Arthur J. Gallagher (Gallagher) has reported a second quarter that was “one for the record books”, closing 17 acquisitions in the quarter alone and delivering combined growth of 28% in adjusted revenues from the brokerage and risk management segments.
Separately, the brokerage segment posted adjusted revenue growth of 34% to AUS$791m (US$741.9m), of which 3.4% was organic. Adjusted net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables (EBITDAC) was up 43%, and Gallagher improved its adjusted EBITDAC margins 190 basis points compared to the second quarter of 2013.
However, commissions dropped slightly to $574.9m (US$539.5m), compared to $427.2m (US$400.9m) last year.
The risk management segment posted adjusted revenue growth of 8% ($168.1m), of which 7.6% was organic, compared to the second quarter of 2013. Gallagher bettered its 16% margin target by 70 basis points.
Net earnings from its clean energy investments were up 45% compared to the second quarter of 2013.
Chairman, president and CEO J. Patrick Gallagher, Jr., said the second quarter “was one for the record books”, pointing to the 17 acquisitions made worldwide including OAMPS in Australia and Crombie Lockwood in New Zealand, and revenue growth in the broking and risk management sectors.
Gallagher praised insurance carriers for “making rational pricing decisions” and making increases and giving decreases when necessary.
Turning to the property and casualty account, he said: “Based on our recent internal survey, for property and casualty accounts renewing in the second quarter, we saw 35% of our customers renewing at higher rates, 30% renewing about flat, and 35% getting decreases. Given this quarter’s mix of renewals, decreases in commissions from lower property rates were partially offset by increases in commissions from higher casualty rates. This is still a very good environment for our production team.”
The figures were converted from US dollars to Australian dollars on 30 July 2014, using XE.com