Core Viewpoint - Arthur J. Gallagher & Co. has successfully completed the acquisition of AssuredPartners, enhancing its capabilities in the insurance brokerage sector and expanding its client offerings [1][2]. Company Overview - Arthur J. Gallagher & Co. is a global insurance brokerage, risk management, and consulting services firm headquartered in Rolling Meadows, Illinois, operating in approximately 130 countries [8]. - AssuredPartners is recognized as a leading U.S. insurance broker with a diverse client base across commercial property/casualty, specialty, employee benefits, and personal lines [2]. Transaction Details - The acquisition was financed through net proceeds from previously disclosed equity and debt financing transactions [3]. - The Compensation Committee approved $316.15 million in equity awards to 572 former AssuredPartners employees to aid in retention, with vesting schedules set for immediate and subsequent anniversaries [4]. Expected Benefits - The transaction is anticipated to deepen Gallagher's capabilities in niche practice groups such as Transportation, Energy, Healthcare, and Government Contractors [6]. - It aims to create new business opportunities by leveraging Gallagher's expertise, data analytics, and extensive product offerings [6]. - The acquisition is expected to be financially attractive, with estimated double-digit adjusted EPS accretion, including the impact of synergies [6].

Group 1 - Arthur J. Gallagher & Co. announced the acquisition of Australia-based MACK Insurance Services, a commercial insurance broker focused on the agriculture sector [1][2] - The terms of the transaction were not disclosed, and Lizzie Carver and her team will join Gallagher's brokerage operations in Australia [1] - J. Patrick Gallagher, Jr., Chairman and CEO, highlighted that MACK's expertise in agriculture complements Gallagher's existing capabilities in Australia [2] Group 2 - Arthur J. Gallagher & Co. is a global insurance brokerage, risk management, and consulting services firm headquartered in Rolling Meadows, Illinois, operating in approximately 130 countries [2]

Core Insights - Arthur J. Gallagher & Co. has acquired Dion Leadership, Inc., based in Novi, Michigan, although the terms of the transaction were not disclosed [1] - Dion Leadership specializes in leadership coaching, management training, talent assessment, and organizational development consulting services across various industries [2] - The acquisition is expected to enhance Gallagher's capabilities in executive consulting, leveraging Dion Leadership's strong client relationships and expertise [3] Company Overview - Arthur J. Gallagher & Co. is a global insurance brokerage, risk management, and consulting services firm headquartered in Rolling Meadows, Illinois, operating in approximately 130 countries [3] - Steve Dion and his team will continue to operate from their current location under the leadership of Steve Coco, who is the Global Managing Director of Gallagher's Talent Consulting operations [2]

Core Viewpoint - Arthur J. Gallagher & Co. reported Q2 2025 earnings with adjusted EPS of $2.33 and revenue of $3.17 billion, both slightly below analyst expectations, highlighting strong profitability but a slowdown in organic revenue growth in the core Brokerage segment [1][2]. Financial Performance - Adjusted EPS for Q2 2025 was $2.33, compared to estimates of $2.36 and $2.29 in Q2 2024, reflecting a year-over-year increase of 1.7% [2]. - Revenue for Q2 2025 reached $3.17 billion, up 14.8% from $2.76 billion in Q2 2024 [2]. - Adjusted EBITDAC climbed to $1.01 billion, with a margin of 36.4%, an increase from 33.1% in Q2 2024 [2][6]. - Organic revenue growth in the core Brokerage segment decelerated to 5.3% in Q2 2025 from 9.5% in Q1 2025 [1][5]. Business Overview - Arthur J. Gallagher & Co. is one of the largest insurance brokers and risk managers globally, focusing on arranging insurance coverage, consulting services, and risk management solutions [3]. - The business model consists of two main segments: Brokerage and Risk Management, with a strategic focus on diversifying operations and pursuing growth through mergers and acquisitions [4]. Key Developments - The company completed 9 acquisitions in the quarter, generating an estimated annualized revenue of $290 million, with the pending AssuredPartners transaction valued at approximately $13.45 billion [7]. - Adjusted revenue for Gallagher Bassett, the risk management arm, increased to $391.8 million, with organic growth of 6.2% [8]. - The workforce grew to 59,291 employees, a 10% increase compared to the previous year [10]. Market Dynamics - The insurance market remains cautious, with property insurance renewal premiums falling by 7% in Q2 2025, while casualty lines rose by 8% in Q1 2025 [11]. - The quarterly dividend was raised to $0.65 per share, up from $0.60 in Q2 2024, indicating a positive outlook despite potential challenges in organic growth [12].

[Forward-Looking Statements](index=3&type=section&id=Forward-Looking%20Statements) The company outlines forward-looking statements and potential risks, including those related to the AssuredPartners acquisition and general business operations - The company identifies significant risks with the pending AssuredPartners acquisition, including regulatory delays, non-accretive earnings, integration challenges, and management distraction[8](index=8&type=chunk) - General business risks encompass global economic and geopolitical events, acquisition strategy challenges, technology application failures, cybersecurity incidents, and international operations risks[7](index=7&type=chunk)[9](index=9&type=chunk)[10](index=10&type=chunk) - Additional risks include competition, insurance premium volatility, challenges in benefit consulting and TPA operations, climate risks, and potential credit rating downgrades[12](index=12&type=chunk) [Part I. Financial Information](index=9&type=section&id=Part%20I.%20Financial%20Information) [Item 1. Financial Statements (Unaudited)](index=9&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) This section presents the unaudited consolidated financial statements, including earnings, balance sheet, cash flows, and equity, for Q2 and H1 2025 and 2024 [Consolidated Statement of Earnings](index=9&type=section&id=Consolidated%20Statement%20of%20Earnings) The company achieved significant revenue and net earnings growth in Q2 and H1 2025, with Q2 revenues up 16.1% and net earnings up 29.1% Consolidated Earnings Summary (in millions) | Metric | Q2 2025 | Q2 2024 | YoY Change | H1 2025 | H1 2024 | YoY Change | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Total Revenues** | $3,220.8 | $2,775.4 | +16.1% | $6,948.2 | $6,032.1 | +15.2% | | **Earnings Before Income Taxes** | $471.4 | $365.6 | +28.9% | $1,344.1 | $1,138.3 | +18.1% | | **Net Earnings Attributable to Controlling Interests** | $365.8 | $283.4 | +29.1% | $1,070.2 | $891.8 | +20.0% | | **Diluted Net Earnings Per Share** | $1.40 | $1.27 | +10.2% | $4.12 | $4.01 | +2.7% | [Consolidated Balance Sheet](index=11&type=section&id=Consolidated%20Balance%20Sheet) Total assets significantly increased as of June 30, 2025, primarily due to higher cash from financing a major pending acquisition and growth in goodwill Key Balance Sheet Items (in millions) | Account | June 30, 2025 | Dec 31, 2024 | Change | | :--- | :--- | :--- | :--- | | **Cash and cash equivalents** | $14,299.5 | $14,987.3 | -4.6% | | **Goodwill** | $13,740.3 | $12,270.2 | +12.0% | | **Total Assets** | $80,122.6 | $64,255.2 | +24.7% | | **Total Liabilities** | $57,066.3 | $44,075.6 | +29.5% | | **Total Stockholders' Equity** | $23,056.3 | $20,179.6 | +14.3% | [Consolidated Statement of Cash Flows](index=13&type=section&id=Consolidated%20Statement%20of%20Cash%20Flows) H1 2025 saw decreased operating cash flow due to earnout payments, significant cash used for investing in acquisitions, and substantial cash provided by financing activities Six-Month Cash Flow Summary (in millions) | Activity | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Net cash provided by operating activities** | $445.7 | $908.8 | | **Net cash used by investing activities** | $(1,620.5) | $(499.6) | | **Net cash provided by (used by) financing activities** | $1,317.3 | $(59.2) | [Notes to Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) Notes detail accounting policies, business combinations, segment information, and debt, highlighting significant acquisition activity and segment financial performance - The company agreed to acquire AssuredPartners for **$13.45 billion**, funded by an **$8.5 billion** stock offering and **$5.0 billion** senior notes, with closing expected in Q3 2025[48](index=48&type=chunk) - The company acquired Woodruff Sawyer for **$1.2 billion** in cash and completed **20 acquisitions** totaling **$1.65 billion** in cash during H1 2025[48](index=48&type=chunk)[49](index=49&type=chunk) - Maximum potential earnout obligations for acquisitions totaled **$1,411.5 million**, with a recorded fair value of **$600.3 million** as of June 30, 2025[121](index=121&type=chunk) Segment Revenues Before Reimbursements (H1 2025 vs H1 2024, in millions) | Segment | H1 2025 | H1 2024 | % Change | | :--- | :--- | :--- | :--- | | **Brokerage** | $6,100.2 | $5,241.2 | +16.4% | | **Risk Management** | $765.3 | $711.4 | +7.6% | | **Corporate** | $0.8 | $1.5 | -46.7% | [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=52&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management analyzes financial performance, segment results, liquidity, and capital resources, emphasizing strong revenue growth from organic and acquisition activities [Brokerage Segment Analysis](index=67&type=section&id=MD%26A%20-%20Brokerage%20Segment) The Brokerage segment, accounting for 88% of revenues, achieved a 16% revenue increase in H1 2025, driven by 7.6% organic growth and acquisitions, with an adjusted EBITDAC margin of 40.2% Brokerage Segment Performance (H1 2025 vs H1 2024) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Revenues (in millions)** | $6,100.2 | $5,241.2 | | **Organic Revenue Growth** | 7.6% | 7.6% | | **Adjusted EBITDAC (in millions)** | $2,449.5 | $1,919.7 | | **Adjusted EBITDAC Margin** | 40.2% | 36.7% | - Acquisitions contributed **$217.7 million** to commission and fee revenue growth in H1 2025[193](index=193&type=chunk) [Risk Management Segment Analysis](index=77&type=section&id=MD%26A%20-%20Risk%20Management%20Segment) The Risk Management segment's H1 2025 revenues increased by 8%, with 5.1% organic fee growth and a stable adjusted EBITDAC margin of 20.7% Risk Management Segment Performance (H1 2025 vs H1 2024) | Metric | H1 2025 | H1 2024 | | :--- | :--- | :--- | | **Revenues before reimbursements (in millions)** | $765.3 | $711.4 | | **Organic Fee Growth** | 5.1% | 10.4% | | **Adjusted EBITDAC (in millions)** | $158.6 | $145.8 | | **Adjusted EBITDAC Margin** | 20.7% | 20.6% | [Corporate Segment Analysis](index=85&type=section&id=MD%26A%20-%20Corporate%20Segment) The Corporate segment's net loss increased significantly in H1 2025, primarily due to a **$130.5 million** rise in interest expense and higher acquisition-related costs - H1 2025 interest expense increased by **$130.5 million** year-over-year, with **$131.7 million** attributed to **$5.0 billion** senior notes for the AssuredPartners acquisition[237](index=237&type=chunk) - H1 2025 operating expenses included **$53.5 million** in external professional fees for acquisitions, with **$46.6 million** specifically for the pending AssuredPartners deal[234](index=234&type=chunk) [Liquidity and Capital Resources](index=91&type=section&id=MD%26A%20-%20Liquidity%20and%20Capital%20Resources) The company maintains strong liquidity, enhanced by H1 2025 financing activities, including **$1.66 billion** for acquisitions and capital raised for the AssuredPartners deal, alongside an 8% dividend increase - Cash from operations decreased to **$445.7 million** in H1 2025 from **$908.8 million** in H1 2024, primarily due to a **$750 million** earnout payment for a 2021 acquisition[249](index=249&type=chunk) - The company raised approximately **$9.6 billion** from a common stock offering and **$5.0 billion** from senior notes to fund the AssuredPartners acquisition[260](index=260&type=chunk)[272](index=272&type=chunk) - The revolving credit facility was increased to **$2.5 billion** and extended to 2030 through an amended credit agreement in April 2025[264](index=264&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=96&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company faces market risks from interest rate and foreign currency fluctuations, detailing potential impacts and using derivatives to hedge currency exposure - A hypothetical **10%** adverse change in foreign currency exchange rates would have increased H1 2025 earnings before income taxes by approximately **$54.2 million**[286](index=286&type=chunk) - With **$12.87 billion** in fixed-rate debt, a one-percentage point decrease in borrowing rates would increase its fair value by **$202.9 million** above carrying value[282](index=282&type=chunk)[284](index=284&type=chunk) [Item 4. Controls and Procedures](index=98&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded that disclosure controls and procedures were effective as of June 30, 2025, with no material changes to internal control over financial reporting - Disclosure controls and procedures were deemed effective by the principal executive and financial officers, providing reasonable assurance[289](index=289&type=chunk) - No material changes to internal control over financial reporting occurred during the quarter[290](index=290&type=chunk) [Part II. Other Information](index=99&type=section&id=Part%20II.%20Other%20Information) [Item 1. Legal Proceedings](index=99&type=section&id=Item%201.%20Legal%20Proceedings) This section refers to Note 12 of the financial statements for details on litigation, regulatory, and taxation matters - Details on legal proceedings are provided in the "Litigation, Regulatory and Taxation Matters" section of Note 12 to the financial statements[293](index=293&type=chunk) [Item 1A. Risk Factors](index=99&type=section&id=Item%201A.%20Risk%20Factors%2E) Risk factors are detailed in the company's Annual Report on Form 10-K for the year ended December 31, 2024 - The company refers to its 2024 Form 10-K for a comprehensive discussion of risk factors[293](index=293&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=99&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) In Q2 2025, no shares were repurchased under the public plan, but **57,074** shares were acquired for employee deferred compensation plans, with **$1.5 billion** repurchase authorization remaining Issuer Purchases of Equity Securities (Q2 2025) | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | April 2025 | 37,522 | $320.77 | | May 2025 | 7,348 | $338.92 | | June 2025 | 12,204 | $320.87 | | **Total** | **57,074** | **$323.13** | - No shares were purchased under the **$1.5 billion** publicly announced repurchase plan, which remains fully available[294](index=294&type=chunk)[298](index=298&type=chunk) - All shares purchased in the quarter were acquired by trustees for the company's deferred compensation and supplemental savings plans[294](index=294&type=chunk)[295](index=295&type=chunk)

