     |  |           |        | 1,580          |  |               |        | 25        |   |           |       | 2%    |  |   |         | (466 | ) |   |        | (441 | ) |  |       | (28)% | 
|Other Income                   |                                  |               | 2,229  |           |  |           | 1,369  |                |  |               | 860    |           |   |           | 63%   |       |  |   | (834    | )    |   |   | 26     |      |   |  | 2%    |      
|                               |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|Total                          |                                  | $             | 66,492 |           |  | $         | 37,980 |                |  | $             | 28,512 |           |   |           | 75%   |       |  | $ | (29,605 | )    |   | $ | (1,093 | )    |   |  | (3)%  |      
|                               |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|Canada                         |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|Commission Income              |                                  | $             | 27,611 |           |  | $         | 25,741 |                |  | $             | 1,870  |           |   |           | 7%    |       |  | $ | 771     |      |   | $ | 2,641  |      |   |  | 10%   |      
|Contingent                     |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|                               | Commissions and Volume Overrides |               |        | 260       |  |           |        | 304            |  |               |        | (44       | ) |           |       | (14)% |  |   |         | 1    |   |   |        | (43  | ) |  |       | (14)% | 
|Other Income                   |                                  |               | 539    |           |  |           | 646    |                |  |               | (107   | )         |   |           | (17)% |       |  |   | 31      |      |   |   | (76    | )    |   |  | (12)% |      
|                               |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      
|Total                          |                                  | $             | 28,410 |           |  | $         | 26,691 |                |  | $             | 1,719  |           |   |           | 6%    |       |  | $ | 803     |      |   | $ | 2,522  |      |   |  | 9%    |      
|                               |                                  |               |        |           |  |           |        |                |  |               |        |           |   |           |       |       |  |   |         |      |   |   |        |      |   |  |       |      

Of the $30.2 million in new revenue we
reported, $28.8 million, or 95%, reflected growth through
acquisition, while $1.4 million, or 5%, resulted from
organic growth. By comparison, acquired brokerages added
$9.8 million, or 65%, of third quarter 2003 sales growth,
while organic growth contributed $5.4 million, or 35%, of our
revenue increases. The acquisition of Talbot will have a
significant impact on the percentage of growth obtained from
acquisitions for the next nine months.

Commission income, which usually ranges from 5%
to 20% of the premium charged by insurers, provided
approximately 95% of our revenue base in the third 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 primarily of
    premium finance fees, fees charged to clients in lieu of
    commissions and interest income, including income earned while
    we hold client premiums on behalf of insurance companies.

The payment of contingent commissions and volume
overrides by insurance companies to insurance brokers like us is
the subject of an investigation by the Attorney General of the
State of New York. Such compensation agreements, also known as
contingent agreements, between insurance companies and brokers
are a long-standing and common practice within the insurance
industry. We have disclosed our receipt of such payments in our
public filings, our website and certain direct communications
with clients. Several state and provincial authorities in
jurisdictions in which we operate have also commenced
investigations of the structure of sales commissions paid by
insurance companies to insurance brokers and other relationships
between insurance companies and insurance brokers. On
November 8, 2004, our Illinois based subsidiary received a
subpoena from the Department of Financial and Professional
Regulation, Division of Insurance, of the State of Illinois. We
are reviewing that subpoena. On November 9, 2004, we
received a request from the Texas Department of Insurance
seeking information on





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



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##### Table of Contents



premiums earned on risks placed in that state.
The Florida Attorney General also very recently announced the
commencement of an investigation. We expect that we may receive
a subpoena from the Florida Attorney General in the near future.
While it is not possible to predict the outcome of these
investigations, the cost of cooperating is significant, and if
such compensation agreements were to be restricted or no longer
permitted, our revenue and profitability may be materially
adversely affected.


In addition to the variations that can result
from changes in organic growth rates, acquisitions and other
variables related to operations, results for the third quarters
2004 and 2003 included a number of factors that complicate
direct comparisons. To increase investor understanding, the
following chart shows the net earnings and diluted earnings per
share impact of specific items during the third quarter 2004 and
2003.

|                                                                                |                                                |              |       |             |   |   |      |       |  
|------------------------------------------------------------------------------- | ---------------------------------------------- | ------------ | ----- | ----------- | - | - | ---- | ----- | -
|(in thousands of U.S. dollars, except per share amounts)                        |                                                | Net Earnings |       | Diluted EPS
|                                                                                |                                                |              |       |            
|Three months ended September 30, 2004
    reported net earnings (Canadian GAAP) |                                                | $            | 1,146 |             |   | $ | 0.04 |      
|                                                                                | Impact of foreign exchange                     |              | $     | (404        | ) |   | $    | (0.01 | )
|                                                                                | Non-cash stock based compensation 
    Talbot |              | $     | 6,889       |   |   | $    | 0.20  |  
|Three months ended September 30, 2003
    reported net earnings (Canadian GAAP) |                                                | $            | 6,820 |             |   | $ | 0.22 |      
|                                                                                | Impact of foreign exchange                     |              | $     | (518        | ) |   | $    | (0.02 | )
|                                                                                | Proceeds from life insurance                   |              | $     | (1,000      | ) |   | $    | (0.03 | )

As shown above, we benefited slightly less from a
stronger Canadian dollar in the third quarter 2004 as compared
to 2003. The impact of foreign exchange on third quarter 2004
earnings generated an increase of $0.4 million as compared
to an increase of $0.5 million in the third quarter 2003.
In the third quarter 2004, non-cash stock based compensation
related to the Talbot acquisition generated a decrease in net
earnings of $6.9 million or $0.20 per diluted 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 third
quarter 2004, the strength of the Canadian dollar versus the
U.S. dollar had a less positive impact on our results than
in the third 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 75% to $66.5 million,
or 70% of consolidated revenue, in the third quarter 2004, due
to acquisitions. Acquisitions added $29.6 million to
revenue, or 104% of the increase, while organic growth was
negative $1.1 million, or 4% of revenue growth. Our U.S.
organic growth rate of negative 3% compared with a positive 1%
in the third quarter 2003, reflecting the rapid softening of
premium rates for property and casualty coverage in the third
quarter of 2004. Core commission income increased 79% over 2003,
while contingent commissions increased 2%.

