Financial Performance - The company achieved a revenue growth of 20% in Q3 2025, marking the 19th consecutive quarter of double-digit growth [4][5] - Organic growth was reported at 4.8%, with adjusted EBITDA growing by 22% and adjusted EBITDA margins expanding by 26 basis points [5][11] - GAAP EPS was $1.76, while adjusted EPS was $2.87, which would have been $0.22 higher if adjusted for intra-quarter revenue seasonality [5][11] Brokerage Segment Performance - The brokerage segment reported a revenue growth of 22%, with organic growth at 4.5% [6][11] - Within retail operations, property and casualty organic growth was 5%, with U.S. growth exceeding 7% [6][7] - Employee benefits showed around 1% organic growth, while wholesale and specialty businesses delivered 5% organic growth [7][11] Risk Management Segment Performance - The risk management segment, Gallagher Bassett, saw an 8% revenue growth, including 6.7% organic growth [11][12] - Adjusted EBITDA margin for this segment was reported at 21.8%, slightly better than previous expectations [12][21] Market Dynamics - The global insurance renewal premium changes showed property down 5% and casualty lines up 6% overall, indicating a mixed pricing environment [8][9] - The company noted a bifurcation in renewal premium changes by client size, with smaller clients seeing a 3% increase while larger clients experienced a 1% decrease [9][10] - The reinsurance market remains healthy with adequate capacity, and the company anticipates stable conditions for January 1 renewals [10][11] Strategic Direction and M&A Activity - The company is focused on a two-pronged revenue growth strategy involving organic growth and mergers & acquisitions (M&A) [4][12] - Since acquiring AssuredPartners, the company has completed five new mergers, contributing approximately $40 million in estimated annualized revenue [12][13] - The company has a pipeline of about 35 term sheets signed or being prepared, representing around $400 million of annualized revenue [13][25] Management Commentary on Future Outlook - Management expressed confidence in the company's positioning for growth despite economic uncertainties, with expectations of around 5% organic growth in Q4 [10][11] - The company anticipates full-year margins around 21% for Gallagher Bassett, indicating a strong performance outlook [12][21] - Management highlighted the importance of maintaining a client-centric culture and leveraging proprietary data and analytics for competitive advantage [11][14] Q&A Session Summary Question: Regarding AssuredPartners and new business - Management clarified that revenue synergies from AssuredPartners will be credited to their P&Ls, while broader base contingent commissions impacting legacy Gallagher will be included in organic growth [29] Question: Organic growth outlook for 2026 - Management indicated that 2026 could resemble 2025, with strong performance expected in reinsurance and property & casualty businesses [30] Question: M&A pipeline post-AssuredPartners acquisition - Management noted that it is still early to assess the full impact of AssuredPartners on the M&A pipeline, but there is optimism for future opportunities [31][32] Question: Market conditions and pricing dynamics - Management acknowledged that while casualty pricing remains stable, there is a mixed environment with property pricing showing some relief [60][62] Question: Employee benefits and new business acquisition - Management expects strong performance in employee benefits due to rising medical costs and a competitive labor market, which will drive new business opportunities [72][74]

Financial Performance - The company achieved a revenue growth of 20% in Q3 2025, marking the 19th consecutive quarter of double-digit growth [3][4] - Adjusted EBITDA grew by 22%, with adjusted EBITDA margins expanding by 26 basis points [4] - GAAP EPS was reported at $1.76, while adjusted EPS was $2.87, which would have been $0.22 higher if adjusted for intra-quarter revenue seasonality [4] Business Segment Performance - The brokerage segment reported a revenue growth of 22%, with organic growth at 4.5% [5] - Employee benefits experienced around 1% organic growth, impacted by lower-than-expected large life cases [6] - The risk management segment, Gallagher Bassett, saw an 8% revenue growth, with organic growth at 6.7% [11][20] Market Dynamics - Global insurance renewal premium changes showed property down 5% and casualty lines up 6% overall, indicating a mixed pricing environment [8][9] - The company noted a bifurcation in renewal premium changes by client size, with smaller clients seeing a 3% increase while larger clients experienced a 1% decrease [9] - The reinsurance market remains healthy with adequate capacity to meet expected demand [10] Strategic Direction and Competitive Landscape - The company is focused on a two-pronged revenue growth strategy, emphasizing both organic growth and mergers & acquisitions [3] - The integration of AssuredPartners is seen as a significant opportunity for value creation, with a strong emphasis on collaboration and shared resources [12][13] - The company aims to leverage its extensive data and analytics capabilities to enhance competitive positioning [11] Management Commentary on Economic Environment - Management expressed confidence in the company's positioning to grow despite market conditions, citing solid client business activity and positive revenue indications [10][11] - There are no signs of an economic downturn, and the company anticipates continued organic growth in the brokerage segment [11][20] - Management highlighted the importance of addressing rising health insurance costs for clients as a key focus area [10] Other Important Information - The company completed five new mergers in the year, contributing approximately $40 million in estimated annualized revenue [13] - The pipeline for future M&A includes about 35 term sheets signed or being prepared, representing around $400 million in annualized revenue [13] Q&A Session Summary Question: Regarding AssuredPartners and new business - Revenue synergies from AssuredPartners will be credited to their P&L, while broader base contingent commissions may impact legacy Gallagher's organic growth [25] Question: Organic growth outlook for 2026 - Management is comfortable that 2026 could resemble 2025, with strong performance expected in reinsurance and P&C businesses [26] Question: M&A pipeline post-AssuredPartners acquisition - The M&A pipeline from AssuredPartners has not yet been integrated, but there is optimism about future opportunities [27][28] Question: Pricing dynamics in the market - Management noted that while casualty pricing increases are stabilizing, property pricing is experiencing downward pressure [39][45] Question: Employee benefits outlook - The fourth quarter is expected to be strong for employee benefits, driven by talent retention strategies and managing rising health insurance costs [47][48]