Core Insights - Arthur J. Gallagher & Co. (AJG) reported second-quarter 2025 adjusted net earnings of $2.33 per share, missing the Zacks Consensus Estimate by 1.3%, but showing a year-over-year increase of 3.1% [1][8] - Total revenues reached $3.2 billion, up 16% year over year, driven by higher commissions, fees, and interest income, beating the Zacks Consensus Estimate by 0.3% [2][8] - Total expenses increased by 14.1% year over year to $2.7 billion, attributed to higher compensation and reimbursements [2][8] - Adjusted EBITDAC grew 26% year over year to $1 billion, with a margin expansion of 307 basis points to 34.5% [3][8] Operational Update - Brokerage segment revenues were $2.7 billion, a 15.6% increase year over year, although it missed the Zacks Consensus Estimate by 0.7% [3][4] - Risk Management segment revenues rose 9.5% year over year to $391.8 million, beating the Zacks Consensus Estimate by 0.5% [5] - Corporate segment EBITDAC was negative $81.7 million, compared to a negative $47.3 million in the prior year [6] Financial Update - As of June 30, 2025, total assets were $80.1 billion, a 24.7% increase from the end of 2024 [7] - Cash and cash equivalents decreased by 4.6% to $14.3 billion from the end of 2024 [7] - Shareholders' equity increased by 14.2% to $23 billion from December 31, 2024 [7] Acquisition Update - In the reported quarter, Arthur J. Gallagher closed nine acquisitions with estimated annualized revenues of approximately $290.8 million [9]

分组1 - Arthur J. Gallagher reported quarterly earnings of $2.33 per share, missing the Zacks Consensus Estimate of $2.36 per share, but showing an increase from $2.26 per share a year ago, resulting in an earnings surprise of -1.27% [1] - The company posted revenues of $3.18 billion for the quarter ended June 2025, surpassing the Zacks Consensus Estimate by 0.25%, and an increase from year-ago revenues of $2.74 billion [2] - Over the last four quarters, Arthur J. Gallagher has surpassed consensus EPS estimates two times and topped consensus revenue estimates two times [2] 分组2 - The stock has added about 0.7% since the beginning of the year, underperforming compared to the S&P 500's gain of 8.2% [3] - The current consensus EPS estimate for the coming quarter is $2.37 on $3.2 billion in revenues, and for the current fiscal year, it is $11.00 on $13.75 billion in revenues [7] - The Zacks Industry Rank for Insurance - Brokerage is currently in the top 33% of over 250 Zacks industries, indicating a favorable outlook for the industry [8]

Financial Data and Key Metrics Changes - The company reported a 16% growth in revenue for the combined brokerage and risk management segments, with 5.4% organic growth and a reported net earnings margin of 17.3% [5] - Adjusted EBITDAC margin increased by 307 basis points year-over-year to 34.5%, with adjusted EBITDAC growth of 26% [5] - GAAP earnings per share were $2.11, while adjusted earnings per share were $2.95 [5] Segment Data and Key Metrics Changes - The Brokerage segment experienced a reported revenue growth of 17% and organic growth of 5.3%, with adjusted EBITDAC margin expanding by 334 basis points to 36.4% [6][24] - The Risk Management segment, Gallagher Bassett, saw a revenue growth of 9% with organic growth of 6.2% and an adjusted EBITDAC margin of 21% [16][28] Market Data and Key Metrics Changes - In the global property and casualty (PC) insurance market, property renewal premiums decreased by 7%, while casualty lines increased by 8% overall [10][11] - For clients generating less than $100,000 in revenue, renewal premiums were up 3%, while those generating more than $100,000 saw a decrease of 2% [11] Company Strategy and Development Direction - The company aims to maintain its competitive edge through niche expertise, extensive data analytics, and global resources [16] - The full-year 2025 brokerage segment organic growth is projected to be in the range of 6.5% to 7.5% [15] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's positioning despite market headwinds, noting solid client business activity and no signs of a significant economic downturn [14] - The company anticipates continued job growth in the U.S., albeit at a slower pace than in 2024, and is prepared to guide employers through challenges in health insurance [15] Other Important Information - The company completed nine new mergers in the second quarter, representing approximately $290 million in estimated annualized revenue, with a pipeline of around 40 term sheets signed or being prepared [18][19] - The company has about $14 billion in available cash and no outstanding borrowings, positioning it well for further M&A activities [35] Q&A Session Summary Question: Timing of HSR information submission to DOJ - Management confirmed they have completed responding to the DOJ's second request and are optimistic about closing the transaction in the third quarter [39] Question: Outlook for brokerage growth in the second half - Management indicated that the 5% brokerage outlook assumes continued pricing trends and potential benefits from the benefits business being pushed to the back half of the year [40][41] Question: Property pricing trends and guidance - Management clarified that they did not incorporate a 20-30% decrease in property pricing into their guidance, stating that the reported numbers are not reflective of such declines [46][47] Question: M&A activity and integration planning - Management expressed confidence in the integration of Assured Partners, stating they are ready to proceed with integration planning despite previous suspensions of some work streams [71][73] Question: Casualty line pricing expectations - Management noted that casualty rates are expected to continue increasing, with specific lines such as general liability and commercial auto showing steady growth [81] Question: E&S market trends - Management acknowledged an increase in submissions and growth in the excess and surplus market, indicating a mixed but generally positive outlook [88]

