10-Q

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF

THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2004

Commission File Number 0-15981

HILB ROGAL & HOBBS COMPANY

(Exact name of registrant as specified in its charter)

Virginia	54-1194795
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
4951 Lake Brook Drive, Suite 500 Glen Allen, Virginia	23060
(Address of principal executive offices)	(Zip Code)

(804) 747-6500

(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    X      No              

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

Yes    X      No              

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

Class	Outstanding at October 29, 2004
Common Stock, no par value	35,976,179

HILB ROGAL & HOBBS COMPANY

INDEX

	Page
Part I. FINANCIAL INFORMATION
Item 1. Financial Statements
Statement of Consolidated Income for the three months and nine months ended September 30, 2004 and 2003	3
Consolidated Balance Sheet September 30, 2004 and December 31, 2003	4
Statement of Consolidated Shareholders’ Equity for the nine months ended September 30, 2004 and 2003	5
Statement of Consolidated Cash Flows for the nine months ended September 30, 2004 and 2003	6
Notes to Consolidated Financial Statements	7-9
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	10-14
Item 3. Quantitative and Qualitative Disclosures About Market Risk	14
Item 4. Controls and Procedures	14
Part II. OTHER INFORMATION
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	15
Item 6. Exhibits	15
Signatures	16

2

HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED INCOME

(UNAUDITED)

PART I — FINANCIAL INFORMATION

Item 1. FINANCIAL STATEMENTS

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2004		2003		2004		2003
Revenues
Commissions and fees	$	151,622	$	137,133	$	453,692	$	415,500
Investment income		788		775		2,099		2,253
Other		1,290		1,466		3,891		3,146
		153,700		139,374		459,682		420,899
Operating expenses
Compensation and employee benefits		81,474		73,856		244,344		225,515
Other operating expenses		28,313		24,051		80,290		71,482
Depreciation		2,136		2,322		6,465		6,902
Amortization of intangibles		3,444		2,353		9,125		6,708
Interest expense		2,546		2,556		7,460		8,095
Integration costs		176		3,174		1,803		3,174
Retirement benefit		—		—		—		5,195
		118,089		108,312		349,487		327,071
INCOME BEFORE INCOME TAXES		35,611		31,062		110,195		93,828
Income taxes		14,262		12,677		44,108		38,280
NET INCOME	$	21,349	$	18,385	$	66,087	$	55,548
Net Income Per Share:
Basic	$	0.60	$	0.52	$	1.85	$	1.62
Assuming Dilution	$	0.58	$	0.50	$	1.81	$	1.53

See notes to consolidated financial statements.

3

HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEET

(in thousands)	September 30, 2004			December 31, 2003
	(UNAUDITED)
ASSETS
CURRENT ASSETS
Cash and cash equivalents, including $57,883 and $58,233, respectively, of restricted funds	$	181,357		$	126,464
Receivables:
Premiums and commissions, less allowance for doubtful accounts of $4,861 and $4,243, respectively		207,847			223,431
Other		38,357			31,820
		246,204			255,251
Prepaid expenses and other current assets		24,499			14,603
TOTAL CURRENT ASSETS		452,060			396,318
PROPERTY AND EQUIPMENT, NET		25,179			25,487
GOODWILL		628,931			565,023
OTHER INTANGIBLE ASSETS		150,775			112,414
Less accumulated amortization		72,295			63,191
		707,411			614,246
OTHER ASSETS		18,280			13,176
	$	1,202,930		$	1,049,227
LIABILITIES AND SHAREHOLDERS’ EQUITY
CURRENT LIABILITIES
Premiums payable to insurance companies	$	311,961		$	308,533
Accounts payable		10,340			9,089
Accrued expenses		32,001			37,434
Premium deposits and credits due customers		48,079			34,290
Current portion of long-term debt		10,724			9,321
TOTAL CURRENT LIABILITIES		413,105			398,667
LONG-TERM DEBT		233,317			174,012
DEFERRED INCOME TAXES		28,728			19,208
OTHER LONG-TERM LIABILITIES		30,127			23,073
SHAREHOLDERS’ EQUITY
Common Stock, no par value; authorized 100,000 shares; outstanding 35,926 and 35,446 shares, respectively		236,343			228,357
Retained earnings		260,418			205,184
Accumulated other comprehensive income (loss):
Unrealized loss on interest rate swaps, net of deferred tax benefit of $179 and $334 respectively		(269	)		(502	)
Other		1,161			1,228
		497,653			434,267
	$	1,202,930		$	1,049,227

See notes to consolidated financial statements.

4

HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED SHAREHOLDERS’ EQUITY

(UNAUDITED)

(in thousands, except per share amounts)	Common Stock			Retained Earnings			Accumulated Other Comprehensive Income (Loss)
Balance at January 1, 2004	$	228,357		$	205,184		$	726
Issuance of 982 shares of Common Stock		17,987
Repurchase of 503 shares of Common Stock		(17,300	)
Income tax benefit from exercise of stock options		7,299
Payment of dividends ($0.3025 per share)					(10,853	)
Net income					66,087
Derivative gain, net of tax								233
Other								(67	)
Balance at September 30, 2004	$	236,343		$	260,418		$	892
Balance at January 1, 2003	$	168,558		$	143,005		$	(915	)
Issuance of 2,515 shares of Common Stock		71,268
Repurchase of 278 shares of Common Stock		(8,339	)
Income tax benefit from exercise of stock options		3,681
Payment of dividends ($0.2750 per share)					(9,512	)
Net income					55,548
Derivative gain, net of tax								695
Retirement benefit		906
Other								349
Balance at September 30, 2003	$	236,074		$	189,041		$	129

See notes to consolidated financial statements.