Canadian
Results

Canadian revenue grew 6% to $28.4 million,
or 30% of consolidated revenue, in the third quarter 2004,
primarily as a result of strong organic growth and a
strengthening of the Canadian dollar against the U.S. dollar.
Canadian brokerages posted organic growth of 9%, of which five
percentage points reflected a stronger Canadian dollar. Net
dispositions lowered revenue by $0.8 million, reflecting the
sale of small fold-in operations acquired in prior years.





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



---



##### Table of Contents



Compensation Expense

Cash compensation in the third quarter 2004
increased 56% to $57.6 million from $36.9 million,
while non-cash stock based compensation grew 515% to
$8.3 million from $1.4 million in the third quarter
2003. As a percentage of revenue, cash compensation expense
increased to 61% from 57% a year earlier due primarily to
negative organic growth in the United States and a relatively
higher level of compensation cost as a percentage of revenue in
the Talbot organization. The increase in non-cash stock based
compensation expense reflects $6.9 million, or $0.20 per
diluted share, related to the amortization of the estimated
earnout payable to management of Talbot over the next three
years and 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
September 30,


($ in thousands)


|                                  |  |      |        |      |  |          |        |         |  |      |      |  |  |  |     |  |  |  |     | 
|--------------------------------- |  | ---- | ------ | ---- |  | -------- | ------ | ------- |  | ---- | ---- |  |  |  | --- |  |  |  | --- | 
|                                  |  |      |        |      |  |          |        |        
|                                  |  |      |        |      |  |          |        | % of   
|                                  |  |      |        |      |  |          |        | Revenue
|                                  |  |      |        |      |  |          |        |        
|                                  |  | 2004 |        | 2003 |  | % Change |        | 2004    |  | 2003
|                                  |  |      |        |      |  |          |        |         |  |     
|Compensation (cash)               |  | $    | 57,593 |      |  | $        | 36,855 |         |  |      | 56%  |  |  |  | 61% |  |  |  | 57% | 
|Non-cash stock based compensation |  |      | 8,346  |      |  |          | 1,355  |         |  |      | 515% |  |  |  | 8%  |  |  |  | 2%  | 
|                                  |  |      |        |      |  |          |        |         |  |      |      |  |  |  |     |  |  |  |     | 
|Total                             |  | $    | 65,939 |      |  | $        | 38,210 |         |  |      | 73%  |  |  |  | 69% |  |  |  | 59% | 
|                                  |  |      |        |      |  |          |        |         |  |      |      |  |  |  |     |  |  |  |     | 

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.

The Company estimates the non-cash stock based
compensation expense for 2004 through 2009 will be:

|                                                          |  |      |        |      |  |      |        |      |  |      |        |      |  |   |       |  |  |   |       |  |  |   |       | 
|--------------------------------------------------------- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | ---- | ------ | ---- |  | - | ----- |  |  | - | ----- |  |  | - | ----- | 
|Year ended December 31,                                   |  | 2004 |        | 2005 |  | 2006 |        | 2007 |  | 2008 |        | 2009
|                                                          |  |      |        |      |  |      |        |      |  |      |        |     
|Stock options granted June 2002                           |  | $    | 1,945  |      |  | $    | 861    |      |  | $    |       |      |  | $ |      |  |  | $ |      |  |  | $ |      | 
|Stock options granted February 2003                       |  |      | 427    |      |  |      | 393    |      |  |      |       |      |  |   |      |  |  |   |      |  |  |   |      | 
|Stock based compensation granted for 2003 bonuses         |  |      | 2,390  |      |  |      | 2,376  |      |  |      | 2,290  |      |  |   | 2,200 |  |  |   | 2,200 |  |  |   | 2,200 | 
|Stock based compensation regarding Talbot
    acquisition |  |      | 13,786 |      |  |      | 21,669 |      |  |      | 10,772 |      |  |   | 1,445 |  |  |   |      |  |  |   |      | 
|Restricted Share Units                                    |  |      | 1,566  |      |  |      | 1,560  |      |  |      | 1,553  |      |  |   | 1,517 |  |  |   | 1,517 |  |  |   | 255   | 
|                                                          |  |      |        |      |  |      |        |      |  |      |        |      |  |   |       |  |  |   |       |  |  |   |       | 
|                                                          |  | $    | 20,114 |      |  | $    | 26,859 |      |  | $    | 14,615 |      |  | $ | 5,162 |  |  | $ | 3,717 |  |  | $ | 2,455 | 
|                                                          |  |      |        |      |  |      |        |      |  |      |        |      |  |   |       |  |  |   |       |  |  |   |       | 

In total, as of September 30, 2004, we had
issued and outstanding approximately 1.5 million stock
options at a weighted average exercise price of $15.47. Our
closing share price on the New York Stock Exchange was $18.08 on
September 30, 2004.

Selling, Occupancy and Administration
Expense

Selling, occupancy and administration expense
increased 41% to $19.6 million in the third quarter 2004 as
compared to 2003. As a percentage of revenue, selling, occupancy
and administration expense decreased slightly to 21% versus 22%,
due to expense control.





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



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##### Table of Contents



Depreciation

Depreciation increased 26% to $2.0 million
in the third quarter 2004 compared to 2003. As a percentage of
revenue, depreciation remained constant at 2%.

Interest Expense

Interest expense increased 84% to
$2.3 million from $1.3 million in the third quarter
2004 as compared to 2003, primarily as a result of higher debt
levels associated with the acquisition of Talbot. The benefits
of an interest rate swap that was entered into during the third
quarter of 2003  which effectively converted
$65 million of fixed interest rate senior notes into
floating rate instruments  was $0.4 million in
the third quarter 2004 versus $0.7 million in the third
quarter of 2003.

Intangible Asset Amortization

Intangible asset amortization increased 127% to
$1.9 million in the third quarter 2004. As a percentage of
revenue this expense increased to 2% from 1% in the third
quarter 2003, primarily due to the amortization of intangible
assets acquired as a result of acquisitions during 2004.

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

The third quarter 2004 included gains of
$1.0 million on the sale of investments and assets and
shares of certain brokerages compared with a gain of
$0.3 million in the third quarter 2003.

Provision for Income Tax Expense

Our effective tax rate increased in the third
quarter 2004 to 72.1% from 32.1% due primarily to non-cash stock
based compensation expense related to the acquisition of Talbot
which is not deductible for tax purposes.