Financial Data and Key Metrics Changes - The company reported a 16% growth in revenue for the combined brokerage and risk management segments, with 5.4% organic growth and a reported net earnings margin of 17.3% [4][5] - Adjusted EBITDAC margin increased to 34.5%, up 307 basis points year over year, with adjusted EBITDAC growth of 26% [4][5] - GAAP earnings per share were $2.11, while adjusted earnings per share were $2.95 [5] Segment Data and Key Metrics Changes - In the Brokerage segment, reported revenue growth was 17%, with organic growth at 5.3% [5][6] - The adjusted EBITDAC margin for the Brokerage segment expanded by 334 basis points to 36.4% [5][27] - The Risk Management segment, Gallagher Bassett, saw a revenue growth of 9%, with organic growth of 6.2% and an adjusted EBITDAC margin of 21% [15][27] Market Data and Key Metrics Changes - The global property and casualty (PC) insurance market remains rational, with property renewal premiums down 7% and casualty lines up 8% overall [9][10] - For clients generating less than $100,000 in revenue, renewal premiums were up 3%, while those generating more than $100,000 saw a 2% decrease [10] - The company noted that the primary insurance market is seeing more competition across property and continued caution within casualty lines [9][12] Company Strategy and Development Direction - The company aims to leverage its niche expertise, extensive data, and analytics offerings to navigate market complexities and find the best coverage for clients [14][15] - The company is optimistic about its M&A strategy, having completed nine new mergers representing approximately $290 million of estimated annualized revenue [17][35] - The company is focused on enhancing productivity and quality through technology investments and AI initiatives [26][68] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the company's position despite market headwinds, expecting full-year 2025 brokerage segment organic growth in the range of 6.5% to 7.5% [14][21] - The company anticipates continued job growth in the U.S., although not as robust as in 2024, and is prepared to guide employers through challenges in health insurance [13][14] - Management remains bullish on the Assured Partners acquisition, expecting it to be accretive in its first year [74][75] Other Important Information - The company has approximately $14 billion in available cash and no outstanding borrowings on its line of credit, positioning it well for future M&A activities [35] - The company has around 40 term sheets signed or being prepared, representing about $500 million of annualized revenue [17] Q&A Session Summary Question: When was the HSR information sent to the DOJ? - Management stated they are not disclosing specific dates but confirmed they have responded to the second request and are engaged in ongoing discussions [40] Question: Is the 5% brokerage outlook assuming a continuation of pricing trends? - Management confirmed that the outlook is based on current pricing trends and noted potential risks with the life business [41][42] Question: Is there a significant drop in property lines baked into guidance? - Management refuted claims of a 20-30% drop in property lines, stating that such figures are inaccurate [48][50] Question: Can you provide an all-in RPC number? - Management indicated that the all-in RPC number would be about 4% [58] Question: What are the expectations for organic growth in 2026? - Management is optimistic about maintaining similar growth rates as in 2025, depending on market conditions [100]

[Executive Summary & Company Overview](index=1&type=section&id=Executive%20Summary%20%26%20Company%20Overview) [CEO Commentary](index=2&type=section&id=CEO%20Commentary) Arthur J. Gallagher & Co. reported a strong second quarter 2025, driven by robust revenue growth and improved margins in its core brokerage and risk management segments - Core brokerage and risk management segments delivered **16% revenue growth**, including **5.4% organic revenue growth**[6](index=6&type=chunk) - Second quarter net earnings margin increased **343 basis points to 17.3%**[6](index=6&type=chunk) - Adjusted EBITDAC margin increased **307 basis points to 34.5%**, and adjusted EBITDAC grew **26% year-over-year**, marking the **21st consecutive quarter of double-digit growth**[6](index=6&type=chunk) - Completed **9 new mergers** in the quarter with approximately **$290 million of estimated annualized revenue**[7](index=7&type=chunk) - The pending AssuredPartners acquisition is on track to close in the **third quarter of 2025**[7](index=7&type=chunk) - Global P/C insurance market remains rational, with property declining **7%** and casualty increasing **8%** in renewal premium changes[8](index=8&type=chunk) [About Arthur J. Gallagher & Co.](index=8&type=section&id=About%20Arthur%20J.%20Gallagher%20%26%20Co.) Arthur J. Gallagher & Co. is a global insurance brokerage, risk management, and consulting services firm, operating in approximately 130 countries worldwide - Arthur J. Gallagher & Co. is a global insurance brokerage, risk management, and consulting services firm[34](index=34&type=chunk) - Headquartered in Rolling Meadows, Illinois, the company provides services in approximately **130 countries**[34](index=34&type=chunk) [Consolidated Financial Performance](index=1&type=section&id=Consolidated%20Financial%20Performance) [Summary of Financial Results - Second Quarter](index=1&type=section&id=Summary%20of%20Financial%20Results%20-%20Second%20Quarter) The company reported strong financial performance for the second quarter of 2025, with significant increases in revenues, net earnings, and EBITDAC across all segments, both on a reported and adjusted basis, compared to the prior year Summary of Financial Results - Second Quarter (in millions, except per share) | Segment | Revenues Before Reimbursements 2nd Q 25 (in millions) | Revenues Before Reimbursements 2nd Q 24 (in millions) | Net Earnings (Loss) 2nd Q 25 (in millions) | Net Earnings (Loss) 2nd Q 24 (in millions) | EBITDAC 2nd Q 25 (in millions) | EBITDAC 2nd Q 24 (in millions) | Diluted Net Earnings (Loss) Per Share 2nd Q 25 | Diluted Net Earnings (Loss) Per Share 2nd Q 24 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Brokerage, as reported** | $ 2,785.6 | $ 2,376.3 | $ 508.4 | $ 332.8 | $ 890.5 | $ 668.1 | $ 1.95 | $ 1.48 | | **Brokerage, as adjusted** | $ 2,779.5 | $ 2,404.7 | $ 717.1 | $ 555.6 | $ 1,012.9 | $ 795.9 | $ 2.75 | $ 2.48 | | **Risk Management, as reported** | $ 391.9 | $ 358.6 | $ 42.6 | $ 47.8 | $ 75.4 | $ 72.3 | $ 0.16 | $ 0.21 | | **Risk Management, as adjusted** | $ 391.8 | $ 357.9 | $ 52.5 | $ 48.5 | $ 82.1 | $ 73.1 | $ 0.20 | $ 0.22 | | **Corporate, as reported** | $ 0.4 | $ 1.1 | $ (184.8) | $ (95.2) | $ (110.7) | $ (50.1) | $ (0.71) | $ (0.42) | | **Corporate, as adjusted** | $ 0.4 | $ 1.1 | $ (160.5) | $ (92.9) | $ (81.7) | $ (47.3) | $ (0.62) | $ (0.41) | | **Total Company, as reported** | $ 3,177.9 | $ 2,736.0 | $ 366.2 | $ 285.4 | $ 855.2 | $ 690.3 | $ 1.40 | $ 1.27 | | **Total Company, as adjusted** | $ 3,171.7 | $ 2,763.7 | $ 609.1 | $ 511.2 | $ 1,013.3 | $ 821.7 | $ 2.33 | $ 2.29 | [Summary of Financial Results - Six-Months ended June 30](index=2&type=section&id=Summary%20of%20Financial%20Results%20-%20Six-Months%20ended%20June%2030) For the six-month period ended June 30, 2025, the company demonstrated significant growth in revenues, net earnings, and EBITDAC across its segments, both on a reported and adjusted basis, compared to the same period in 2024 Summary of Financial Results - Six-Months Ended June 30 (in millions, except per share) | Segment | Revenues Before Reimbursements 6 Mths 25 (in millions) | Revenues Before Reimbursements 6 Mths 24 (in millions) | Net Earnings (Loss) 6 Mths 25 (in millions) | Net Earnings (Loss) 6 Mths 24 (in millions) | EBITDAC 6 Mths 25 (in millions) | EBITDAC 6 Mths 24 (in millions) | Diluted Net Earnings (Loss) Per Share 6 Mths 25 | Diluted Net Earnings (Loss) Per Share 6 Mths 24 | | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | :--- | | **Brokerage, as