The firm's performance was driven by higher contingent income, which rose 42 percent to $13.5 million, and brokerage fees which rose 9 percent to $78 million and account for 90 percent of U.S.I.'s income.

During an analyst's conference call, David L. Eslick, chairman, president and chief executive officer for the Briarcliff Manor, N.Y.-based firm, defended the controversial contingency fee payments by insurers to brokers, a topic of several official inquiries. He said they help brokers obtain a good deal for customers. (See related story on Web site: Another Broker Defends Contingency Fees.)

Executives said the insurance market generally appears to be moderating to softening, with increased competition for new business, compared to renewal pricing, which is moderating. Property is flat premium pricing or declines to as much as 20 percent. However, this is a small portion of the company's business.

Price levels remain high and terms and conditions remain restricted in several classes, mainly residential construction, directors & officers, professional liability, medical malpractice, and workers' compensation, the firm said.

On employee benefits, health care costs are still driving increases and forcing redesigns of packages, U.S.I. reported.

U.S.I. executives said the company has a number of acquisitions in the works that could amount to $75-to-$100 million in revenue by the end of the year. The completion of the acquisitions of Los Angeles-based Dodge, Warren & Peters Insurance Services Inc. and Bertholon-Rowland Corporation of New York have added $50 million in revenue to the firm, well above the $35 million in revenue targeted by U.S.I. for 2004.

Mr. Eslick said the two acquisitions make U.S.I. one of the largest brokers to offer program lawyers professional liability in the United States and positions it as one of the largest middle-market brokers in Southern California.

U.S.I. said it is keeping with its earning per share guidance of between $1.10 to $1.15 per share for the year.