Financial Performance & Estimates - The brokerage segment's foreign currency impact on revenues is estimated to be approximately $52 million for full year 2025[11] - The brokerage segment's amortization of intangibles is estimated at $828 million pretax for full year 2025[11] - The risk management segment's EBITDAC margin, as adjusted, is expected to be approximately 21% for full year 2025[11] - Net after-tax cash flow from clean energy investments is estimated to be greater than $180 million in 2025 and greater than $200 million in 2026 and beyond[22] AssuredPartners Acquisition - AssuredPartners' estimated revenue for the fourth quarter of 2025 is $710 million[36] - AssuredPartners' estimated adjusted EBITDAC margin is 33% for FY 2026[36] - Gallagher expects to achieve approximately $260 to $280 million of annual run-rate synergies from the AssuredPartners acquisition by early 2028[37] Acquisition Rollover Revenues (Excluding AssuredPartners) - Brokerage segment acquisition rollover revenues are estimated to be $79 million for the fourth quarter of 2025[29] - Brokerage segment acquisition rollover revenues are estimated to be $99 million for the first quarter of 2026[29] - Risk management segment expects approximately $16 million of rollover revenue (before reimbursements) during fourth quarter 2025[30] Corporate Segment - Adjusted Full Year 2025 Net Earnings Attributable to Controlling Interests is estimated to be $(573.7) million[18]