5

HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

STATEMENT OF CONSOLIDATED CASH FLOWS

(UNAUDITED)

	Nine Months Ended September 30,
(in thousands)	2004			2003
OPERATING ACTIVITIES
Net income	$	66,087		$	55,548
Adjustments to reconcile net income to net cash provided by operating activities:
Integration costs		1,803			3,174
Retirement benefit		—			5,195
Depreciation		6,465			6,902
Amortization of intangibles		9,125			6,708
Provision for losses on receivables		991			1,025
Provision for deferred income taxes		3,675			3,964
Gain on sale of assets		(560	)		(531	)
Income tax benefit from exercise of stock options		7,299			3,681
Changes in operating assets and liabilities net of effects from integration costs, retirement costs and insurance agency acquisitions and dispositions:
Decrease in receivables		17,133			1,113
(Increase) decrease in prepaid expenses		(9,261	)		6,506
(Decrease) increase in premiums payable to insurance companies		(18,397	)		6,478
Increase in premium deposits and credits due customers		13,790			6,489
(Decrease) increase in accounts payable		(388	)		1,190
Decrease in accrued expenses		(12,043	)		(12,070	)
Other operating activities		724			4,153
Net Cash Provided by Operating Activities		86,443			99,525
INVESTING ACTIVITIES
Purchase of property and equipment		(6,570	)		(8,485	)
Purchase of insurance agencies, net of cash acquired		(45,128	)		(45,895	)
Proceeds from sale of assets		4,872			831
Other investing activities		(478	)		976
Net Cash Used in Investing Activities		(47,304	)		(52,573	)
FINANCING ACTIVITIES
Proceeds from long-term debt		50,000			5,000
Principal payments on long-term debt		(5,419	)		(29,556	)
Debt issuance costs		(300	)		(557	)
Repurchase of Common Stock		(17,300	)		(8,339	)
Proceeds from issuance of Common Stock (net of tax payments for options exercised)		(374	)		(686	)
Dividends		(10,853	)		(9,512	)
Net Cash Provided by (Used in) by Financing Activities		15,754			(43,650	)
Increase in Cash and Cash Equivalents		54,893			3,302
Cash and cash equivalents at beginning of period		126,464			134,692
Cash and Cash Equivalents at End of Period	$	181,357		$	137,994

See notes to consolidated financial statements.

6

HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

September 30, 2004

(UNAUDITED)

NOTE A—BASIS OF PRESENTATION

The accompanying unaudited consolidated financial statements of Hilb Rogal & Hobbs Company (the Company) have been prepared in accordance with accounting principles generally accepted in the United States for interim financial information and with the instructions to Form 10-Q and Article 10 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States for complete financial statements. In the opinion of management, all adjustments (consisting of normal recurring accruals) considered necessary for a fair presentation have been included. Operating results for the nine-month period ended September 30, 2004 are not necessarily indicative of the results that may be expected for the year ending December 31, 2004. For further information, refer to the consolidated financial statements and footnotes thereto included in the Company’s Form 10-K for the year ended December 31, 2003.

NOTE B—ACCOUNTING FOR STOCK-BASED COMPENSATION

The Company has three stock-based compensation plans. The Company continues to account for its stock options using the intrinsic value method prescribed in Accounting Principles Board Opinion No. 25, “Accounting for Stock Issued to Employees,” and related interpretations. No stock-based compensation cost is reflected in net income, as all options granted under those plans had an exercise price equal to the market value of the underlying common stock on the date of grant.

Statement of Financial Accounting Standards No. 123, “Accounting for Stock-Based Compensation” (Statement 123), as amended by Statement of Financial Accounting Standards No. 148, establishes accounting and disclosure requirements using a fair value based method of accounting for stock options.

In October 2004, the Financial Accounting Standards Board (FASB) continued its redeliberations on the proposed Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (Proposed Statement 123R). Proposed Statement 123R would require all companies to measure compensation costs for all share-based payments (including stock options) at fair value. The proposed statement would be effective for all public companies for interim and annual periods beginning after June 15, 2005, and retroactive application of the requirements of Statement 123 to the beginning of the fiscal year that includes the effective date would be permitted, but not required. The Company continues to evaluate the impact of this proposed statement on its financial position and results of operations.

The following table illustrates the effect on net income and earnings per share if the Company had applied the fair value recognition provisions of Statement 123 to stock-based compensation.

	Three Months Ended September 30,						Nine Months Ended September 30,
(in thousands, except per share amounts)	2004			2003			2004			2003
Net income—as reported	$	21,349		$	18,385		$	66,087		$	55,548
Deduct: Total stock-based compensation expense determined under fair value based method for all awards, net of related tax effects		(1,447	)		(2,109	)		(4,103	)		(5,102	)
Pro forma net income	$	19,902		$	16,276		$	61,984		$	50,446
Net income per share:
Basic—as reported	$	0.60		$	0.52		$	1.85		$	1.62
Basic—pro forma	$	0.55		$	0.46		$	1.73		$	1.47
Assuming dilution—as reported	$	0.58		$	0.50		$	1.81		$	1.53
Assuming dilution—pro forma	$	0.55		$	0.45		$	1.70		$	1.39

7

HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2004

(UNAUDITED)

NOTE C—INCOME TAXES

Deferred taxes result from temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. The Company’s effective rate varies from the statutory rate primarily due to state income taxes.

NOTE D—ACQUISITIONS

During the first nine months of 2004, the Company acquired certain assets and liabilities of six insurance agencies and other accounts for approximately $91.9 million ($60.1 million in cash, $18.0 million in guaranteed future payments and 387,438 shares of common stock). The purchase price may be increased based on agency profitability per the contracts. These acquisitions are not material to the consolidated financial statements individually or in aggregate.

The Company has two September 2004 acquisitions, with a cumulative purchase price of approximately $65.3 million, for which the purchase price allocations are preliminary, pending the receipt of asset appraisals. The purchase price allocations for the remaining current year acquisitions are also preliminary, pending the completion of internal asset valuations.

NOTE E—SALE OF ASSETS AND OTHER GAINS

During the nine months ended September 30, 2004 and 2003, the Company sold certain insurance agencies and accounts and other assets resulting in gains of $0.6 million and $0.5 million, respectively. Revenues, expenses and assets related to these dispositions were not material to the consolidated financial statements.

NOTE F—NET INCOME PER SHARE

The following table sets forth the computation of basic and diluted net income per share.