Net Earnings and Earnings Per Share

Our net earnings decreased 83% to
$1.1 million in the third quarter 2004, due to
$6.9 million of non-cash stock based compensation
associated with the acquisition of Talbot. As a percentage of
revenue, net earnings decreased to 1% from 11% in the third
quarter 2003 and diluted earnings per share decreased 82% to
$0.04.

As shown in the table on page 27, net
earnings increased $0.4 million or $0.01 per diluted share
as a result of the Canadian dollar strengthening versus the U.S.
dollar in the third quarter 2004. In the third quarter 2003, net
earnings increased $0.5 million or $0.02 per diluted share
due to foreign exchange rates and an additional
$1.0 million or $0.03 per diluted share due to life
insurance proceeds received. The table also shows the impact of
$6.9 million or $0.20 per diluted share of non-cash stock
based compensation relating to the Talbot acquisition.

Results of Operations

Nine months ended September 30, 2004
compared with nine months ended

September 30, 2003


Revenue

Revenue grew 23% to $256.5 million in the
first nine months 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.





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



---



##### Table of Contents



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

|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |     | 
|------------------------------------- | -------------------------------- | ---------- | ------- | --------- |  | --------- | ------- | -------------- |  | ------------- | ------ | --------- |  | --------- | ---- | --- |  | - | ------- | ---- | - | - | ------ | ----- |  |  | --- | --- | 
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |          
|                                      |                                  | Revenue    |         |           |  |           |         |                |  |               |        |          
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |          
|                                      |                                  |            |         |           |  |           |         | Adjustment     |  |               |        |          
|                                      |                                  | First Nine |         |           |  |           |         | for            |  |               |        |          
|(in thousands of U.S. dollars, except |                                  | Months     |         | Total Net |  | Total Net |         | (Acquisitions) |  | Organic       |        | Organic  
|percentages)                          |                                  | 2004       |         | 2003      |  | Change($) |         | Growth(%)      |  | and Disposals |        | Growth($) |  | Growth(%)
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |          
|Total                                 |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|Commission Income                     |                                  | $          | 228,858 |           |  | $         | 184,755 |                |  | $             | 44,103 |           |  |           | 24%  |     |  | $ | (32,238 | )    |   | $ | 11,865 |       |  |  | 6%  |    
|Contingent                            |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|                                      | Commissions and Volume Overrides |            |         | 19,940    |  |           |         | 17,150         |  |               |        | 2,790     |  |           |      | 16% |  |   |         | (530 | ) |   |        | 2,260 |  |  |     | 13% | 
|Other Income                          |                                  |            | 7,684   |           |  |           | 5,798   |                |  |               | 1,886  |           |  |           | 33%  |     |  |   | (1,484  | )    |   |   | 402    |       |  |  | 7%  |    
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|Total                                 |                                  | $          | 256,482 |           |  | $         | 207,703 |                |  | $             | 48,779 |           |  |           | 23%  |     |  | $ | (34,252 | )    |   | $ | 14,527 |       |  |  | 7%  |    
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|U.S.                                  |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|Commission Income                     |                                  | $          | 146,593 |           |  | $         | 111,324 |                |  | $             | 35,269 |           |  |           | 32%  |     |  | $ | (33,396 | )    |   | $ | 1,873  |       |  |  | 2%  |    
|Contingent                            |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|                                      | Commissions and Volume Overrides |            |         | 13,437    |  |           |         | 12,575         |  |               |        | 862       |  |           |      | 7%  |  |   |         | (531 | ) |   |        | 331   |  |  |     | 3%  | 
|Other Income                          |                                  |            | 5,948   |           |  |           | 4,032   |                |  |               | 1,916  |           |  |           | 47%  |     |  |   | (1,529  | )    |   |   | 387    |       |  |  | 10% |    
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|Total                                 |                                  | $          | 165,978 |           |  | $         | 127,931 |                |  | $             | 38,047 |           |  |           | 30%  |     |  | $ | (35,456 | )    |   | $ | 2,591  |       |  |  | 2%  |    
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|Canada                                |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|Commission Income                     |                                  | $          | 82,265  |           |  | $         | 73,431  |                |  | $             | 8,834  |           |  |           | 12%  |     |  | $ | 1,158   |      |   | $ | 9,992  |       |  |  | 14% |    
|Contingent                            |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|                                      | Commissions and Volume Overrides |            |         | 6,503     |  |           |         | 4,575          |  |               |        | 1,928     |  |           |      | 42% |  |   |         | 1    |   |   |        | 1,929 |  |  |     | 42% | 
|Other Income                          |                                  |            | 1,736   |           |  |           | 1,766   |                |  |               | (30    | )         |  |           | (2)% |     |  |   | 45      |      |   |   | 15     |       |  |  | 1%  |    
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    
|Total                                 |                                  | $          | 90,504  |           |  | $         | 79,772  |                |  | $             | 10,732 |           |  |           | 13%  |     |  | $ | 1,204   |      |   | $ | 11,936 |       |  |  | 15% |    
|                                      |                                  |            |         |           |  |           |         |                |  |               |        |           |  |           |      |     |  |   |         |      |   |   |        |       |  |  |     |    

Of the $48.8 million in new revenue we
reported, $34.3 million, or 70%, reflected growth through
acquisition, while $14.5 million, or 30%, resulted from
organic growth. By comparison, acquired brokerages added
$31.1 million, or 61%, of growth in the first nine months
of 2003, while organic growth contributed $20.3 million, or
39%, of our revenue increases. The acquisition of Talbot will
have a significant impact on the percentage of our growth from
acquisitions for the next nine months. Organic growth was 7% in
the first nine months of 2004, including the impact of foreign
exchange rate changes between the U.S. and Canadian dollars. In
the first nine months, the rise of the Canadian dollar versus
the U.S. dollar contributed three percentage points of our 7%
growth rates in revenue.

Commission income, which usually ranges from 5%
to 20% of the premium charged by insurers, provided
approximately 89% of our revenue base in the first nine months
2004. These core commissions represent a lower
percentage of total revenue than is the norm for a full year,
because we typically earn the majority of our contingent
commissions and volume overrides early in the year. For the year
ended December 31, 2003, commission income provided
approximately 91% of our revenue base. 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 primarily of
    premium finance fees, fees charged to clients in lieu of
    commissions and interest income, including income earned while
    we hold client premiums on behalf of insurance companies.

