Investing.com -- S&P Global Ratings has upgraded its long-term issuer credit rating for Hub International Ltd. to ’B+’ from ’B’, as announced on May 21, 2025. The ratings agency also raised its issue ratings on the company’s senior secured debt and senior unsecured debt to ’B+’ and ’B’, respectively, up from ’B’ and ’B-’.

The upgrade comes as Hub International continues to experience strong revenue growth and increased cash flow generation. The company recently announced a minority common equity investment expected to fund growth through 2026 and promote deleveraging.

S&P Global Ratings believes that Hub’s financial risk profile will benefit from a deleveraging trend that is expected to be enduring. The updated assessment of the company’s credit profile reflects the use of internally generated cash and funds raised from a $1.6 billion minority equity investment. This investment, made by a consortium of new and existing investors, is expected to drive growth and support a sustainable deleveraging trend through 2026.

Hub’s financial leverage and EBITDA interest coverage are projected to improve toward 5.5x-6.0x and 2.5x-3.0x, respectively, through 2026. The company’s revenue is expected to modestly exceed $5.5 billion for 2025 and $6.0 billion for 2026, with steady EBITDA margins of 34%-35%. This should drive cash flow from operations to $535 million-$555 million in 2025 and $760 million-$780 million in 2026.

The company maintains a strong market presence in the U.S., where it generates about 80% of its revenue and is the No. 5 insurance broker. In Canada, where it generates about 20% of its revenue, Hub is the leading insurance broker. The company’s competitive position is supported by meaningful scale, scope, and diversity enhancements across its retail-commercial/personal, and wholesale/specialty segments.

The stable outlook reflects S&P Global Ratings’ view that Hub will sustain its robust growth and steady operating performance through 2026, with a continued deleveraging trend. The new equity investment is expected to provide significant near-term liquidity to fund growth and related operational initiatives.

While unlikely through 2026, an upgrade would be driven by sustained improvements in Hub’s competitive position. However, the ratings could be lowered if Hub experiences significant credit metric erosion from a shift in financial policy or weaker operating performance. This could lead to slower revenue growth and EBITDA margin compression, resulting in financial leverage and coverage migrating to run-rate levels of 7.5x and about 2.0x, respectively.

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