	Three Months Ended September 30,				Nine Months Ended September 30,
(in thousands, except per share amounts)	2004		2003		2004		2003
Numerator for basic and dilutive net income per share—net income	$	21,349	$	18,385	$	66,087	$	55,548
Denominator
Weighted average shares		35,562		34,707		35,525		33,988
Effect of guaranteed future shares to be issued in connection with agency acquisitions		310		324		268		220
Denominator for basic net income per share		35,872		35,031		35,793		34,208
Effect of dilutive securities:
Employee stock options		352		658		437		740
Employee non-vested stock		130		111		123		113
Contingent stock—acquisitions		166		729		127		1,131
Dilutive potential common shares		648		1,498		687		1,984
Denominator for diluted net income per share—adjusted weighted average shares		36,520		36,529		36,480		36,192
Net Income Per Share:
Basic	$	0.60	$	0.52	$	1.85	$	1.62
Assuming Dilution	$	0.58	$	0.50	$	1.81	$	1.53

8

HILB ROGAL & HOBBS COMPANY AND SUBSIDIARIES

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS—(Continued)

September 30, 2004

(UNAUDITED)

NOTE G—INTEGRATION COSTS

The Company began the integration of Hobbs with the rest of the Company subsequent to June 30, 2003 with the completion of the Hobbs earn-out. In the first nine months of 2004, the Company recognized integration costs of $1.8 million and related income taxes of $0.7 million. These amounts represent costs such as severance and other employee-related costs, facility and lease termination costs, and branding expenses.

NOTE H—LONG-TERM DEBT

The Company has a credit agreement which provides a term loan facility and revolving credit facility. Borrowings under this credit agreement bear interest at variable rates based on LIBOR plus a negotiated spread. Effective March 31, 2004, the Company amended the credit agreement to reduce the negotiated spread applicable to the term loan. In addition, the Company modified certain covenants, including increasing the annual limit for repurchases of its common stock from $20.0 million to $50.0 million. Effective October 28, 2004, the Company further amended the credit agreement to modify certain restrictive covenant requirements.

NOTE I—CHANGE IN METHOD OF ACCOUNTING

In January 2003, the FASB issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46) and subsequently revised FIN 46 in December 2003. Effective January 1, 2004, the Company adopted the provisions of FIN 46. The Company did not identify any variable interest entities (VIEs) of which the Company is the primary beneficiary, thus, the Company was not required to consolidate any VIE.

NOTE J—RETIREMENT BENEFIT

In March 2003, Andrew L. Rogal, the Company’s Chairman and Chief Executive Officer, announced his decision to retire for personal reasons following the Company’s annual meeting of shareholders on May 6, 2003. In the first quarter of 2003, the Company recorded a one-time retirement benefit charge, net of tax, of $3.2 million, or $0.09 per share, representing a contractual retirement benefit for Mr. Rogal. The charge consists primarily of compensation and the accelerated vesting of stock options and non-vested stock. The Company’s board of directors elected Martin L. (Mell) Vaughan, III to succeed Mr. Rogal as Chairman and Chief Executive Officer.

9

Item 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Results of Operations:

Three Months Ended September 30, 2004

Net income for the three months ended September 30, 2004 was $21.3 million, or $0.58 per share, compared with $18.4 million, or $0.50 per share, for the comparable period last year. Net income for the 2004 quarter included integration costs, net of tax, of $0.1 million, or $0.01 per share. Integration costs represent costs such as severance and other employee-related costs. In addition, non-operating gains, net of tax, were $51 thousand and $391 thousand for the three months ended September 30, 2004 and 2003, respectively.

Commissions and fees were $151.6 million, an increase of 10.6%, from commissions and fees of $137.1 million during the comparable period of the prior year. Approximately $14.0 million of commissions were derived from acquisitions of new insurance agencies in 2004 and 2003. This increase was offset by decreases of approximately $1.2 million from the sale of certain offices and accounts in 2004 and 2003. Excluding the effect of acquisitions and dispositions, commissions and fees increased 1.2%. This increase principally reflects an increase in new business production and higher contingent commissions, partially offset by the effects of a continued softening of property and casualty premium rates and the elimination of under performing producers, resulting in the loss of some business.

Expenses for the quarter increased $9.8 million, or 9.0%. The 2004 quarter includes Hobbs integration costs of $0.2 million. Compensation and benefits and other operating expenses increased $7.6 million and $4.3 million, respectively. Approximately $7.4 million of the increase in compensation and benefits can be attributed to acquisitions of insurance agencies. These increased costs from acquired agencies and investments in new talent were partially offset by decreases in performance-based compensation and the aforementioned elimination of underperforming producers. Other operating expenses increased mainly due to acquisitions and higher litigation and regulatory costs. Amortization of intangibles increased approximately $1.1 million due primarily to intangible assets acquired in 2004 and 2003 acquisitions.

The Company’s overall tax rate for the three months ended September 30, 2004 was 40.1%, which was comparable to 40.8% for the same period of the prior year.

Nine Months Ended September 30, 2004

Net income for the nine months ended September 30, 2004 increased to $66.1 million, or $1.81 per share, from $55.5 million, or $1.53 per share, for the prior year period. Net income for the nine months ended September 30, 2003 included a one-time retirement benefit charge, net of tax, of $3.2 million, or $0.09 per share, and Hobbs integration costs, net of tax, of $1.9 million, or $0.06 per share. Net income for the nine months ended September 30, 2004 included integration costs, net of tax, of $1.1 million, or $0.03 per share. Integration costs represent costs such as severance and other employee-related costs, facility and lease termination costs and branding expenses. In addition, non-operating gains, net of tax, were $0.3 million for both nine months ended September 30, 2004 and 2003.

Commissions and fees for the nine months ended September 30, 2004 increased 9.2% to $453.7 million from $415.5 million during the prior year period. Approximately $33.6 million of commissions were derived from acquisitions of new insurance agencies in 2004 and 2003. This increase was offset by decreases of approximately $4.0 million from the sale of certain offices and accounts in 2004 and 2003. Excluding the effect of acquisitions and dispositions, commissions and fees from operations owned during both periods increased 2.1%. This organic growth principally reflects similar trends as noted for the three-month period in addition to higher contingent commissions, which are heavily weighted in the first quarter.

Expenses for the nine months ended September 30, 2004 increased $22.4 million, or 6.9%, from the prior year period. For the 2004 nine-month period, expenses include Hobbs integration costs of $1.8 million. For the

10

2003 nine-month period, expenses include a one-time retirement benefit charge of $5.2 million and Hobbs integration costs of $3.2 million. Compensation and benefits and other operating expenses increased $18.8 million and $8.8 million, respectively. Approximately $17.8 million of the increase in compensation and benefits can be attributed to acquisitions of insurance agencies. These increased costs from acquired agencies and investments in new talent were partially offset by reductions for performance based compensation and the elimination of underperforming producers. The increase in other operating expenses can be attributed to similar trends as noted for the three month period in addition to higher facility costs due to relocations. Depreciation expense decreased $0.4 million due to the impact of fully depreciated and disposed assets. Amortization of intangibles increased approximately $2.4 million due primarily to intangible assets acquired in 2004 and 2003 acquisitions. Interest expense decreased $0.6 million as average borrowings and interest rates on the credit agreement declined slightly compared to the same period in the prior year.