See our discussion of recent developments
regarding compensation arrangements under
 Three months ended September 30, 2004
compared with three months ended September 30,
2003  Revenue.

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





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



---



##### Table of Contents



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


|                                                                               |                                                          |              |        |             |   |   |      |       |  
|------------------------------------------------------------------------------ | -------------------------------------------------------- | ------------ | ------ | ----------- | - | - | ---- | ----- | -
|(in thousands of U.S. dollars, except per share amounts)                       |                                                          | Net Earnings |        | Diluted EPS
|                                                                               |                                                          |              |        |            
|Nine months ended September 30, 2004
    reported net earnings (Canadian GAAP) |                                                          | $            | 22,360 |             |   | $ | 0.68 |      
|                                                                               | Impact of foreign exchange                               |              | $      | (1,235      | ) |   | $    | (0.04 | )
|                                                                               | Impact of write-off of trademarks                        |              | $      | 1,656       |   |   | $    | 0.05  |  
|                                                                               | Impact of non-cash stock based
    compensation  Talbot |              | $      | 6,889       |   |   | $    | 0.20  |  
|Nine months ended September 30, 2003
    reported net earnings (Canadian GAAP) |                                                          | $            | 25,833 |             |   | $ | 0.81 |      
|                                                                               | Impact of foreign exchange                               |              | $      | (1,229      | ) |   | $    | (0.04 | )
|                                                                               | Life insurance proceeds                                  |              | $      | (1,000      | ) |   | $    | (0.03 | )

As shown above, the impact of foreign exchange in
the first nine months 2004 as compared to 2003 was constant. In
2004, we wrote off $1.7 million (after tax) of intangible
assets related to trademarks as part of our corporate branding
initiative and recorded $6.9 million of non-cash
compensation related to the Talbot acquisition.

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
nine months 2004, the strength of the Canadian dollar versus the
U.S. dollar had the same impact on our results as it did in the
first nine months 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 30% to $166 million, or
65% of consolidated revenue, in the first nine months 2004 as
compared to 2003, due to both operations acquired in the prior
12 months and organic growth. Acquisitions added
$35.5 million to revenue  93% of the increase
while organic growth provided $2.6 million, or 7% of
revenue growth. Our U.S. operations posted an organic growth
rate of 2% in the first nine months 2004, a 67% decrease from 6%
in the first nine months 2003, due to declining insurance rates
throughout the period. Core commission income increased 32%,
while contingent commissions and volume overrides grew 7%.

During the first nine months of 2004, the U.S.
market experienced some softening of premium rates for property
and casualty coverage. However, insurance rates decreased much
more significantly in the third quarter 2004. 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 13% to $90.5 million,
or 35% of consolidated revenue, in the first nine months 2004 as
compared to 2003, primarily as a result of organic growth, along
with a strengthening of the Canadian dollar against the U.S.
dollar. Canadian brokerages posted organic growth of 15%, of
which eight percentage points reflected a stronger Canadian
dollar. Net dispositions lowered revenue by $1.2 million
reflecting the sale of a few small operations acquired in prior
years. Canadian premium rates fell significantly in the third
quarter 2004. Canadian operations benefited strongly from an
increase in contingent commissions and volume overrides, which
grew 42% in the first nine months 2004, versus a 27% growth rate
in first nine months 2003. The reason for this increase was the
same as in the United States.





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Compensation Expense

Cash compensation expense for the nine months
ended September 30, 2004 increased 23% to
$140.3 million from $113.7 million, while non-cash
stock based compensation grew 226% to $11.7 million from
$3.6 million in the first nine months 2003. As a percentage
of revenue, cash compensation expense remained constant at 55%,
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, offset by the impact of
negative organic growth in the United States in the third
quarter.

Compensation Comparison

For the nine months ended
September 30,


($ in thousands)


|                                  |  |      |         |      |  |         |         |              |  |      |      |  |  |  |     |  |  |  |     | 
|--------------------------------- |  | ---- | ------- | ---- |  | ------- | ------- | ------------ |  | ---- | ---- |  |  |  | --- |  |  |  | --- | 
|                                  |  |      |         |      |  |         |         |             
|                                  |  |      |         |      |  |         |         | % of Revenue
|                                  |  |      |         |      |  |         |         |             
|                                  |  | 2004 |         | 2003 |  | %Change |         | 2004         |  | 2003
|                                  |  |      |         |      |  |         |         |              |  |     
|Compensation (cash)               |  | $    | 140,344 |      |  | $       | 113,744 |              |  |      | 23%  |  |  |  | 55% |  |  |  | 55% | 
|Non-cash stock based compensation |  |      | 11,661  |      |  |         | 3,575   |              |  |      | 226% |  |  |  | 4%  |  |  |  | 1%  | 
|                                  |  |      |         |      |  |         |         |              |  |      |      |  |  |  |     |  |  |  |     | 
|Total                             |  | $    | 152,005 |      |  | $       | 117,319 |              |  |      | 30%  |  |  |  | 59% |  |  |  | 56% | 
|                                  |  |      |         |      |  |         |         |              |  |      |      |  |  |  |     |  |  |  |     | 

Our non-cash stock based compensation includes
stock options and restricted share units for senior employees as
well as the amortization of $6.9 million, or $0.20 per
diluted share, of non-cash stock based compensation related to
the estimated earnout due to management of Talbot over the next
three years. 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 25% to $51.3 million in the first nine months
2004 as compared to 2003. As a percentage of revenue, selling,
occupancy and administration expense remained constant at 20%.

Depreciation

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

Interest Expense

Interest expense increased 37% to
$5.7 million from $4.2 million in the first nine
months 2004, primarily as a result of higher debt levels
incurred in the Talbot acquisition during the third quarter. The
benefits of an interest rate swap that was entered into during
the third quarter of 2003 which effectively converted
$65 million of fixed interest rate senior notes into
floating rate instruments, were $1.1 million in the first
nine months 2004 and $0.7 for the same period during 2003.

Intangible Asset Amortization

Intangible asset amortization increased 51% to
$3.6 million in the first nine months 2004 as a result of
acquisitions. As a percentage of revenue, this expense remained
unchanged at 1%.