Financial Performance - Total revenue for Q3 2025 reached $3,325.4 million, a 20% increase compared to $2,766.5 million in Q3 2024[3] - Organic revenue growth was 4.8%, with incremental revenue from acquisitions exceeding $450 million[5] - Adjusted EBITDAC for Q3 2025 was $981.6 million, reflecting a 22% growth from $800.2 million in Q3 2024[3] - Net earnings for Q3 2025 were $273.6 million, down from $314.1 million in Q3 2024, resulting in a diluted earnings per share of $1.04 compared to $1.39[3] - For the nine-month period ended September 30, 2025, total revenue was $10,191.7 million, up from $8,720.6 million in the same period of 2024[6] - Adjusted net earnings for the nine-month period were $2,169.0 million, compared to $1,782.1 million in 2024, with diluted earnings per share increasing to $8.32 from $7.95[6] - The net earnings margin for Q3 2025 was 13.8%, while the adjusted EBITDAC margin was 32.1%[5] - Reported base commissions and fees for Q3 2025 were $2,572.8 million, up from $2,123.0 million in Q3 2024, reflecting a 21.2% increase[8] - Total reported commissions, fees, supplemental revenues, and contingent revenues for Q3 2025 reached $2,765.8 million, compared to $2,271.4 million in Q3 2024, marking a 21.8% increase[8] - Total revenues for the Brokerage Segment increased to $2,922.9 million in Q3 2025, up from $2,396.4 million in Q3 2024, representing a growth of 21.9%[45] - Total revenues for the Risk Management Segment increased to $442.3 million in Q3 2025, up from $410.0 million in Q3 2024, marking a growth of 7.9%[45] Acquisitions and Integration - The company closed 6 acquisitions in Q3 2025, with estimated annualized revenues acquired amounting to $3,036.0 million, significantly higher than $32.7 million in Q3 2024[8] - The company acquired AssuredPartners for approximately $13.8 billion, funded through a combination of cash and debt financing[10] - Gallagher's net earnings were positively impacted by strategic acquisitions, including Buck and AssuredPartners, contributing to overall revenue growth[39] - The company continues to integrate AssuredPartners professionals, indicating a strong start for the new team[6] - The acquisition of AssuredPartners added approximately 10,900 employees in August 2025, enhancing the company's operational capacity[54] - Gallagher's workforce-related charges included severance costs associated with recent acquisitions, highlighting integration efforts[39] Expenses and Costs - Compensation expense for Q3 2025 was reported at $1,649.0 million, an increase from $1,362.9 million in Q3 2024[11] - Adjusted operating expense ratio for Q3 2025 was 18.5%, down 0.4 pts from Q3 2024, benefiting from savings in client-related expenses[19] - Reported operating expenses for Q3 2025 were $76.3 million, compared to $71.0 million in Q3 2024, with adjusted operating expenses at $74.4 million versus $69.3 million[18] - Total expenses for the total company increased to $3,018.7 million in Q3 2025, compared to $2,403.5 million in Q3 2024, an increase of 25.6%[48] - The company incurred $38.5 million in acquisition costs in Q3 2025, compared to $39.2 million in Q3 2024[21] Earnings and Margins - Net earnings for Q3 2025 were $410.4 million, compared to $383.0 million in Q3 2024, indicating a growth in profitability[14] - Net earnings for Q3 2025 were $49.5 million, an increase from $44.6 million in Q3 2024, with a net earnings margin of 12.3%[20] - EBITDAC for Q3 2025 was $82.0 million, up from $74.1 million in Q3 2024, with an adjusted EBITDAC of $87.6 million compared to $76.7 million[20] - Net earnings attributable to controlling interests rose to $409.5 million in Q3 2025, compared to $381.5 million in Q3 2024, reflecting an increase of 7.0%[45] - The company reported adjusted net earnings of $690.2 million for the third quarter ended September 30, 2025, compared to $409.5 million for the same period in 2024, marking an increase of about 68%[55] - The company reported adjusted earnings per share of $2.65 for Q3 2025, compared to $1.57 for Q3 2024, indicating an increase of approximately 68%[55] Market Outlook and Strategy - The company reported a positive outlook with no indications of economic slowdown, supported by a two-pronged growth strategy of organic growth and M&A[5] - Gallagher plans to continue its market expansion efforts, leveraging recent acquisitions to drive growth in new regions[39] - Gallagher's strategic focus on technology and data analytics is expected to enhance operational efficiency and competitive positioning[33] Assets and Liabilities - Total assets increased to $79,067.9 million as of September 30, 2025, up from $64,255.2 million at December 31, 2024, representing a growth of approximately 23%[51] - Goodwill rose significantly to $22,213.3 million in 2025, compared to $12,270.2 million in 2024, indicating a substantial increase of about 81%[51] - Total liabilities increased to $55,831.0 million in 2025, up from $44,075.6 million in 2024, reflecting a rise of approximately 27%[51] - Total stockholders' equity increased to $23,236.9 million in 2025 from $20,179.6 million in 2024, reflecting a growth of about 10%[51] Tax and Regulatory Considerations - The effective tax rate for Q3 2025 was 21.1%, compared to 22.1% in Q3 2024[28] - The company faced challenges from geopolitical events and regulatory changes, which could impact future performance[33] - The effective income tax rate impact resulted in a reduction of $2.9 million in net earnings for Q3 2024[58] Future Events - Gallagher plans to host a webcast conference call on October 30, 2025, to discuss these results[29]

Core Viewpoint - Arthur J. Gallagher & Co. is set to release its quarterly earnings on October 30, 2025, with positive growth expectations despite a slight downward revision in EPS estimates [1][2][6] Financial Performance Expectations - Analysts estimate an EPS of $2.51 for the upcoming quarter, reflecting an 11.1% increase year-over-year [2][6] - Revenue projections range from $3.34 billion to $3.45 billion, indicating a potential 25.8% increase compared to the same period last year [2][6] EPS Estimate Revision - The consensus EPS estimate has been revised downward by 0.9% over the past 30 days, which may impact investor sentiment and stock performance [3][6] Segment Performance Insights - Growth in the Brokerage unit is attributed to new business, renewals, and improved interest income [4] - The Risk Management segment is expected to benefit from strong client retention and robust business production, contributing to a positive outlook for the third quarter [4] Financial Ratios and Stability - The company has a price-to-earnings (P/E) ratio of approximately 40.91 and a price-to-sales ratio of about 5.39, indicating a premium valuation [5] - AJG's debt-to-equity ratio stands at 0.58, suggesting a moderate level of debt, while a current ratio of 1.36 reflects solid liquidity and financial stability [5]