The Company’s overall tax rate for the nine months ended September 30, 2004 was 40.0%, which was comparable to 40.8% for the same period of the prior year.

Other

For the three months ended September 30, 2004, net income as a percentage of revenues did not vary significantly from the three months ended June 30, 2004. Commission income increased $5.9 million, or 4.1%, between the two periods primarily as a result of current quarter acquisitions, organic growth and the timing of policy renewals. In addition, net income for the three months ended September 30, 2004 included integration costs, net of tax, of $0.1 million.

The timing of contingent commissions, policy renewals and acquisitions may cause revenues, expenses and net income to vary significantly from quarter to quarter. As a result of the factors described above, operating results for the nine months ended September 30, 2004 should not be considered indicative of the results that may be expected for the entire year ending December 31, 2004.

Liquidity and Capital Resources:

Net cash provided by operations totaled $86.4 million and $99.5 million for the nine months ended September 30, 2004 and 2003, respectively, and is primarily dependent upon the timing of the collection of insurance premiums from clients and payment of those premiums to the appropriate insurance underwriters.

The Company has historically generated sufficient funds internally to finance capital expenditures for property and equipment. Cash expenditures for the acquisition of property and equipment were $6.6 million and $8.5 million for the nine months ended September 30, 2004 and 2003, respectively. The timing and extent of the purchase and sale of investments is dependent upon cash needs and yields on alternate investments and cash equivalents. The purchase of insurance agencies utilized cash of $45.1 million and $45.9 million for the nine months ended September 30, 2004 and 2003, respectively. Cash balances utilized to acquire insurance agencies have been primarily funded through operations and long-term borrowings. In addition, a portion of the purchase price in such acquisitions may be paid through the Company’s common stock and/or deferred cash and common stock payments. The Company did not have any material capital expenditure commitments as of September 30, 2004.

Financing activities provided cash of $15.8 million and utilized cash of $43.7 million for the nine months ended September 30, 2004 and 2003, respectively. Cash received from current year financing activities is primarily attributed to current year borrowings against the Company’s revolving credit facility to fund acquisitions, partially offset by cash used to repurchase common stock and make dividend and scheduled debt payments. The Company has annually increased its dividend rate and anticipates the continuance of its dividend policy. The Company repurchased 502,700 shares of its common stock for $17.3 million during the nine months ended September 30, 2004. The Company is currently authorized to purchase up to $50.0 million annually of its common stock in 2004 subject to market conditions and other factors.

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As of September 30, 2004, the Company has a credit agreement with outstanding term loans of $153.1 million, which are due in various amounts through 2007, including $149.6 million due in 2007, and outstanding revolving credit facility borrowings of $60.0 million, with $70.0 million available under the revolving credit facility for future borrowings. Borrowings bear interest at variable rates based on LIBOR plus a negotiated spread. Effective July 1, 2004, the Company entered into an interest rate swap agreement to fix the interest rate on $30.0 million of variable rate debt through June 30, 2007 at 3.7%. The Company designated this interest rate swap as a cash flow hedge under Statement of Financial Accounting Standards No. 133, “Accounting for Derivative Instruments and Hedging Activities.” This interest rate swap replaces two interest rate swaps that expired on June 30, 2004. In addition, effective March 31, 2004, the Company amended the credit agreement to reduce the negotiated spread applicable to the term loan and modify certain covenants, including increasing the annual limit for repurchases of its common stock. Effective October 28, 2004, the Company further amended the credit agreement to modify certain restrictive covenant requirements.

The Company had a current ratio (current assets to current liabilities) of 1.09 to 1.00 as of September 30, 2004. Shareholders’ equity of $497.7 million at September 30, 2004 is improved from $434.3 million at December 31, 2003. The debt to equity ratio at September 30, 2004 of 0.47 to 1.00 has increased from the ratio at December 31, 2003 of 0.40 to 1.00 due to current year borrowings which have been utilized to finance acquisitions.

The Company believes that cash generated from operations, together with proceeds from borrowings, will provide sufficient funds to meet the Company’s short and long-term funding needs.

Market Risk

The Company has certain investments and utilizes derivative financial instruments (on a limited basis) which are subject to market risk; however, the Company believes that exposure to market risk associated with these instruments is not material.

Change in Accounting Method

In January 2003, the Financial Accounting Standards Board (FASB) issued Interpretation No. 46, “Consolidation of Variable Interest Entities” (FIN 46) and subsequently revised FIN 46 in December 2003. Effective January 1, 2004, the Company adopted the provisions of FIN 46. The Company did not identify any VIEs for which the Company is the primary beneficiary, thus, the Company was not required to consolidate any VIE.

In October 2004, the FASB continued its redeliberations on the proposed Statement of Financial Accounting Standards No. 123R, “Share-Based Payment” (Proposed Statement 123R). Proposed Statement 123R would require all companies to measure compensation costs for all share-based payments (including stock options) at fair value. The proposed statement would be effective for all public companies for interim and annual periods beginning after June 15, 2005, and retroactive application of the requirements of Statement 123 to the beginning of the fiscal year that includes the effective date would be permitted, but not required. The Company continues to evaluate the impact of this proposed statement on its financial position and results of operations.

Recent Industry Developments

On October 14, 2004, the Office of the Attorney General of the State of New York (NYAG) filed a lawsuit against Marsh & McLennan Companies, Inc. and its subsidiary Marsh Inc. (collectively Marsh), the world’s largest insurance broker, alleging statutory and common law fraud, securities fraud, bid-rigging and other antitrust violations in the placement of insurance business. The NYAG’s issuance of subpoenas to various companies in the insurance industry concerning the compensation of brokers and agents by underwriters was first publicized in April 2004. As of the date of this report, the Company has not received a subpoena from the

12

NYAG. Management is not aware of, nor does it condone, any of the fraudulent, anti-competitive or manipulative practices alleged by the NYAG, including bid-rigging or utilizing fictitious quotes to create the illusion of competitive pricing. The Company has engaged outside legal counsel to perform an independent review concerning its practices in the areas that are the subject of the NYAG’s allegations against Marsh.