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

The nine months ended September 30, 2004
included gains of $1.5 million on the sale of investments
and assets and shares of certain brokerages compared with a gain
of $0.3 million in the nine months ended September 30,
2003.

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 identity 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 changed their names and we
recognized a non-cash pre-tax expense of approximately
$2.6 million related to the write-off of trademarks.

Provision for Income Tax Expense

Our effective tax rate increased in the first
nine months 2004 to 40.5% from 35.3% due primarily to non-cash
stock based compensation expense related to the acquisition of
Talbot which is not deductible for tax purposes.

Net Earnings and Earnings Per Share

Our net earnings decreased 13% to
$22.4 million in the first nine months 2004, primarily as a
result of non-cash stock based compensation expense related to
Talbot. Accordingly, as a percentage of revenue, net earnings
decreased to 9% in the first nine months 2004 compared to 12% in
the first nine months of 2003. Diluted earnings per share also
decreased 16% to $0.68.

As shown in the table on page 31, net
earnings increased $1.2 million or $0.04 per diluted share,
due to the strengthening Canadian dollar versus the U.S. dollar
and decreased $6.9 million or $0.20 per diluted share as a
result of non-cash stock based compensation, relating to the
Talbot acquisition. Also in the first nine months 2004, diluted
earnings per share decreased $0.05 due to the write-off of
trademarks. In the first nine months of 2003, net earnings
increased $1.2 million from foreign exchange rates and
$1.0 million from life insurance proceeds.

Cash Flow, Liquidity and Capital
Resources

As of September 30, 2004, we had cash and
cash equivalents of $78.1 million, a decrease of 5%, from
$82.1 million as of December 31, 2003. Operating
activities generated $30.9 million of cash in the nine
months ended September 30, 2004 compared to $43.4 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, $88.8 million of cash was
used in investing activities, primarily for the purchase of
subsidiaries and acquisitions of property and equipment compared
to $16.0 million in 2003. Also in 2004, $52.7 million
of cash was generated by financing activities, primarily
resulting from long-term debt advances, compared to
$8.7 million generated in the first nine months 2003. In
2004, the effect of exchange rate changes on cash and cash
equivalents was an increase of $1.2 million compared to an
increase of $2.3 million in 2003. Net debt, defined as
long-term debt ($154.9 million) and subordinated
convertible debentures ($35.0 million) less non-trust cash
(cash and cash equivalents of $78.1 million) as of
September 30, 2004, was $111.8 million compared with
$31.7 million as of December 31, 2003, primarily as a
result of additional long-term debt associated with the
acquisition of Talbot.

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 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.





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



|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|--- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(1) | Revolving U.S. dollar LIBOR loan  This
    unsecured facility totals $75 million and bears interest at a
    floating rate of prime plus 1% or 112.5 basis points above
    LIBOR, which were 1.84% and 1.12% at September 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
    September 30, 2004 and December 31, 2003,
    respectively. We were in compliance with all financial covenants
    governing this facility as of September 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 basis points. Borrowings
    under this facility are repayable on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

As of September 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. 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. We incurred approximately
$0.7 million in fees and expenses related to the offering
of these notes, which were capitalized and are being amortized
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 our 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
September 30, 2004, we estimated the fair value of the swap
was $1.7 million, which is not recognized in our financial
statements. Accordingly, $1.7 million is the estimated
amount that we would need to pay to terminate the swap as of
September 30, 2004.

Also at September 30, 2004 we had
outstanding a $7.5 million term loan from an insurance
carrier with which we place insurance. 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 September 30, 2004 with $17.2 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, $10.4 million is secured by liens on
certain assets of our subsidiaries.

Also at September 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 had converted all of the
Fairfax notes, Fairfax would have owned approximately 32% of our
total outstanding common shares as of September 30, 2004,
versus the 26% of outstanding shares which it held on that date.

At September 30, 2004, our cash position
included approximately $56.1 million deployed as working
capital at the brokerage level and approximately
$22.0 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





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##### Table of Contents



year. However, we intend to use common shares as
consideration 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, which is not a 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 (debt as a
percentage of debt and shareholders equity) increased to
34% at September 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
September 30, 2004 our ratio of debt to capitalization
would have been 36%, 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
September 30, 2004, we were in compliance with the
financial covenants under all of our debt instruments.

Contractual obligations

The table below summarizes our contractual
obligations and commercial commitments as of September 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                      |  | $154,307 |  | $      |  |           |  | $     | 6,290  |       |  | $       | 15,313 |  |  | $ | 85,308  |  |  | $ | 47,396 | 
|Capital lease obligations           |  | 567      |  |        |  |           |  |       | 312    |       |  |         | 255    |  |  |   |        |  |  |   |       | 
|Operating lease obligations         |  | 78,700   |  |        |  |           |  |       | 16,074 |       |  |         | 26,427 |  |  |   | 19,362  |  |  |   | 16,837 | 
|Executive share purchase plan loans |  | 500      |  |        |  |           |  |       |       |       |  |         |       |  |  |   | 500     |  |  |   |       | 
|                                    |  |          |  |        |   |           |  |       |        |       |  |         |        |  |  |   |         |  |  |   |        | 
|Total                               |  | $234,074 |  | $      |  |           |  | $     | 22,676 |       |  | $       | 41,995 |  |  | $ | 105,170 |  |  | $ | 64,233 | 
|                                    |  |          |  |        |   |           |  |       |        |       |  |         |        |  |  |   |         |  |  |   |        | 

Acquisitions

In connection with the acquisition of Talbot on
July 1, 2004, we will purchase Talbot managements
special shares of Satellite Acquisition Corp. over the next
three years, using a combination of both our restricted and
unrestricted common shares. Payments will be made in on
September 1, 2005, March 31, 2006 and March 31,
2007 based upon Talbots earnings for the 12-month periods
ending December 31, 2004, 2005 and 2006, respectively. We
will record the contingent payment to management as a charge to
earnings in the form of non-cash stock based compensation
expense over the period in which the payments are earned. For
the quarter ended September 30, 2004, we recorded
$6.9 million of non-cash stock based compensation with an
offsetting credit to accrued liabilities for the same amount.
Based on Talbots financial performance projected for 2004,
management estimates we may be obligated to pay contingent
payments of approximately $41 million in our common shares,
in addition to the $6.9 million of payments mentioned above.