reported** | $ 6,100.2 | $ 5,241.2 | $ 1,324.5 | $ 985.4 | $ 2,241.5 | $ 1,716.8 | $ 5.08 | $ 4.40 | | **Brokerage, as adjusted** | $ 6,087.7 | $ 5,225.3 | $ 1,751.5 | $ 1,352.4 | $ 2,449.5 | $ 1,919.7 | $ 6.72 | $ 6.06 | | **Risk Management, as reported** | $ 765.3 | $ 711.4 | $ 83.7 | $ 87.1 | $ 146.9 | $ 142.8 | $ 0.32 | $ 0.39 | | **Risk Management, as adjusted** | $ 765.0 | $ 709.4 | $ 101.4 | $ 94.0 | $ 158.6 | $ 145.8 | $ 0.39 | $ 0.42 | | **Corporate, as reported** | $ 0.8 | $ 1.5 | $ (333.1) | $ (174.4) | $ (232.9) | $ (112.8) | $ (1.28) | $ (0.78) | | **Corporate, as adjusted** | $ 0.8 | $ 1.5 | $ (288.8) | $ (169.4) | $ (180.8) | $ (106.8) | $ (1.11) | $ (0.76) | | **Total Company, as reported** | $ 6,866.3 | $ 5,954.1 | $ 1,075.1 | $ 898.1 | $ 2,155.5 | $ 1,746.8 | $ 4.12 | $ 4.01 | | **Total Company, as adjusted** | $ 6,853.5 | $ 5,936.2 | $ 1,564.1 | $ 1,277.0 | $ 2,427.3 | $ 1,958.7 | $ 6.00 | $ 5.72 | [Consolidated Balance Sheet](index=14&type=section&id=Consolidated%20Balance%20Sheet) The consolidated balance sheet shows an increase in total assets and stockholders' equity at June 30, 2025, compared to December 31, 2024, primarily driven by higher cash and fiduciary assets, and an increase in capital in excess of par value Consolidated Balance Sheet Highlights (in millions) | Item | June 30, 2025 (in millions) | Dec 31, 2024 (in millions) | | :--- | :--- | :--- | | Cash and cash equivalents | $ 14,299.5 | $ 14,987.3 | | Fiduciary assets | $ 38,294.3 | $ 24,712.1 | | Total current assets | $ 57,838.1 | $ 44,113.3 | | Total assets | $ 80,122.6 | $ 64,255.2 | | Fiduciary liabilities | $ 38,294.3 | $ 24,712.1 | | Total current liabilities | $ 42,539.6 | $ 29,260.8 | | Corporate related borrowings - noncurrent | $ 12,097.9 | $ 12,731.9 | | Total liabilities | $ 57,066.3 | $ 44,075.6 | | Total stockholders' equity | $ 23,056.3 | $ 20,179.6 | [Other Information (Shares, Workforce)](index=14&type=section&id=Other%20Information%20(Shares%2C%20Workforce)) The company's diluted weighted average shares outstanding increased significantly due to a follow-on public offering, and the total workforce expanded, primarily within the Brokerage segment Other Information (Shares and Workforce) | Item | 2nd Q Ended June 30, 2025 | 2nd Q Ended June 30, 2024 | 6 Mths Ended June 30, 2025 | 6 Mths Ended June 30, 2024 | | :--- | :--- | :--- | :--- | :--- | | Basic weighted average shares outstanding (in thousands) | 256,260 | 218,789 | 255,540 | 218,126 | | Diluted weighted average shares outstanding (in thousands) | 260,435 | 222,854 | 259,929 | 222,404 | | Number of common shares outstanding at end of period (in thousands) | N/A | N/A | 256,363 | 219,107 | | Workforce - Brokerage | N/A | N/A | 44,909 | 40,566 | | Workforce - Risk Management | N/A | N/A | 10,584 | 10,103 | | Workforce - Total Company | N/A | N/A | 59,291 | 53,899 | - The increase in shares outstanding is primarily due to a follow-on public offering in December 2024 and January 2025 to fund a portion of the pending AssuredPartners acquisition[55](index=55&type=chunk) [Brokerage Segment Analysis](index=3&type=section&id=Brokerage%20Segment%20Analysis) [Organic Revenues (Non-GAAP)](index=3&type=section&id=Organic%20Revenues%20(Non-GAAP)%20-%20Brokerage%20Segment) The Brokerage segment demonstrated solid organic revenue growth across all categories for both the second quarter and the six-month period ended June 30, 2025, with contingent revenues showing the highest organic change in Q2 Brokerage Segment Organic Revenues (Non-GAAP) | Category | Organic Change 2nd Q 2025 | Organic Change 6 Mths 2025 | | :--- | :--- | :--- | | Organic base commissions and fees | 4.7% | 7.1% | | Organic supplemental revenues | 10.5% | 16.2% | | Organic contingent revenues | 16.5% | 10.9% | | Total organic change | 5.3% | 7.6% | [Acquisition Activity](index=3&type=section&id=Acquisition%20Activity%20-%20Brokerage%20Segment) The Brokerage segment continued its acquisition strategy, closing 9 new mergers in Q2 2025 with substantial estimated annualized revenues. The significant AssuredPartners acquisition is progressing as planned, with financing secured and an expected close in Q3 2025 Brokerage Segment Acquisition Activity | Metric | 2nd Q 2025 | 2nd Q 2024 | 6 Mths 2025 | 6 Mths 2024 | | :--- | :--- | :--- | :--- | :--- | | Number of acquisitions closed | 9 | 12 | 19 | 24 | | Estimated annualized revenues acquired (in millions) | $ 290.8 | $ 72.0 | $ 353.5 | $ 141.2 | - The acquisition of AssuredPartners for approximately **$13.45 billion** is expected to close in the **third quarter of 2025**, following regulatory approvals[13](index=13&type=chunk) - Funding for AssuredPartners acquisition included **$8.5 billion** from a common stock offering and **$5.0 billion** from senior notes issuance in December 2024, with an additional **$1.28 billion** from overallotment exercise in January 2025[13](index=13&type=chunk) [Compensation Expense and Ratios](index=4&type=section&id=Compensation%20Expense%20and%20Ratios%20-%20Brokerage%20Segment) The Brokerage segment saw a decrease in both reported and adjusted compensation expense ratios in Q2 2025 compared to Q2 2024, primarily benefiting from higher interest income and headcount controls, despite some offsetting costs Brokerage Segment Compensation Expense and Ratios (in millions) | Metric | 2nd Q 2025 (in millions) | 2nd Q 2024 (in millions) | 6 Mths 2025 (in millions) | 6 Mths 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Compensation expense, as reported | $ 1,526.2 | $ 1,370.3 | $ 3,143.4 | $ 2,847.1 | | Compensation expense, as adjusted | $ 1,419.8 | $ 1,293.2 | $ 2,962.8 | $ 2,676.5 | | Reported compensation expense ratios | 54.8% | 57.7% | 51.5% | 54.3% | | Adjusted compensation expense ratios | 51.1% | 53.8% | 48.7% | 51.2% | - Reported compensation expense ratio decreased by **2.9 percentage points**, primarily due to higher interest income from AssuredPartners financing proceeds and headcount control savings, partially offset by higher acquisition-related adjustments and workforce/lease termination charges[14](index=14&type=chunk) - Adjusted compensation expense ratio decreased by **2.7 percentage points**, mainly benefiting from higher interest income and headcount control savings[15](index=15&type=chunk) [Operating Expense and Ratios](index=4&type=section&id=Operating%20Expense%20and%20Ratios%20-%20Brokerage%20Segment) The Brokerage segment's operating expense ratios decreased in Q2 2025, driven by higher interest income and real estate savings, despite an increase in technology costs Brokerage Segment Operating Expense and Ratios (in millions) | Metric | 2nd Q 2025 (in millions) | 2nd Q 2024 (in millions) | 6 Mths 2025 (in millions) | 6 Mths 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Operating expense, as reported | $ 368.9 | $ 337.9 | $ 715.3 | $ 677.3 | | Operating expense, as adjusted | $ 346.8 | $ 315.6 | $ 675.4 | $ 629.1 | | Reported operating expense ratios | 13.2% | 14.2% | 11.7% | 12.9% | | Adjusted operating expense ratios | 12.5% | 13.1% | 11.1% | 12.0% | - Reported operating expense ratio decreased by **1.0 percentage point**, primarily due to higher interest income from AssuredPartners financing proceeds, lower integration costs, and real estate savings from office consolidations, partially offset