As a result of the NYAG’s lawsuit against Marsh, controversy now surrounds the longstanding insurance industry practice of contingent and override commissions paid to agents and brokers by underwriters. In addition to the ongoing investigation by the NYAG, other state attorneys general and insurance departments have been making inquiries into, among other things, the industry’s commission payment practices. As previously disclosed, the Company has contingent and override commission agreements with certain underwriters. Contingent commissions are commissions paid by underwriters based on the estimated profit that the underwriter makes and/or the overall volume of business that the Company places with the underwriter. Override commissions are commissions paid by underwriters in excess of the standard commission rates on specific classes of business.

For the nine months ended September 30, 2004, the Company recognized $39.4 million in contingent and override commissions: approximately 85% from standard contingency agreements maintained at the local office level and approximately 15% from specially negotiated volume-based national override agreements which are also in keeping with industry norms. Contingent commissions are heavily weighted in the first quarter. While it is not possible to predict the outcome of the governmental inquiries into the insurance industry’s commission payment practices, any decrease in the Company’s contingent and override commissions may have a negative effect on the results of its operations.

In October 2004, the Company received a subpoena from the Office of the Attorney General of the State of Connecticut (CTAG), as part of the CTAG’s investigation of possible antitrust violations. The CTAG’s subpoena requests information concerning various business practices, including contingent commissions. In November 2004, the Company was notified that it will receive a subpoena from the Office of the Attorney General of the State of Florida requesting information regarding business practices. Additionally, the Company has received requests for information from certain state insurance departments, and the Company may receive additional subpoenas and/or requests for information in the future from attorneys general and/or insurance departments of other states. It is the Company’s understanding that numerous others in the insurance industry have also received such subpoenas and requests for information. The Company will evaluate, and intends to cooperate fully in connection with, all such subpoenas and requests.

In November 2004, the Company was sued in a purported class action, originally filed in August 2004 in the U.S. District Court for the Southern District of New York, brought by OptiCare Health Systems Inc. against the 10 largest U.S. insurance brokers and four of the largest commercial insurers. The amended complaint alleges unlawful conduct by all defendants in connection with the pricing and placing of insurance, including antitrust violations, deceptive trade practices, breach of fiduciary duty and violations of the Racketeer Influenced and Corrupt Organizations statute. The Company believes the suit is without merit, and intends to defend itself vigorously.

Forward-Looking Statements

The Company cautions readers that the foregoing discussion and analysis includes “forward-looking statements” within the meaning of Section 21E of the Securities Exchange Act of 1934, as amended, and are subject to the safe harbor created by that Act. These forward-looking statements are believed by the Company to be reasonable based upon management’s current knowledge and assumptions about future events, but are subject to the uncertainties generally inherent in any such forward-looking statement, including factors discussed above as well as other factors that may generally affect the Company’s business, financial condition or operating results. Reference is made to the discussion of “Forward-Looking Statements” contained in “Management’s Discussion and Analysis of Financial Condition and Results of Operations” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2003 regarding important risk factors and uncertainties that

13

could cause actual results, performance or achievements to differ materially from future results, performance or achievements expressed or implied in any forward-looking statement made by or on behalf of the Company.

Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

The Company believes that its exposure to market risk associated with transactions using certain investments and derivative financial instruments is not material.

Item 4. CONTROLS AND PROCEDURES

As of the end of the period covered by this report on Form 10-Q, the Company’s management, including the Chief Executive Officer and the Chief Financial Officer, performed an evaluation of the effectiveness of the design and operation of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended). Based on that evaluation, the Company’s management, including the Chief Executive Officer and Chief Financial Officer, concluded that the Company’s disclosure controls and procedures were effective as of that evaluation date. Management is also responsible for establishing and maintaining adequate internal control over the Company’s financial reporting. There have been no changes in the Company’s internal control over financial reporting during the three months ended September 30, 2004, that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

14

PART II—OTHER INFORMATION

Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

c) The following table sets forth the details of purchases of common stock under the publicly announced share-repurchase program (the 2004 Program) that occurred in the third quarter of 2004:

Period	Total Number of Shares Purchased	Average Price Paid per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Maximum Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
July 2004	150,000	$	33.39	150,000	$	36,660,576
August 2004	120,000	$	33.00	120,000	$	32,700,149

The 2004 Program was announced by the Company on March 31, 2004 and provides for the Company to purchase up to $50.0 million of its common stock annually, increasing the prior $20.0 million annual authorization. The repurchases may be made on the open market or in negotiated transactions, with the timing and amount of the transactions to be determined by the Company’s management subject to market conditions and other factors.

Not included in the above table are purchases other than the 2004 Program that were made on behalf of a trust maintained by the Company for the Executive Voluntary Deferral Plan and the Outside Directors Deferral Plan. Total number of shares purchased during the quarter was 5,194, at an average price per share of $33.74.

Item 6. EXHIBITS

Exhibit No.	Document
10.1	Third Amendment to Credit Agreement dated as of October 28, 2004, among the Company, as Borrower, and Wachovia Bank, National Association, as administrative agent
10.2	Form of Change of Control Employment Agreement for F. Michael Crowley, an executive with the Company (incorporated by reference to Exhibit 10.13 to the Company’s Form 10-K for the year ended December 31, 1998, File No. 0-15981)
31.1	Certification Statement of Chief Executive Officer Pursuant to Rule 13a – 14(a)/15d – 14(a)
31.2	Certification Statement of Chief Financial Officer Pursuant to Rule 13a – 14(a)/15d – 14(a)
32.1	Certification Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
32.2	Certification Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

15

SIGNATURES

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

HILB ROGAL & HOBBS COMPANY

(Registrant)

Date: November 9, 2004	By:	/S/    MARTIN L. VAUGHAN, III
		Martin L. Vaughan, III Chairman and Chief Executive Officer (Principal Executive Officer)

Date: November 9, 2004	By:	/S/    CAROLYN JONES
		Carolyn Jones Senior Vice President, Chief Financial Officer and Treasurer (Principal Financial Officer)

Date: November 9, 2004	By:	/S/    ROBERT W. BLANTON, JR.
		Robert W. Blanton, Jr. Vice President and Controller (Chief Accounting Officer)

