AJG - NYSE
Arthur J. Gallagher & Co.
AJG·NYSE
$210.30
+2.2%Financial ServicesInsurance - Brokers
Arthur J. Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, third-party claims settlement, and administration services in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand, India, and the United Kingdom. It operates through Brokerage and Risk Management segments. The Brokerage segment consists of retail and wholesale insurance brokerage operations; assists retail brokers and other non-affiliated brokers in the placement of specialized and hard-to-place insurance; acts as a brokerage wholesaler, managing general agent, and managing general underwriter for distributing specialized insurance coverage's to underwriting enterprises. This segment also performs activities, including marketing, underwriting, issuing policies, collecting premiums, appointing and supervising other agents, paying claims, and negotiating reinsurance; and offers brokerage and consulting services to businesses and organizations, including commercial, not-for-profit, and public entities, as well as individuals in the areas of insurance placement, risk of loss management, and management of employer sponsored benefit programs. The Risk Management segment provides contract claim settlement and administration services to enterprises and public entities; and claims management, loss control consulting, and insurance property appraisal services. The company offers its services through a network of correspondent insurance brokers and consultants. It serves commercial, industrial, public, religious, and not-for-profit entities. The company was incorporated in 1927 and is headquartered in Rolling Meadows, Illinois.
At a Glance
Live SnapshotMarket Cap$54.03B
EPS5.8300
P/E Ratio36.07
Earnings Date07/30/2026
Earnings Call Transcript
AJG • 2025 • Q1
Operator
Thank you. [Operator Instructions] Our first questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your question.
Elyse Greenspan
That’s great. And then my second question, so it sounds like you guys are still working, I guess, not a lot to update, as you said, like working on a response to the DOJ. So is that something, I guess, you guys would expect to respond? I think there’s like a 30-day clock once that happens. Is that something that, based on the timeline of a Q4 close, Doug, is that – would you expect to just respond to comments, I guess, that would be something that would happen in the Q2? Is that your expectation?
Doug Howell
All right. We’re obviously putting together all the information that’s been requested. And we’re working hard on it both on our side and then the AP team is doing the same thing. We’ll get that over to them sometime in mid-third quarter. And then it does start a clock tick, you may have the right to ask some questions. But there is a process here. First, getting that over, certifying to it and then they’ll have 30 days to get back to us on that.
Elyse Greenspan
Okay. And then I just – you mentioned that there was, I guess, some timing that impacted on the first quarter, some kind of – was it a pull forward from other quarters? I think it was 1% and then there was also going to be an impact in Q2.
Doug Howell
Yes. All right. So let’s go through that a little bit because I think it’s a good question. First, it doesn’t do anything to full year. Second, we’re just getting some better insights into the development of revenues. We’ve implemented our new reinsurance system last fall. So that’s up and running. We’ve got a new benefit system. So those systems help us look into the treaties and then to the expected headcount in our benefits business. So while the timing this quarter was mostly in reinsurance, let’s call that about two thirds, and the other one third is across our benefits business and a little bit in the specialty business. But without this timing, the first quarter for reinsurance was still in the upper teens, and it impacted specialty and benefits each about a point. But we’re going to have a little bit of that again in the second quarter, but to a lesser magnitude. And then again, the timing will reverse itself compared to last year in the third and fourth quarters. So no impact for full year organic. And we would say that this is the result of just putting in new systems and be able to make better estimates earlier on in the year.
Elyse Greenspan
Thank you.
Doug Howell
Thanks, Elyse.
Operator
Thank you. Our next questions come from the line of Greg Peters with Raymond James. Please proceed with your question.
Doug Howell
Yes, it’s pretty linear too, Greg. If you look at, let’s say, over 100, we said it’s up a point or so or something like that. But when you go to like $25,000 to $100,000, maybe it’s 3.5%, 4%, you get a little lower than that $10,000 to $25,000 account, maybe you’re getting in the mid-4s. And then when you get less than $10,000 as that account size, now this is for premiums, you’re seeing it being up in the mid-5s. So it’s consistent even within that under $100,000 million, that the smaller it gets, the higher the rate increases. We saw that not going up as fast on the other side too, when rates were going up. So I don’t know if it’s as much they’re just a reversion to the mean, also that the smaller accounts are catching up.
Greg Peters
Got it. Just a detail question on that. Is the organic profile at Assured based on what you’ve seen just similar to what you’re seeing inside your retail business?
Doug Howell
Yes.
Greg Peters
Perfect.
Doug Howell
Yes. I mean they account for 606 [ph] differently, but let’s just say it is. You can throw a hat over them.
Operator
Thank you. Our next questions come from the line of Mike
Mike Zaremski
Thanks. Good evening. Doug, the – or I think Pat might pull this too, the one point of timing benefit in Brokerage organic, is that in addition to the $26 million reversal on Page 6 of the CFO commentary, which I’ll admit is kind of over my head, in terms of its explanation?
Doug Howell
Yes. I think you’re calling out the fact last year – and we highlighted it last year, there was a gross up of revenues and a gross up of expenses as we implemented our conforming accounting policies on some historical acquisitions that caused the gross up. So we didn’t take credit for the $26 million as revenue last year and so we shouldn’t be measured by that again this year. So it’s just if you gross up the revenues, you gross up the comp on the revenues and a lot of those revenues triggered some extra earn-outs on it, it all washed to nothing. And we did talk about it last year, but it kind of sticks out a little bit more now, you can see that we repeated the note about that, on Page 6, I think it’s in the third footnote – or second or third footnote there. So it’s – we’re levelizing for a change in purchase accounting, which I think is 100% appropriate.