by increased technology costs[16](index=16&type=chunk) - Adjusted operating expense ratio decreased by **0.6 percentage points**, benefiting from higher interest income and real estate savings, partially offset by increased technology costs[17](index=17&type=chunk) [Net Earnings to Adjusted EBITDAC (Non-GAAP)](index=5&type=section&id=Net%20Earnings%20to%20Adjusted%20EBITDAC%20(Non-GAAP)%20-%20Brokerage%20Segment) The Brokerage segment reported a significant increase in net earnings and adjusted EBITDAC for Q2 and 6 months 2025, with improved margins, partly due to interest income from acquisition financing Brokerage Segment Net Earnings to Adjusted EBITDAC (in millions) | Metric | 2nd Q 2025 (in millions) | 2nd Q 2024 (in millions) | 6 Mths 2025 (in millions) | 6 Mths 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net earnings, as reported | $ 508.4 | $ 332.8 | $ 1,324.5 | $ 985.4 | | EBITDAC | $ 890.5 | $ 668.1 | $ 2,241.5 | $ 1,716.8 | | EBITDAC, as adjusted | $ 1,012.9 | $ 795.9 | $ 2,449.5 | $ 1,919.7 | | Net earnings margin, as reported | 18.3% | 14.0% | 21.7% | 18.8% | | EBITDAC margin, as adjusted | 36.4% | 33.1% | 40.2% | 36.7% | - Second quarter 2025 adjusted EBITDAC margin includes approximately **$144 million of interest income** revenues earned on proceeds related to the AssuredPartners Financing[18](index=18&type=chunk) [Reported Statement of Earnings and EBITDAC - Brokerage Segment](index=12&type=section&id=Reported%20Statement%20of%20Earnings%20and%20EBITDAC%20-%20Brokerage%20Segment) The Brokerage segment's reported statement of earnings shows substantial growth in total revenues and net earnings for both the second quarter and six-month period of 2025, with a corresponding increase in EBITDAC Brokerage Segment Reported Statement of Earnings and EBITDAC (in millions) | Metric | 2nd Q Ended June 30, 2025 (in millions) | 2nd Q Ended June 30, 2024 (in millions) | 6 Mths Ended June 30, 2025 (in millions) | 6 Mths Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Total revenues | $ 2,785.6 | $ 2,376.3 | $ 6,100.2 | $ 5,241.2 | | Compensation | $ 1,526.2 | $ 1,370.3 | $ 3,143.4 | $ 2,847.1 | | Operating | $ 368.9 | $ 337.9 | $ 715.3 | $ 677.3 | | Depreciation | $ 38.1 | $ 32.3 | $ 71.0 | $ 65.1 | | Amortization | $ 174.3 | $ 170.8 | $ 377.9 | $ 326.8 | | Net earnings | $ 508.4 | $ 332.8 | $ 1,324.5 | $ 985.4 | | EBITDAC | $ 890.5 | $ 668.1 | $ 2,241.5 | $ 1,716.8 | [Reconciliation of Non-GAAP Measures - Pre-tax Earnings and Diluted Net Earnings per Share - Brokerage Segment](index=15&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures%20-%20Pre-tax%20Earnings%20and%20Diluted%20Net%20Earnings%20per%20Share%20-%20Brokerage%20Segment) This section provides a detailed reconciliation of the Brokerage segment's GAAP pre-tax earnings and diluted net earnings per share to adjusted non-GAAP measures, highlighting the impact of various adjustments for both the second quarter and six-month periods of 2025 and 2024 Brokerage Segment Reconciliation of Non-GAAP Measures - 2nd Q Ended June 30, 2025 (in millions, except per share) | Adjustment | Earnings Before Income Taxes (in millions) | Provision for Income Taxes (in millions) | Net Earnings (Loss) (in millions) | Diluted Net Earnings (Loss) per Share | | :--- | :--- | :--- | :--- | :--- | | Brokerage, as reported | $ 684.4 | $ 176.0 | $ 508.4 | $ 1.95 | | Net (gains) on divestitures | (6.1) | (1.6) | (4.5) | (0.02) | | Acquisition integration | 40.7 | 10.3 | 30.4 | 0.12 | | Workforce and lease termination | 37.8 | 9.7 | 28.1 | 0.11 | | Acquisition related adjustments | 33.2 | 8.4 | 24.8 | 0.09 | | Amortization of intangible assets | 174.3 | 44.4 | 129.9 | 0.50 | | **Brokerage, as adjusted** | **$ 964.3** | **$ 247.2** | **$ 717.1** | **$ 2.75** | Brokerage Segment Reconciliation of Non-GAAP Measures - 6 Mths Ended June 30, 2025 (in millions, except per share) | Adjustment | Earnings Before Income Taxes (in millions) | Provision for Income Taxes (in millions) | Net Earnings (Loss) (in millions) | Diluted Net Earnings (Loss) per Share | | :--- | :--- | :--- | :--- | :--- | | Brokerage, as reported | $ 1,783.5 | $ 459.0 | $ 1,324.5 | $ 5.08 | | Net (gains) on divestitures | (12.5) | (3.2) | (9.3) | (0.04) | | Acquisition integration | 84.7 | 21.4 | 63.3 | 0.24 | | Workforce and lease termination | 55.7 | 14.2 | 41.5 | 0.16 | | Acquisition related adjustments | 66.1 | 16.7 | 49.4 | 0.19 | | Amortization of intangible assets | 377.9 | 95.8 | 282.1 | 1.09 | | **Brokerage, as adjusted** | **$ 2,355.4** | **$ 603.9** | **$ 1,751.5** | **$ 6.72** | [Risk Management Segment Analysis](index=5&type=section&id=Risk%20Management%20Segment%20Analysis) [Organic Revenues (Non-GAAP)](index=5&type=section&id=Organic%20Revenues%20(Non-GAAP)%20-%20Risk%20Management%20Segment) The Risk Management segment achieved consistent organic fee revenue growth for both the second quarter and six-month period of 2025 Risk Management Segment Organic Revenues (Non-GAAP) | Metric | 2nd Q 2025 | 2nd Q 2024 | 6 Mths 2025 | 6 Mths 2024 | | :--- | :--- | :--- | :--- | :--- | | Fees as reported (in millions) | $ 383.3 | $ 349.5 | $ 747.9 | $ 694.0 | | Organic fees (in millions) | $ 368.1 | $ 346.6 | $ 722.4 | $ 687.6 | | Organic change in fees | 6.2% | N/A | 5.1% | N/A | [Acquisition Activity](index=5&type=section&id=Acquisition%20Activity%20-%20Risk%20Management%20Segment) The Risk Management segment completed one acquisition in the six-month period of 2025, contributing to its annualized revenues Risk Management Segment Acquisition Activity | Metric | 2nd Q 2025 | 2nd Q 2024 | 6 Mths 2025 | 6 Mths 2024 | | :--- | :--- | :--- | :--- | :--- | | Number of acquisitions closed | — | — | 1 | — | | Estimated annualized revenues acquired (in millions) | $ — | $ — | $ 38.2 | $ — | [Compensation Expense and Ratios](index=6&type=section&id=Compensation%20Expense%20and%20Ratios%20-%20Risk%20Management%20Segment) The Risk Management segment's reported compensation expense ratio increased slightly in Q2 2025, influenced by higher acquisition-related adjustments and incentive compensation, while the adjusted ratio remained flat due to headcount controls Risk Management Segment Compensation Expense and Ratios (in millions) | Metric | 2nd Q 2025 (in millions) | 2nd Q 2024 (in millions) | 6 Mths 2025 (in millions) | 6 Mths 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Compensation expense, as reported | $ 243.6 | $ 219.2 | $ 474.7 | $ 433.1 | | Compensation expense, as adjusted | $ 238.4 | $ 217.8 | $ 465.8 | $ 429.0 | | Reported compensation expense ratios | 62.2% | 61.1% | 62.0% | 60.9% | | Adjusted compensation expense ratios | 60.9% | 60.9% | 60.9% | 60.5% | - Reported compensation expense ratio increased by **1.1 percentage points**, primarily due to higher acquisition-related adjustments, workforce and lease termination costs, and incentive compensation, partially offset by headcount control savings[20](index=20&type=chunk) - Adjusted compensation expense ratio was flat, benefiting from headcount controls and temporary help, offset by incentive compensation[21](index=21&type=chunk) [Operating Expense and Ratios](index=6&type=section&id=Operating%20Expense%20and%20Ratios%20-%20Risk%20Management%20Segment) The Risk Management segment's operating expense ratios slightly decreased in Q2 2025, driven by savings in client-related and real