16

HILB ROGAL & HOBBS COMPANY

EXHIBIT INDEX

Exhibit No.	Document
10.1	Third Amendment to Credit Agreement dated as of October 28, 2004, among the Company, as Borrower, and Wachovia Bank, National Association, as administrative agent
10.2	Form of Change of Control Employment Agreement for F. Michael Crowley, an executive with the Company (incorporated by reference to Exhibit 10.13 to the Company’s Form 10-K for the year ended December 31, 1998, File No. 0-15981)
31.1	Certification Statement of Chief Executive Officer Pursuant to Rule 13a – 14(a)/15d – 14(a)
31.2	Certification Statement of Chief Financial Officer Pursuant to Rule 13a – 14(a)/15d – 14(a)
32.1	Certification Statement of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350
32.2	Certification Statement of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350

EX-10.1

Exhibit 10.1

THIRD AMENDMENT TO CREDIT AGREEMENT

THIS THIRD AMENDMENT TO CREDIT AGREEMENT, dated as of the 28^th day of October, 2004 (this “Amendment”), is made among HILB ROGAL & HOBBS COMPANY (formerly known as Hilb, Rogal and Hamilton Company), a Virginia corporation (the “Borrower”), and WACHOVIA BANK, NATIONAL ASSOCIATION (the “Administrative Agent”) on behalf of the Required Lenders (as defined in the Credit Agreement described below).

RECITALS

A. The Borrower, the Administrative Agent and the banks and financial institutions listed on the signature pages thereof or that became parties thereto after the date thereof (collectively the “Lenders”) are parties to a Second Amended and Restated Credit Agreement, dated as of July 1, 2002, as amended by a First Amendment to Credit Agreement, dated as of July 16, 2003, and a Second Amendment to Credit Agreement, dated as of March 31, 2004 (as further amended, the “Credit Agreement”), providing for the availability of a credit facility to the Borrower upon the terms and conditions set forth therein. Capitalized terms used herein without definition shall have the meanings given to them in the Credit Agreement.

B. The Borrower has requested certain amendments to the Credit Agreement. The Administrative Agent and the Lenders have agreed to effect such amendments on the terms and subject to the conditions set forth herein.

STATEMENT OF AGREEMENT

NOW, THEREFORE, in consideration of the foregoing and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereto agree as follows:

ARTICLE I

AMENDMENTS

1.1 Business and Financial Information. Section 5.2(c) is hereby amended by adding the following proviso to the end thereof: “provided that the Borrower is not required to delivery any such ‘management letter’ from an accountant that prohibits the sharing of such letter with third parties.”

1.2 Permitted Acquisitions. Section 5.8(a) of the Credit Agreement is hereby amended by:

(a) deleting the reference to “$125,000,000” in clause (iii) and replacing it with “$150,000,000”;

(b) amending and restating clause (iv) in its entirety as follows:

“(iv) the Acquisition Amount (without regard to the issuance of any Capital Stock of the Borrower) with respect thereto together with the aggregate (without duplication) of (A) the Acquisition Amounts (without regard to the issuance of any Capital Stock of the Borrower) for all other Acquisitions consummated during the same fiscal quarter or the period of three consecutive fiscal quarters immediately prior thereto (but specifically excluding, if applicable, any Acquisitions consummated on or prior to the Closing Date), and (B) the amount of cash paid by the Borrower and its Subsidiaries in connection with earnout and contingent obligations during the same fiscal quarter or the period of three consecutive fiscal quarters immediately prior thereto for all Acquisitions, shall not exceed $125,000,000;”

ARTICLE II

EFFECTIVENESS

This Amendment shall become effective on the date when the last of the following conditions shall have been satisfied:

(a) The Administrative Agent shall have received counterparts of this Amendment, duly executed by the Borrower and the Subsidiary Guarantors; and

(b) The Administrative Agent shall have received the approval of this Amendment from the Required Lenders.

ARTICLE III

ACKNOWLEDGEMENT

The Subsidiary Guarantors hereby acknowledge that the Borrower, the Administrative Agent and the Lenders have agreed to amend the Credit Agreement as provided herein. Each Subsidiary Guarantor hereby approves and consents to the transactions contemplated by this Amendment and agrees that its obligations under the Subsidiary Guaranty and the other Credit Documents to which it is a party shall not be diminished as a result of the execution of this Amendment. This acknowledgement by the Subsidiary Guarantors is made and delivered to induce the Administrative Agent and the Lenders to enter into this Amendment, and the Subsidiary Guarantors acknowledge that the Administrative Agent and the Lenders would not enter into this Amendment in the absence of the acknowledgements contained herein.

2

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower hereby represents and warrants to the Administrative Agent and the Lenders as follows:

4.1 Representations and Warranties. After giving effect to this Amendment, each of the representations and warranties of the Borrower contained in the Credit Agreement and in the other Credit Documents is true and correct

in all material respects on and as of the date hereof, with the same effect as if made on and as of the date hereof (except to the extent any such representation or warranty is expressly stated to have been made as of a specific date, in which case such representation or warranty is true and correct in all material respects as of such date).

4.2 No Default. After giving effect to this Amendment, no Default or Event of Default has occurred and is continuing.

ARTICLE V

MISCELLANEOUS

5.1 Effect of Amendment. From and after the effective date of the amendments to the Credit Agreement set forth herein, all references to the Credit Agreement set forth in any other Credit Document or other agreement or instrument shall, unless otherwise specifically provided, be references to the Credit Agreement as amended by this Amendment and as may be further amended, modified, restated or supplemented from time to time. This Amendment is limited as specified and shall not constitute or be deemed to constitute an amendment, modification or waiver of any provision of the Credit Agreement except as expressly set forth herein. Except as expressly amended hereby, the Credit Agreement shall remain in full force and effect in accordance with its terms.

5.2 Governing Law. This Amendment shall be governed by and construed and enforced in accordance with the laws of the State of New York (without regard to the conflicts of law provisions thereof, but including Section 5-1401 of the General Obligations Law of the State of New York).

5.3 Expenses. The Borrower agrees to pay upon demand all reasonable out-of-pocket costs and expenses of the Administrative Agent (including, without limitation, the reasonable fees and expenses of counsel to the Administrative Agent) in connection with the preparation, negotiation, execution and delivery of this Amendment and the other Credit Documents delivered in connection herewith.

5.4 Severability. To the extent any provision of this Amendment is prohibited by or invalid under the applicable law of any jurisdiction, such provision shall be ineffective only to the extent of such prohibition or invalidity and only in any such jurisdiction, without prohibiting or invalidating such provision in any other jurisdiction or the remaining provisions of this Amendment in any jurisdiction.