In connection with the acquisition of Hooper
Hayes and Associates, Inc., in 2003 we issued 196,000 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 September 30, 2004, 103,000 shares have been
released from escrow.

In connection with various other acquisitions
completed through September 30, 2004, we may be obligated
to pay contingent consideration of approximately $8.5 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





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##### Table of Contents



connection with contingent consideration earned
as at September 30, 2004, the financial statements reflect
a liability to pay cash of $1.1 million and an obligation
to issue common shares valued at approximately $0.1 million
as of September 30, 2004.


Contingent liabilities

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 and insurance companies as well. Such compensation
agreements, also known as contingent agreements, between
insurance companies and brokers are a long-standing and common
practice within the insurance industry. Kaye Insurance discloses
such agreements on its invoices to clients and on its web site.
In addition, we disclose the arrangements in our public filings.
In August 2004, Kaye Insurance received a second subpoena from
the Office of the Attorney General of the State of New York
seeking information regarding all revenue that Kaye Insurance
may have derived from insurance companies. In September 2004,
Kaye Insurance received a third subpoena from the Office of the
Attorney General of the State of New York seeking information
regarding any fictitious and inflated insurance quotes to which
Kaye may have been a party. We have retained external counsel to
assist us in responding to the New York Attorney Generals
inquiries and, among other things, have requested that such
external counsel conduct an investigation to determine whether
any current or former employee of Hub engaged in the practice of
falsifying or inflating insurance quotes. Substantial progress
has been made with respect to such investigation at Kaye
Insurance and such investigation is otherwise ongoing as to Kaye
and other subsidiaries. To date, management is unaware of any
such wrongdoing. We continue to fully cooperate with the
Attorney Generals 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
revenue, profitability and liquidity may be materially adversely
affected.

In August 2004, Talbot Agency of Illinois, Inc.,
a subsidiary of Hub, received a letter and questionnaire from
the Attorney General of the State of Connecticut regarding
certain compensation agreements between insurance brokers and
insurance companies. We have responded to the Connecticut
Attorney General.

In October 2004, we were joined as a defendant in
a class action lawsuit against 30 different insurance brokers
and insurance companies. The lawsuit was originally filed in
August 2004 in the U.S. District Court for the Southern District
of New York by OptiCare Health Systems Inc., a client of a Marsh
& McLennan subsidiary. It now names the ten largest U.S.
insurance brokers and four of the largest commercial insurers.
The amended complaint alleges that the defendants used the
contingent commission structure of placement service agreements
in a conspiracy to deprive policyholders of independent
and unbiased brokerage services, as well as free and open
competition in the market for insurance. We dispute the
allegations of the complaint and intend to vigorously defend
against the suit. However, a finding that the contingent
commission structure conflicts with an insurance brokers
duty to its clients as well as the cost of defending against the
lawsuit and the diversion of managements attention could
have a material adverse effect on our revenue, profitability and
liquidity.

Several state and provincial authorities in
jurisdictions in which we operate have also commenced
investigations of the structure of sales commissions paid by
insurance companies to insurance brokers and other relationships
between insurance companies and insurance brokers. On
November 8, 2004, our Illinois based subsidiary received a
subpoena from the Department of Financial and Professional
Regulation, Division of Insurance, of the State of Illinois. We
are reviewing that subpoena. On November 9, 2004, we
received a request from the Texas Department of Insurance
seeking information on premiums earned on risks placed in that
state. The Florida Attorney General also very recently announced
the commencement of an investigation. We expect that we may
receive a subpoena from the Florida Attorney General in the near
future.

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 $4.2 million and $4.5
million as of September 30, 2004 and December 31,
2003, respectively, to assist in purchasing our common shares.
As collateral, the employees have pledged 446,000 and 478,000
common shares as of September 30, 2004 and





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December 31, 2003, respectively, which have
a market value of $8.0 million and $8.1 million as of
September 30, 2004 and December 31, 2003,
respectively. Interest on the loans in the amount of $141,000
and $222,000 for the nine months ended September 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 the ordinary course of business, we are
subject to various other 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 such other 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 nine months ended
September 30, 2004, restricted share units totaling 991,000
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 J.P. Flanagan Corporation.

Share repurchases.For the nine months ended
September 30, 2004, no common shares were repurchased by
us, other than shares equal in value to $71,000 under the
executive purchase plan.

Shares reserved for issuance.As of September 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
$29.8 million, or 9%, to $372.6 million as of
September 30, 2004 from $342.8 million as of
December 31, 2003. This increase resulted from net earnings
of $22.4 million, an increase in contributed surplus of
$6.3 million related primarily to non-cash stock based
compensation, $3.4 million of shares issued in connection with
acquisitions, an increase in the cumulative translation account
of $1.8 million, (due mainly to the strengthening of the
Canadian dollar compared to the U.S. dollar in 2004) and
exercise of stock options for $0.5 million. The increase in
shareholders equity was offset by the declaration of
dividends of $4.6 million 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 September 30, 2004
would result in approximately $0.8 million decrease in our
earnings.

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 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 in the first nine months of 2004. At
September 30, 2004 and 2003, respectively, one U.S. dollar
equaled $1.2639 and $1.3504 Canadian dollars. 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 September 30, 2004, and 2003.





|                                 |                                
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##### Table of Contents



|                               |  |      |     |      |  |      |       | 
|------------------------------ |  | ---- | --- | ---- |  | ---- | ----- | 
|(in thousands of U.S. dollars) |  | 2004 |     | 2003
|                               |  |      |     |     
|Revenue                        |  | +/-$ | 371 |      |  | +/-$ | 1,137 | 
|Net earnings                   |  | +/-$ | 96  |      |  | +/-$ | 123   | 
|Cumulative translation account |  | +/-$ | 6   |      |  | +/-$ | 107   | 