estate expenses, despite increased technology and integration costs Risk Management Segment Operating Expense and Ratios (in millions) | Metric | 2nd Q 2025 (in millions) | 2nd Q 2024 (in millions) | 6 Mths 2025 (in millions) | 6 Mths 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Operating expense, as reported | $ 72.9 | $ 67.1 | $ 143.7 | $ 135.5 | | Operating expense, as adjusted | $ 71.3 | $ 67.0 | $ 140.6 | $ 134.6 | | Reported operating expense ratios | 18.6% | 18.7% | 18.8% | 19.1% | | Adjusted operating expense ratios | 18.2% | 18.7% | 18.4% | 19.0% | - Reported operating expense ratio decreased by **0.1 percentage points**, benefiting from savings in client-related expenses and lower real estate expenses, partially offset by increased technology and integration costs[22](index=22&type=chunk) - Adjusted operating expense ratio decreased by **0.5 percentage points**, primarily due to savings in client-related expenses and lower real estate expenses, partially offset by increased technology costs[23](index=23&type=chunk) [Net Earnings to Adjusted EBITDAC (Non-GAAP)](index=6&type=section&id=Net%20Earnings%20to%20Adjusted%20EBITDAC%20(Non-GAAP)%20-%20Risk%20Management%20Segment) The Risk Management segment experienced a slight decrease in reported net earnings but an increase in adjusted EBITDAC for Q2 2025, with improved adjusted EBITDAC margins Risk Management Segment Net Earnings to Adjusted EBITDAC (in millions) | Metric | 2nd Q 2025 (in millions) | 2nd Q 2024 (in millions) | 6 Mths 2025 (in millions) | 6 Mths 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Net earnings, as reported | $ 42.6 | $ 47.8 | $ 83.7 | $ 87.1 | | EBITDAC | $ 75.4 | $ 72.3 | $ 146.9 | $ 142.8 | | EBITDAC, as adjusted | $ 82.1 | $ 73.1 | $ 158.6 | $ 145.8 | | Net earnings margin, as reported | 10.9% | 13.3% | 10.9% | 12.2% | | EBITDAC margin, as adjusted | 21.0% | 20.4% | 20.7% | 20.6% | [Reported Statement of Earnings and EBITDAC - Risk Management Segment](index=12&type=section&id=Reported%20Statement%20of%20Earnings%20and%20EBITDAC%20-%20Risk%20Management%20Segment) The Risk Management segment's reported statement of earnings shows an increase in revenues before reimbursements for both the second quarter and six-month period of 2025, with a slight decrease in net earnings but an increase in EBITDAC Risk Management Segment Reported Statement of Earnings and EBITDAC (in millions) | Metric | 2nd Q Ended June 30, 2025 (in millions) | 2nd Q Ended June 30, 2024 (in millions) | 6 Mths Ended June 30, 2025 (in millions) | 6 Mths Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Revenues before reimbursements | $ 391.9 | $ 358.6 | $ 765.3 | $ 711.4 | | Total revenues | $ 434.8 | $ 398.0 | $ 847.2 | $ 789.4 | | Compensation | $ 243.6 | $ 219.2 | $ 474.7 | $ 433.1 | | Operating | $ 72.9 | $ 67.1 | $ 143.7 | $ 135.5 | | Depreciation | $ 9.9 | $ 6.8 | $ 19.4 | $ 17.7 | | Amortization | $ 6.8 | $ — | $ 12.5 | $ 6.3 | | Net earnings | $ 42.6 | $ 47.8 | $ 83.7 | $ 87.1 | | EBITDAC | $ 75.4 | $ 72.3 | $ 146.9 | $ 142.8 | [Reconciliation of Non-GAAP Measures - Pre-tax Earnings and Diluted Net Earnings per Share - Risk Management Segment](index=15&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures%20-%20Pre-tax%20Earnings%20and%20Diluted%20Net%20Earnings%20per%20Share%20-%20Risk%20Management%20Segment) This section details the reconciliation of the Risk Management segment's GAAP pre-tax earnings and diluted net earnings per share to adjusted non-GAAP measures, outlining the impact of various adjustments for both the second quarter and six-month periods of 2025 and 2024 Risk Management Segment Reconciliation of Non-GAAP Measures - 2nd Q Ended June 30, 2025 (in millions, except per share) | Adjustment | Earnings Before Income Taxes (in millions) | Provision for Income Taxes (in millions) | Net Earnings (Loss) (in millions) | Diluted Net Earnings (Loss) per Share | | :--- | :--- | :--- | :--- | :--- | | Risk Management, as reported | $ 58.0 | $ 15.4 | $ 42.6 | $ 0.16 | | Net (gains) on divestitures | (0.1) | — | (0.1) | — | | Acquisition integration | 1.5 | 0.4 | 1.1 | 0.01 | | Workforce and lease termination | 4.0 | 1.1 | 2.9 | 0.01 | | Acquisition related adjustments | 1.4 | 0.4 | 1.0 | — | | Amortization of intangible assets | 6.8 | 1.8 | 5.0 | 0.02 | | **Risk Management, as adjusted** | **$ 71.6** | **$ 19.1** | **$ 52.5** | **$ 0.20** | Risk Management Segment Reconciliation of Non-GAAP Measures - 6 Mths Ended June 30, 2025 (in millions, except per share) | Adjustment | Earnings Before Income Taxes (in millions) | Provision for Income Taxes (in millions) | Net Earnings (Loss) (in millions) | Diluted Net Earnings (Loss) per Share | | :--- | :--- | :--- | :--- | :--- | | Risk Management, as reported | $ 113.9 | $ 30.2 | $ 83.7 | $ 0.32 | | Net (gains) on divestitures | (0.3) | (0.1) | (0.2) | — | | Acquisition integration | 3.1 | 0.9 | 2.2 | 0.01 | | Workforce and lease termination | 7.2 | 2.0 | 5.2 | 0.02 | | Acquisition related adjustments | 1.8 | 0.5 | 1.3 | — | | Amortization of intangible assets | 12.5 | 3.3 | 9.2 | 0.04 | | **Risk Management, as adjusted** | **$ 138.2** | **$ 36.8** | **$ 101.4** | **$ 0.39** | [Corporate Segment Analysis](index=7&type=section&id=Corporate%20Segment%20Analysis) [Corporate Segment Reported GAAP Information](index=7&type=section&id=Corporate%20Segment%20Reported%20GAAP%20Information) The Corporate segment reported increased pretax losses and net losses for both the second quarter and six-month period of 2025 compared to 2024, primarily driven by higher interest and banking costs and acquisition-related expenses Corporate Segment Reported GAAP Information - 2nd Quarter (in millions) | Component | Pretax Loss 2025 (in millions) | Net Earnings (Loss) Attributable to Controlling Interests 2025 (in millions) | Pretax Loss 2024 (in millions) | Net Earnings (Loss) Attributable to Controlling Interests 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Interest and banking costs | $ (159.5) | $ (118.0) | $ (95.0) | $ (70.3) | | Clean energy related | $ (1.8) | $ (1.3) | $ (2.2) | $ (1.8) | | Acquisition costs | $ (34.1) | $ (28.6) | $ (7.3) | $ (6.1) | | Corporate (2) | $ (75.6) | $ (36.9) | $ (41.6) | $ (17.0) | | **Reported 2nd Quarter** | **$ (271.0)** | **$ (184.8)** | **$ (146.1)** | **$ (95.2)** | | **Adjusted 2nd Quarter** | **$ (242.0)** | **$ (160.5)** | **$ (143.3)** | **$ (92.9)** | Corporate Segment Reported GAAP Information - Six Months (in millions) | Component | Pretax Loss 2025 (in millions) | Net Earnings (Loss) Attributable to Controlling Interests 2025 (in millions) | Pretax Loss 2024 (in millions) | Net Earnings (Loss) Attributable to Controlling Interests 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Interest and banking costs | $ (319.0) | $ (236.0) | $ (188.1) | $ (139.2) | | Clean energy related | $ (3.6) | $ (2.6) | $ (4.1) | $ (3.2) | | Acquisition costs | $ (60.5) | $ (51.6) | $ (12.0) | $ (10.0) | | Corporate (2) | $ (170.2) | $ (42.9) | $ (98.5) | $ (22.0) | | **Reported Year** | **$ (553.3)** | **$ (333.1)** | **$ (302.7)** | **$ (174.4)** | | **Adjusted six months** | **$ (501.2)** | **$ (288.8)** | **$ (296.7)** | **$ (169.4)** | [Components of Corporate Segment Costs](index=8&type=section&id=Components%20of%20Corporate%20Segment%20Costs) This section defines and explains the key cost components