5.5 Successors and Assigns. This Amendment shall be binding upon, inure to the benefit of and be enforceable by the respective successors and assigns of the parties hereto.

5.6 Construction. The headings of the various sections and subsections of this Amendment have been inserted for convenience only and shall not in any way affect the meaning or construction of any of the provisions hereof.

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5.7 Counterparts. This Amendment may be executed in any number of counterparts and by different parties hereto on separate counterparts, each of which when so executed and delivered shall be an original, but all of which shall together constitute one and the same instrument.

[the remainder of this page left blank intentionally]

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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their duly authorized officers as of the date first above written.

HILB ROGAL & HOBBS COMPANY
By:	/s/ Carolyn Jones
Title:	SVP, CFO & Treasurer
WACHOVIA BANK, NATIONAL ASSOCIATION, as Administrative Agent on behalf of the Required Lenders
By:	/s/ William R. Goley
Title:	Director

S-1

For purposes of Article III only:*

HILB ROGAL & HOBBS INVESTMENT COMPANY (formerly known as HILB, ROGAL AND HAMILTON INVESTMENT COMPANY)

HILB ROGAL & HOBBS REALTY COMPANY (formerly known as HILB, ROGAL AND HAMILTON REALTY COMPANY)

HILB ROGAL & HOBBS SERVICES COMPANY (formerly known as HILB, ROGAL AND HAMILTON SERVICES COMPANY)

HILB ROGAL & HOBBS COMPANY OF ALABAMA, INC. (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF ALABAMA, INC.)

BEIERSDOERFER, MEADOWS & GOULD, INC.

HILB ROGAL & HOBBS COMPANY OF ARIZONA (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF ARIZONA)

HRH INSURANCE SERVICES OF THE COACHELLAVALLEY, INC.

HILB ROGAL & HOBBS INSURANCE SERVICES OF CENTRAL CALIFORNIA, INC. (formerly known as HILB, ROGAL AND HAMILTON INSURANCE SERVICES OF CENTRAL CALIFORNIA, INC.)

MORGAN & FRANZ INSURANCE AGENCY OF ORANGE COUNTY

HRH OF NORTHERN CALIFORNIA INSURANCE SERVICES, INC.

PROFESSIONAL PRACTICE INSURANCE BROKERS, INC.

HILB ROGAL & HOBBS INSURANCE SERVICES OF SAN DIEGO, INC. (formerly known as HILB, ROGAL AND HAMILTON INSURANCE SERVICES OF SAN DIEGO, INC.)

ARIS/B&W INSURANCE SERVICES, INC.

SUMMIT RISK MANAGEMENT & INSURANCE SERVICES, INC.

HILB ROGAL & HOBBS COMPANY OF DENVER (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF DENVER)

HILB ROGAL & HOBBS COMPANY OF CONNECTICUT, LLC (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF CONNECTICUT, LLC)

THE MANAGING AGENCY GROUP, INC.

PREMIUM FUNDING ASSOCIATES, INC.

THOMAS M. MURPHY & ASSOCIATES, INC.

HILB ROGAL & HOBBS COMPANY OF GAINESVILLE, FLORIDA, INC. (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF GAINESVILLE, FLORIDA, INC.)

HUNT INSURANCE GROUP, INC.

INSURANCE CONSULTANTS & ANALYSTS, INC.

HILB ROGAL & HOBBS COMPANY OF ORLANDO (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF ORLANDO)

HILB ROGAL & HOBBS COMPANY OF SARASOTA (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF SARASOTA)

HILB ROGAL & HOBBS COMPANY OF SOUTH FLORIDA (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF SOUTH FLORIDA)

* The Borrower is in the process of causing several of its Subsidiary Guarantors to change their names so that the phrase “Hilb, Rogal and Hamilton” is replaced with “Hilb Rogal & Hobbs” in each such Subsidiary Guarantor’s name. The Borrower and the applicable Subsidiary Guarantors have filed with the appropriate Governmental Authorities the documents necessary to effect such name changes; however, not all of the name changes may be effective as of the date hereof.

S-2

HILB ROGAL & HOBBS COMPANY OF TAMPA BAY, INC. (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF TAMPA BAY, INC.)

HILB ROGAL & HOBBS COMPANY OF ATLANTA (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF ATLANTA)

HILB ROGAL & HOBBS COMPANY OF GAINESVILLE, GEORGIA (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF GAINESVILLE, GEORGIA)

HILB ROGAL & HOBBS COMPANY OF SAVANNAH, INC. (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF SAVANNAH, INC.)

HILB ROGAL & HOBBS COMPANY OF ILLINOIS (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF ILLINOIS)

DULANEY, JOHNSTON & PRIEST, INC.

THE DUNLAP CORPORATION

THE DUNLAP AGENCY

THE DUNLAP CORPORATION OF NEW HAMPSHIRE

HILB ROGAL & HOBBS COMPANY OF BALTIMORE (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF BALTIMORE)

HILB ROGAL & HOBBS COMPANY OF METROPOLITAN WASHINGTON (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF METROPOLITAN WASHINGTON)

HILB ROGAL & HOBBS INSURANCE AGENCY OF MASSACHUSETTS, LLC (formerly known as HILB, ROGAL AND HAMILTON INSURANCE AGENCY OF MASSACHUSETTS, LLC)

HILB ROGAL & HOBBS COMPANY OF GRAND RAPIDS (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF GRAND RAPIDS)

HILB ROGAL & HOBBS COMPANY OF PORT HURON (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF PORT HURON)

HRH INSURANCE SERVICES OF NEVADA, INC.

ASHURST PROCESSING AGENCY, INC.

GIACONIA LIFE ASSOCIATES, LLC

HILB ROGAL & HOBBS COMPANY OF NORTHERN NEW JERSEY, LLC (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF NORTHERN NEW JERSEY, LLC)

HRH CONSULTING GROUP, LLC

HILB ROGAL & HOBBS COMPANY OF NEW YORK, LLC (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF NEW YORK, LLC)

KAMMSAC INTERNATIONAL, LLC

KALVIN-MILLER HOLDINGS, LLC

PROPERTY OWNERS & MANAGERS PURCHASING GROUP, INC.