Operator
Thank you. Our next questions come from the line of Mark Hughes with Truist Securities. Please proceed with your questions.
Doug Howell
Yes. We’re still seeing good employment growth in those folks. We are – I think there is starting to be more chatter around medical inflation. So there could be some proactiveness there by the carriers on that in order to make sure they stay ahead of it. So it’s not a huge portion of our book really, but it is an interesting uptick that is – remember, that’s both rate and exposure. So it’s moving north and our educated guess is more exposure and higher medical inflation.
Operator
Thank you. Thank you. Our next questions come from the line of David Motemaden with Evercore ISI. Please proceed with your questions.
David Motemaden
My question, I missed it, just on the RPC for this quarter. I think you had said it was 5% last quarter. It was trending around 4% in the first two months of the quarter, this 1Q. Where did that end up for 1Q? And within your outlook, what are you guys assuming for the rest of the year?
Doug Howell
So let me see if I can break that apart. What’s your question? You want to know what the renewal premium change was in the first quarter and what our outlook is for the rest of the year? Is that the question?
David Motemaden
Yes. What’s embedded in the outlook that you gave – the organic cadence that you gave?
David Motemaden
Yes. No, that makes sense. And then lastly so I might be nitpicking here, but I think you guys have called out 5% organic in U.S. retail and it sounds like that was maybe a little bit lighter than what you guys were talking about in March. I think you guys were saying 6%. Was there anything behind that outside of just the general RPC trends that we spoke about?
Doug Howell
Listen, I think that when you get down to a point one way or another on the organic, I would say they’re almost the same number. There could be a mix difference in there. When something moves a point, I’ll be honest, we don’t dig into it as deeply if something moves five points. So the point is consider it mix, but still, the point is on this is it’s still going up. And if you look across everything that we’ve said is we still have a market that is arguably flat in a couple of spots and going up in a lot of spots, right? So I think that the fact is there still is a need for rate. The carriers see that, you’ve seen that in the releases that they’ve had. And so I think that you blend all that together, we’re selling more than we’re losing, and we feel pretty good about a 6% to 8% year, that would be a terrific five- or six-year run on that.
Operator
Thank you. [Operator Instructions] Our next questions come from the line of Katie Sakys with Autonomous Research. Please proceed with your questions.
Katie Sakys
Hi, thank you. I guess my first question, I wanted to go back to Doug’s comments on the cadence of Brokerage organic growth that you expect to see for 2Q, 3Q and 4Q? Back-of-the-envelope math, I’m kind of getting to the midpoint of the 6% to 8% full year guide. Which of those quarters, Doug, do you kind of see the most potential to upside versus your current estimates right now? And how does seasonality perhaps inform that view?
Doug Howell
I think the upside could come in the fourth quarter. I think if we have a storm season, and like Pat said, the property shifts, I also still believe that there’s going to be development issues, as you get into your third quarter actuarial reserves as they start to do their third quarter views of how they feel their development is. When it goes from a – into a paid loss triangle versus an incurred loss triangle, you kind of wake up to that when you do your actuarial reviews in the third quarter. So fourth quarter is probably the quarter where there’s the most upside.
Katie Sakys
Great. Super helpful. And then I apologize if this next question is a little bit nitpicky, but I noticed in the CFO commentary that the average EBITDAC multiple that you guys paid for your tuck-ins this quarter was slightly elevated at 11.5x versus the 10x to 11x guide. Is that just a result of some noise from one-off transactions? Or is there any additional color that we should be aware of there?
Doug Howell
If I peel apart the 11 that we closed in the quarter, I don’t see anybody really off the map on that. So being 10x to 11x is still pretty close, so.
Operator
Thank you. Our next questions come from the line of Andrew Andersen with Jefferies. Please proceed with your questions.
Andrew Andersen
Hey, good afternoon. The supplemental commissions within Brokerage were pretty strong. Was there any timing benefit there? And just maybe more broadly, could you talk about how you’re thinking about that those line items, the contingents and supplementals?
Andrew Andersen
Got it. And then just within specialty, could you maybe talk about the growth difference between open brokerage and MGA? And I suppose where I’m going with this is, I’m not sure if the MGAs are kind of weighted to property. But if we’re seeing some compression in property rate, could that impact your MGA growth in the back half of the year?
Doug Howell
Our binding business had a terrific quarter. I think they’re in the mid-teens. The Brokerage business was probably 5% to 6%, something like that. So I think between the two, Brokerage and binding, our affinity business had a terrific quarter. Captives were a little slow this quarter. But by and large, the binding business did a really great job. And the open brokerage is still continuing to show really, really nice mid-single-digit growth.
Operator
Thank you. Our next questions come from the line of Meyer Shields with KBW. Please proceed with your questions.
Doug Howell
Listen, in our culture, the fact that people run together to help each other, we’re really seeing that. We’re seeing a lot of joint meetings between our retail folks, our wholesale folks, our reinsurers. I just spent a week in London, and all the opportunities that we have with MGAs and capital formation using the reinsurance opportunities, I think we’re just scratching the surface of what Gallagher Re will bring to us.
Operator
Thank you. Our last question will come from the line of Cave Montazeri with Deutsche Bank. Please proceed with your questions.
Cave Montazeri
Makes sense. My follow-up is on your international organic growth. I think you mentioned 4% if I remember correctly, I guess it’s not a bad number in absolute terms, but it is a bit of a drag on the overall brokerage organic. Could you give us a bit of maybe regional color on what you’re seeing internationally? Maybe like some regions being better than others?
Doug Howell
Yes. Cave, it’s a flat market. Australia and New
Transcript from May 1, 2025
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