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:

|                               |  |               |         |              |  |   |         |  
|------------------------------ |  | ------------- | ------- | ------------ |  | - | ------- | -
|                               |  | September 30, |         | December 31,
|(in thousands of U.S. dollars) |  | 2004          |         | 2003        
|                               |  |               |         |             
|Customer relationships         |  | $             | 95,894  |              |  | $ | 43,422  |  
|Non-competition covenants      |  |               | 4,099   |              |  |   | 2,643   |  
|Trademarks                     |  |               |        |              |  |   | 2,587   |  
|Goodwill                       |  |               | 385,604 |              |  |   | 323,185 |  
|Accumulated amortization       |  |               | (26,081 | )            |  |   | (23,072 | )
|                               |  |               |         |              |  |   |         |  
|Total                          |  | $             | 459,516 |              |  | $ | 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 estimated economic useful life,
typically ten to 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 2004 certain of our subsidiaries initiated a plan
to change 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 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 nine months
ended September 30, 2004 and 2003, our amortization has
been comprised of the following:

|                               |  |               |       |               |  |      |     |      |  |   |       |  |  |   |       | 
|------------------------------ |  | ------------- | ----- | ------------- |  | ---- | --- | ---- |  | - | ----- |  |  | - | ----- | 
|                               |  |               |       |              
|                               |  | For the three |       | For the nine 
|                               |  | months ended  |       | months ended 
|                               |  | September 30, |       | September 30,
|                               |  |               |       |              
|(in thousands of U.S. dollars) |  | 2004          |       | 2003          |  | 2004 |     | 2003
|                               |  |               |       |               |  |      |     |     
|Customer relationships         |  | $             | 1,846 |               |  | $    | 748 |      |  | $ | 3,503 |  |  | $ | 2,250 | 
|Non-competition covenants      |  |               | 58    |               |  |      | 92  |      |  |   | 118   |  |  |   | 147   | 
|                               |  |               |       |               |  |      |     |      |  |   |       |  |  |   |       | 
|Total                          |  | $             | 1,904 |               |  | $    | 840 |      |  | $ | 3,621 |  |  | $ | 2,397 | 
|                               |  |               |       |               |  |      |     |      |  |   |       |  |  |   |       | 





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|38   HUB INTERNATIONAL LIMITED | INTERIM REPORTSEPTEMBER 30, 2004



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##### Table of Contents



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         |  | $    | 5,375 |      |  | $    | 7,377 |      |  | $    | 7,376 |  |  | $ | 7,376 |  |  | $ | 7,376 | 
|Non-competition covenants      |  |      | 190   |      |  |      | 110   |      |  |      | 84    |  |  |   | 76    |  |  |   |      | 
|                               |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 
|Total                          |  | $    | 5,565 |      |  | $    | 7,487 |      |  | $    | 7,460 |  |  | $ | 7,452 |  |  | $ | 7,376 | 
|                               |  |      |       |      |  |      |       |      |  |      |       |  |  |   |       |  |  |   |       | 

Related Party Transactions

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

|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 
|---------------------------------------- |  | ------------- | ----- | ------------- |  | ---- | ----- | ---- |  | - | ------ |  |  | - | ------ | 
|                                         |  |               |       |              
|                                         |  | For the three |       | For the nine 
|                                         |  | months ended  |       | months ended 
|                                         |  | September 30, |       | September 30,
|                                         |  |               |       |              
|                                         |  | 2004          |       | 2003          |  | 2004 |       | 2003
|(in thousands of U.S. dollars)           |  |               |       |               |  |      |       |     
|Northbridge Financial Corporation        |  | $             | 4,953 |               |  | $    | 5,469 |      |  | $ | 15,904 |  |  | $ | 12,091 | 
|Crum & Forster Holdings, Inc.            |  |               | 84    |               |  |      | 221   |      |  |   | 443    |  |  |   | 1,052  | 
|Fairfax Inc.                             |  |               | 463   |               |  |      | 1,665 |      |  |   | 3,053  |  |  |   | 5,928  | 
|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  |               | 5,500 |               |  |      | 7,355 |      |  |   | 19,400 |  |  |   | 19,071 | 
|Old Lyme Insurance Company, Ltd (OLIC) |  |               | 1,066 |               |  |      |      |      |  |   | 1,297  |  |  |   |       | 
|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 
|                                         |  | $             | 6,566 |               |  | $    | 7,355 |      |  | $ | 20,697 |  |  | $ | 19,071 | 
|                                         |  |               |       |               |  |      |       |      |  |   |        |  |  |   |        | 

As of September 30, 2004 and
December 31, 2003, we had accounts receivable and accounts
payable balances with the above related parties in the amounts
of $3.9 million and $11.2 million, for September 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
September 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 September 30, 2004 and
December 31, 2003, subordinated convertible debentures of
$35 million were held by certain subsidiaries of Fairfax.

During the first nine months of 2004 and
2003, we incurred expenses related to rental of premises from
related parties in the amount of $1.6 million,
respectively. At September 30, 2004 and December 31,
2003, we also had accounts receivable due from related parties
in the amount of $2.7 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 September 30, 2004 and December 31,
2003, $1.8 million and $1.9 million were 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
September 30, 2004 and December 31, 2003,
respectively, which have a market value of $2.6 million as
of September 30, 2004 and December 31, 2003,
respectively.





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|INTERIM REPORTSEPTEMBER 30, 2004 | HUB INTERNATIONAL LIMITED    39



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##### Table of Contents



Off-Balance Sheet Transactions

Under Canadian GAAP, we use the synthetic
instruments method to 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. 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
$1.7 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 the 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 September 30, 2004.
Based on that evaluation, our chief executive officer and chief
financial officer concluded that as of September 30, 2004,
our disclosure controls and procedures were effective in timely
alerting them to material information relating to us which is
required to be disclosed in our reports filed or submitted under
the Exchange Act. In addition, there have been no changes in our
internal control over financial reporting during the third
quarter of 2004 that have materially affected, or are reasonably
likely to materially affect, our internal control over financial
reporting. Notwithstanding the foregoing, there can be no
assurance that our 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.




PART II. OTHER INFORMATION




Item 1. Legal Proceedings

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 and insurance companies as well. Such compensation
agreements, also known as contingent agreements, between
insurance companies and brokers are a long-standing and common
practice within the insurance industry. Kaye Insurance discloses
such agreements on its invoices to clients and on its web site.
In addition, we disclose the arrangements in our public filings.
In August 2004, Kaye Insurance received a second subpoena from
the Office of the Attorney General of the State of New York
seeking information regarding all revenue that Kaye Insurance
may have derived from insurance companies. In September 2004,
Kaye Insurance received a third subpoena from the Office of the
Attorney General of the State of New York seeking information
regarding any fictitious and inflated insurance quotes to which
Kaye may have been a party. We have retained external counsel to
assist us in responding to the





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##### Table of Contents



New York Attorney Generals inquiries and,
among other things, have requested that such external counsel
conduct an investigation to determine whether any current or
former employee of Hub engaged in the practice of falsifying or
inflating insurance quotes. Substantial progress has been made
with respect to such investigation of Kaye Insurance and such
investigation is otherwise ongoing as to Kaye and other
subsidiaries. To date, management is unaware of any such
wrongdoing. We continue to fully cooperate with the Attorney
Generals 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 revenue,
profitability and liquidity may be materially adversely affected.


