However, the firm sees some positives as clients increased their insured exposure, boosting premium volume, and the company continues to see growth in its employee benefits business. He noted, too, that USI is seeing improvements in retention rates, standing at 90 percent in the second quarter.

For the first six months of 2005, net income dropped 76 percent, down $8.3 million from $10.9 million (22 cents a share) to $2.6 million (5 cents a share). Revenues increased 29 percent ($55.6 million) to $245 million.

Much of the decrease in net income was attributed to accounting for discontinued operations. USI said it has sold four operations for $9.4 million and is seeking to sell three more.

On the issue of regulatory inquiries growing out of investigations into broker and insurer misuse of contingency fees to disguise bid-rigging activity, Mr. Eslick said the firm continues to respond to regulators and has performed its own in-house inquiry into the kick-back issue.

"We have found nothing on our side to cause concern," he said.

He said USI will continue to make acquisitions and "expects to see more at the end of the year==not big ones, but good-size pieces that we can pick up and fold into our current operations."