HILB ROGAL & HOBBS COMPANY OF UPSTATE NEW YORK, LLC (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF UPSTATE NEW YORK, LLC)

PROFESSIONAL PRACTICES INSURANCE BROKERS, INC. (SOUTHEAST)

BOAHC, INC. D/B/A BERWANGER OVERMYER ASSOCIATES

BOAEB AGENCY, INC.

BOAFS AGENCY, INC.

MIDWEST PENSION SERVICES, INC.

BOAPC AGENCY, INC.

HILB ROGAL & HOBBS COMPANY OF OKLAHOMA (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF OKLAHOMA)

S-3

HILB ROGAL & HOBBS COMPANY OF OREGON (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF OREGON)

HILB ROGAL & HOBBS COMPANY OF PHILADELPHIA, LLC (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF PHILADELPHIA, LLC)

HILB ROGAL & HOBBS COMPANY OF PITTSBURGH, LLC (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF PITTSBURGH, LLC)

HRH MERGER COMPANY

HILB ROGAL & HOBBS COMPANY OF SAN ANTONIO (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF SAN ANTONIO)

HILB ROGAL & HOBBS COMPANY OF TEXAS (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF TEXAS)

HILB ROGAL & HOBBS COMPANY OF VIRGINIA (formerly known as HILB, ROGAL AND HAMILTON COMPANY OF VIRGINIA)

TIMOTHY S. MILLS INSURANCE SERVICES, INC.

INTEGRATED RISK SOLUTIONS INSURANCE SERVICES, LLC

TLC HOBBS, LLC

WESTPORT FINANCIAL SERVICES, LLC

WESTPORT INSURANCE AGENCY, LLC

WESTPORT WORLDWIDE, LLC

WESTPORT INSURANCE BROKERAGE, LLC

STAFFING RISK SOLUTIONS, LLC

BAY TECHNOLOGY GROUP, LLC

HOBBS GROUP, INC. (OH)

HOBBS GROUP, INC. (MD)

HOBBS GROUP, INC. (MA)

HOBBS GROUP INVESTMENT ADVISORS, LLC

HOBBS GROUP LIMITED LIABILITY COMPANY

HOBBS GROUP, LLC

HOBBS IRA CORP.

INTEGRATED RISK SOLUTIONS INSURANCE SERVICES, LLC

HOBBS GROUP INSURANCE BROKERS, LLC

HOBBS/OFJ ACQUISITION CORP.

O’NEILL, FINNEGAN & JORDAN INSURANCE AGENCY, INC.

HOBBS GROUP (NY), LLC

KIRKLIN & COMPANY, LLC

HOBBS GROUP, INC. (TX)

HRH OF COLORADO MERGER COMPANY

FREBERG & COMPANY OF WYOMING, INC.

DOMINION SPECIALTY GROUP, INC.

BLISS AND GLENNON, INC.

MACLEAN, ODDY & ASSOCIATES, INC.

HILB ROGAL & HOBBS OF APPLETON, INC.

HILB ROGAL & HOBBS OF CHICAGO, INC.

HILB ROGAL & HOBBS OF TENNESSEE, INC.

S-4

HILB ROGAL & HOBBS OF VERO BEACH, INC.

HILB ROGAL & HOBBS OF LANSING, INC.

FRANK F. HAACK & ASSOCIATES, INC.

By:	/s/ Carolyn Jones
Title:	SVP, CFO & Treasurer

S-5

EX-31.1

Exhibit 31.1

STATEMENT OF CHIEF EXECUTIVE OFFICER

PURSUANT TO RULE 13a – 14(a)/15d – 14(a)

I, Martin L. Vaughan, III, Chief Executive Officer of Hilb Rogal & Hobbs Company, certify that:

1. I have reviewed this report on Form 10-Q of Hilb Rogal & Hobbs Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    November 8, 2004	/S/    MARTIN L. VAUGHAN, III
	Martin L. Vaughan, III
	Chief Executive Officer

EX-31.2

Exhibit 31.2

STATEMENT OF CHIEF FINANCIAL OFFICER

PURSUANT TO RULE 13a – 14(a)/15d – 14(a)

I, Carolyn Jones, Senior Vice President, Chief Financial Officer and Treasurer of Hilb Rogal & Hobbs Company, certify that:

1. I have reviewed this report on Form 10-Q of Hilb Rogal & Hobbs Company;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) for the registrant and we have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures as of the end of the period covered by this report based on such evaluation; and

(c) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date:    November 8, 2004	/S/    CAROLYN JONES
	Carolyn Jones
	Senior Vice President, Chief
	Financial Officer and Treasurer

EX-32.1

Exhibit 32.1

STATEMENT OF CHIEF EXECUTIVE OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Form 10-Q of Hilb Rogal & Hobbs Company for the quarter ended September 30, 2004, I, Martin L. Vaughan, III, Chief Executive Officer of Hilb Rogal & Hobbs Company, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(a) such Form 10-Q for the quarter ended September 30, 2004 fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and

(b) the information contained in such Form 10-Q for the quarter ended September 30, 2004 fairly presents, in all material respects, the consolidated financial condition and results of operations of Hilb Rogal & Hobbs Company and its subsidiaries as of and for the periods presented in such Form 10-Q.

Date:    November 8, 2004	By:	/S/    MARTIN L. VAUGHAN, III
		Martin L. Vaughan, III
		Chief Executive Officer

EX-32.2

Exhibit 32.2

STATEMENT OF CHIEF FINANCIAL OFFICER

PURSUANT TO 18 U.S.C. SECTION 1350

In connection with the Form 10-Q of Hilb Rogal & Hobbs Company for the quarter ended September 30, 2004, I, Carolyn Jones, Senior Vice President, Chief Financial Officer and Treasurer of Hilb Rogal & Hobbs Company, hereby certify pursuant to 18 U.S.C. § 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that, to my knowledge:

(a) such Form 10-Q for the quarter ended September 30, 2004 fully complies with the requirements of section 13(a) of the Securities Exchange Act of 1934, as amended; and

(b) the information contained in such Form 10-Q for the quarter ended September 30, 2004 fairly presents, in all material respects, the consolidated financial condition and results of operations of Hilb Rogal & Hobbs Company and its subsidiaries as of and for the periods presented in such Form 10-Q.

Date:    November 8, 2004	By:	/S/    CAROLYN JONES
		Carolyn Jones
		Senior Vice President, Chief
		Financial Officer and Treasurer