In August 2004, Talbot Agency of Illinois, Inc.,
a subsidiary of Hub, received a letter and questionnaire from
the Attorney General of the State of Connecticut regarding
certain compensation agreements between insurance brokers and
insurance companies. We have responded to the Connecticut
Attorney General.

In October 2004, we were joined as a defendant in
a class action lawsuit against 30 different insurance brokers
and insurance companies. The lawsuit was originally filed in
August 2004 in the U.S. District Court for the Southern District
of New York by OptiCare Health Systems Inc., a client of a
Marsh & McLennan subsidiary. It now names the ten
largest U.S. insurance brokers and four of the largest
commercial insurers. The amended complaint alleges that the
defendants used the contingent commission structure of placement
service agreements in a conspiracy to deprive policyholders of
independent and unbiased brokerage services, as well as
free and open competition in the market for insurance. We
dispute the allegations of the complaint and intend to
vigorously defend against the suit. However, a finding that the
contingent commission structure conflicts with an insurance
brokers duty to its clients as well as the cost of
defending against the lawsuit and the diversion of
managements attention could have a material adverse effect
on our revenue, profitability and liquidity.

Several state and provincial authorities in
jurisdictions in which we operate have also commenced
investigations of the structure of sales commissions paid by
insurance companies to insurance brokers and other relationships
between insurance companies and insurance brokers. On
November 8, 2004, our Illinois based subsidiary received a
subpoena from the Department of Financial and Professional
Regulation, Division of Insurance, of the State of Illinois. We
are reviewing that subpoena. On November 9, 2004, we
received a request from the Texas Department of Insurance
seeking information on premiums earned on risks placed in that
state. The Florida Attorney General also very recently announced
the commencement of an investigation. We expect that we may
receive a subpoena from the Florida Attorney General in the near
future.

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




Item 2. Unregistered Sales of Equity
Securities and Use of Proceeds

On July 1, 2004, we issued 23,735 common
shares to the former shareholder of B. & D.A. Weisburger. in
connection with our acquisition of the assets of that brokerage.
On August 6, 2004, we issued an additional 20,350 common
shares to the former members of Bush, Cotton & Scott, LLC in
connection with our acquisition of the membership interest of
that brokerage on April 21, 2004.

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 5. Other Information

Additional Risk Factor

In addition to those risks described under the
captions Risks related to our business and
Risks related to our common shares, which are
incorporated by reference herein from our Annual Report on
Form 10-K filed with the Securities and Exchange Commission
on March 15, 2004, the following additional risk factor is
also applicable to our business and to our common shares.





|                                 |                                
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|INTERIM REPORTSEPTEMBER 30, 2004 | HUB INTERNATIONAL LIMITED    41



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##### Table of Contents



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

We and several other insurance brokers are
currently the subject of an investigation being conducted by the
Office of the Attorney General of the State of New York
regarding contingent compensation agreements between insurance
brokers and insurance companies. One of our subsidiaries also
received a letter and questionnaire from the Attorney General of
the State of Connecticut regarding certain compensation
agreements between insurance brokers and insurance companies, to
which we have responded. Several state and provincial
authorities in jurisdictions in which we operate have also
commenced investigations of the structure of sales commissions
paid by insurance companies to insurance brokers and other
relationships between insurance companies and insurance brokers.
On November 8, 2004, our Illinois based subsidiary received
a subpoena from the Department of Financial and Professional
Regulation, Division of Insurance, of the State of Illinois. We
are reviewing that subpoena. On November 9, 2004, we
received a request from the Texas Department of Insurance
seeking information on premiums earned on risks placed in that
state. The Florida Attorney General also very recently announced
the commencement of an investigation. We expect that we may
receive a subpoena from the Florida Attorney General in the near
future. While it is not possible to predict the outcome of any
of these investigations, the cost of cooperating with these
investigations is significant. Moreover, if such compensation
agreements were to be restricted or no longer permitted, or if
we were subject to a significant fine, our revenue,
profitability and liquidity may be materially adversely affected.

In October 2004, we were named as a defendant in
a class action lawsuit against 30 different insurance brokers
and insurance companies. The lawsuit alleges that the defendants
used the contingent commission structure to deprive
policyholders of independent and unbiased brokerage
services, as well as free and open competition in the market for
insurance. The cost of defending against the lawsuit, and
diversion of managements attention, may be significant and
could have a material adverse effect on our results of
operations. In addition, an adverse finding in such class action
lawsuit or a similar suit could result in a significant judgment
against us that could have a material adverse effect on our
financial position, results of operation and liquidity.

An adverse result in either a regulatory
investigation or class action lawsuit could also cause a
significant decline in the market price of our common shares,
which could cause our shareholders to lose a significant portion
of their investment in our common shares.

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);





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##### Table of Contents





| |   |                                                                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------
| |  | fluctuations in foreign currency exchange rates;                                                                                                             
|
| |  | any loss of services of key executive officers;                                                                                                              
|
| |  | industry consolidation;                                                                                                                                      
|
| |  | increased competition in the industry;                                                                                                                       
|
| |  | the resolution of regulatory issues and
    litigation, including those related to compensation arrangements
    with insurance companies;                   
|
| |  | the actual costs of resolution of contingent
    liabilities; and                                                                                            
|
| |  | the passage of new federal, state or provincial
    legislation subjecting our business to increased regulation in
    the jurisdictions in which we operate.

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 July 29, 2004 the Board of Directors
declared a dividend of $0.05 on our common shares, payable
September 30, 2004 for the quarter ended September 30,
2004 to shareholders of record on September 15, 2004.




Item 6. Exhibits

Exhibits

|     |  |                                                                                                                                                                                                                                                                          
|---- |  | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|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.





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##### 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: November 9, 2004






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|44   HUB INTERNATIONAL LIMITED | INTERIM REPORTSEPTEMBER 30, 2004