contributing to the Corporate segment's financial results, including interest and banking costs, clean energy investments, acquisition-related expenses, and general corporate overhead, along with the consolidated effective tax rate - Interest and banking costs in Q2 2025 are higher than Q2 2024 primarily due to debt issuances in December 2024[28](index=28&type=chunk) - Clean energy related costs consist of operating results from Gallagher's investments in new clean energy projects[29](index=29&type=chunk) - Acquisition costs primarily include external professional fees, due diligence costs, and gains/losses from forward currency hedges for acquisitions[30](index=30&type=chunk) - Corporate costs include overhead allocations for staff compensation, other corporate activities, net unrealized foreign exchange remeasurement, and various tax items[31](index=31&type=chunk) - Consolidated effective tax rates for Q2 2025 and 2024 were **22.3%** and **21.9%**, respectively[32](index=32&type=chunk) [Reported Statement of Earnings and EBITDAC - Corporate Segment](index=13&type=section&id=Reported%20Statement%20of%20Earnings%20and%20EBITDAC%20-%20Corporate%20Segment) The Corporate segment's reported statement of earnings shows increased losses before income taxes and net losses for both the second quarter and six-month period of 2025, with a corresponding increase in negative EBITDAC Corporate Segment Reported Statement of Earnings and EBITDAC (in millions) | Metric | 2nd Q Ended June 30, 2025 (in millions) | 2nd Q Ended June 30, 2024 (in millions) | 6 Mths Ended June 30, 2025 (in millions) | 6 Mths Ended June 30, 2024 (in millions) | | :--- | :--- | :--- | :--- | :--- | | Other income | $ 0.4 | $ 1.1 | $ 0.8 | $ 1.5 | | Total revenues | $ 0.4 | $ 1.1 | $ 0.8 | $ 1.5 | | Compensation | $ 33.6 | $ 30.6 | $ 83.0 | $ 65.8 | | Operating | $ 77.5 | $ 20.6 | $ 150.7 | $ 48.5 | | Interest | $ 158.6 | $ 94.3 | $ 317.0 | $ 186.5 | | Depreciation | $ 1.7 | $ 1.7 | $ 3.4 | $ 3.4 | | Loss before income taxes | $ (271.0) | $ (146.1) | $ (553.3) | $ (302.7) | | Benefit for income taxes | $ (86.2) | $ (50.9) | $ (220.2) | $ (128.3) | | Net loss | $ (184.8) | $ (95.2) | $ (333.1) | $ (174.4) | | EBITDAC | $ (110.7) | $ (50.1) | $ (232.9) | $ (112.8) | [Reconciliation of Non-GAAP Measures - Pre-tax Earnings and Diluted Net Earnings per Share - Corporate Segment](index=15&type=section&id=Reconciliation%20of%20Non-GAAP%20Measures%20-%20Pre-tax%20Earnings%20and%20Diluted%20Net%20Earnings%20per%20Share%20-%20Corporate%20Segment) This section provides a detailed reconciliation of the Corporate segment's GAAP pre-tax earnings and diluted net earnings per share to adjusted non-GAAP measures, specifically highlighting the impact of transaction-related costs for both the second quarter and six-month periods of 2025 and 2024 Corporate Segment Reconciliation of Non-GAAP Measures - 2nd Q Ended June 30, 2025 (in millions, except per share) | Adjustment | Earnings Before Income Taxes (in millions) | Benefit for Income Taxes (in millions) | Net Earnings (Loss) (in millions) | Diluted Net Earnings (Loss) per Share | | :--- | :--- | :--- | :--- | :--- | | Corporate, as reported | $ (271.0) | $ (86.2) | $ (184.8) | $ (0.71) | | Transaction-related costs | 29.0 | 4.7 | 24.3 | 0.09 | | **Corporate, as adjusted** | **$ (242.0)** | **$ (81.5)** | **$ (160.5)** | **$ (0.62)** | Corporate Segment Reconciliation of Non-GAAP Measures - 6 Mths Ended June 30, 2025 (in millions, except per share) | Adjustment | Earnings Before Income Taxes (in millions) | Benefit for Income Taxes (in millions) | Net Earnings (Loss) (in millions) | Diluted Net Earnings (Loss) per Share | | :--- | :--- | :--- | :--- | :--- | | Corporate, as reported | $ (553.3) | $ (220.2) | $ (333.1) | $ (1.28) | | Transaction-related costs | 52.1 | 7.8 | 44.3 | 0.17 | | **Corporate, as adjusted** | **$ (501.2)** | **$ (212.4)** | **$ (288.8)** | **$ (1.11)** | [Non-GAAP Measures and Other Disclosures](index=8&type=section&id=Non-GAAP%20Measures%20and%20Other%20Disclosures) [Information Regarding Non-GAAP Measures](index=9&type=section&id=Information%20Regarding%20Non-GAAP%20Measures) This section provides detailed definitions and explanations for the non-GAAP financial measures used in the report, such as EBITDAC, adjusted EBITDAC, adjusted EPS, and organic revenue, clarifying their purpose and how they are derived from GAAP figures - Non-GAAP measures are used to provide useful information to management, analysts, and investors regarding financial and business trends, and for evaluating executive officer incentive compensation[39](index=39&type=chunk) - Adjusted measures exclude items like net gains (losses) on divestitures, acquisition integration costs, transaction-related costs, workforce and lease termination charges, acquisition related adjustments, amortization of intangible assets, foreign currency translation impact, and effective income tax rate impact[41](index=41&type=chunk)[43](index=43&type=chunk) - EBITDAC is defined as net earnings before interest, income taxes, depreciation, amortization, and the change in estimated acquisition earnout payables[43](index=43&type=chunk) - Organic revenues exclude the first twelve months of revenues from acquisitions, revenues from divested operations, and the period-over-period impact of foreign currency translation to provide a comparable measure of revenue growth[44](index=44&type=chunk) [Forward-Looking Statements & Risk Factors](index=8&type=section&id=Forward-Looking%20Statements%20%26%20Risk%20Factors) This section contains a cautionary statement regarding forward-looking information and outlines various important factors and risks that could cause actual results to differ materially from those projected, including global economic conditions, acquisition-related challenges, and operational risks - Forward-looking statements include anticipated future results, expected timing of the AssuredPartners acquisition, acquisition rollover revenues, changes in expenses, future capital structure, foreign currency impact, integration costs, effective tax rate, premium rate environment, and the economic environment[35](index=35&type=chunk) - Important risk factors include global economic and geopolitical events (e.g., interest/inflation rates, political violence), acquisition risks (e.g., closing, integration, unforeseen liabilities), reputational damage (e.g., culture, sustainability backlash), cybersecurity, technology/AI risks, competition for talent, business interruptions, international operations risks, data privacy, changes in insurance markets, and tax/environmental compliance[37](index=37&type=chunk) - Readers are cautioned against relying on forward-looking statements and are advised to refer to Gallagher's SEC filings for a more detailed discussion of risk factors[36](index=36&type=chunk)[38](index=38&type=chunk) [Webcast Conference Call](index=8&type=section&id=Webcast%20Conference%20Call) Details for the webcast conference call to discuss the financial results are provided, including the date, time, and access information - A webcast conference call will be hosted on **Thursday, July 31, 2025**, at **5:15 p.m. ET/4:15 p.m. CT**[33](index=33&type=chunk) - To listen to the call or access the replay, visit Arthur J. Gallagher & Co. - Events & Presentations (ajg.com)[33](index=33&type=chunk)