Core Insights - The article highlights seven insurance stocks to watch, including United Parcel Service, Berkshire Hathaway, Wells Fargo & Company, Progressive, Arthur J. Gallagher & Co., Brown & Brown, and Everest Group, based on their high trading volumes recently [2] Group 1: Company Profiles - United Parcel Service (UPS) is a package delivery company that offers a range of services including transportation, delivery, distribution, and insurance, operating through U.S. Domestic Package and International Package segments [3] - Berkshire Hathaway Inc. engages in insurance, freight rail transportation, and utility businesses, providing various insurance products and operating railroad systems in North America [4] - Wells Fargo & Company is a diversified financial services company offering banking, insurance, investments, and mortgage services, operating through multiple segments including Consumer Banking and Lending, and Corporate and Investment Banking [5] - Progressive Corporation provides personal and commercial auto and property insurance products, operating in three segments: Personal Lines, Commercial Lines, and Property [6] - Arthur J. Gallagher & Co. offers insurance brokerage and consulting services, operating through Brokerage, Risk Management, and Corporate segments [6] - Brown & Brown, Inc. is an insurance agency and brokerage firm providing various insurance services, operating through Retail, National Programs, Wholesale Brokerage, and Services segments [7] - Everest Group, Ltd. provides reinsurance and insurance products globally, operating through Insurance and Reinsurance segments [7]

Group 1 - Gallagher Bassett acquired 100% of Safe T Professionals LLC, previously holding a minority investment in the company [1] - Safe T Professionals specializes in environmental, health, and safety management and staffing services, primarily in the construction and manufacturing sectors across the Southwest and Western U.S. [2] - Gallagher Bassett is a subsidiary of Arthur J. Gallagher & Co., which is an insurance brokerage and risk management firm based in Rolling Meadows, Illinois [2] Group 2 - Anna Martinez, Joshua Martinez, and their team will continue operations at their current location under the leadership of Jim Bond, executive vice president of Gallagher Bassett North America [1]

Core Insights - Arthur J. Gallagher & Co. (AJG) is anticipated to show growth in both revenue and earnings for Q3 2025, with revenues expected to reach $3.45 billion, reflecting a 25.8% increase year-over-year [1] - The earnings consensus estimate is $2.51 per share, indicating an 11% year-over-year growth, with a 2% upward revision in the last 30 days [2] Earnings Prediction - The earnings model suggests a likely earnings beat for AJG, supported by a positive Earnings ESP of +0.10% and a Zacks Rank of 3 (Hold) [3][4] Factors Influencing Q3 Results - Improved performance across both major business segments is expected to contribute positively to Q3 results, driven by new business, solid client retention, and higher renewal premiums [5] - The fees estimate is $1 billion, up 10.5% from the previous year, while commissions are expected to reach $1.9 billion, indicating a 27.7% increase [6] Segment Performance - The Risk Management segment is likely to benefit from strong client retention and increased business activity, while the Brokerage segment is expected to see gains from new business generation and improved interest income [7][9] Expense Outlook - Total expenses are projected to rise due to increased compensation, reimbursements, interest, amortization, and changes in estimated acquisition earnout payables [8]

Market Overview - U.S. equities saw significant gains in Q3, driven by the Federal Reserve's first rate cut of the year, strong corporate earnings growth, and increased market participation [2] - Investor enthusiasm for artificial intelligence contributed to substantial gains in technology stocks, particularly among the "Magnificent Seven" [2] - Small-cap stocks outperformed as capital shifted into undervalued market segments, despite ongoing concerns about tariffs, inflation, and labor market softness [2] Company Highlights - Resideo Technologies, Inc. (REZI) was the top contributor in Q3, with organic revenue, EBITDA, and adjusted EPS exceeding expectations, and a positive outlook supported by demand for smart home solutions [3] - Barrick Mining Corporation (B) experienced a rise in shares due to strong financial results and rising gold prices, alongside a strategic divestiture of its Hemlo Gold Mine for $1.09 billion [4] - ZimVie, Inc. (ZIMV) advanced following an announcement of its acquisition by ARCHIMED, expected to close by year-end [5] - Mosaic Co. (MOS) was the biggest detractor from performance due to an earnings miss, with pressures from lower volumes and rising production costs, although phosphate markets are expected to remain tight through 2025 [6] - Prestige Consumer Healthcare Inc. (PBH) declined after mixed earnings results and a downward revision to guidance, but plans to strengthen supply through an acquisition of Pillar5 [7] - Schlumberger Limited (SLB) traded lower due to a challenging macroeconomic environment, with pressures from OPEC+ supply increases and geopolitical uncertainty impacting oil prices [8] New Positions and Exits - New positions included Arthur J. Gallagher & Co. (AJG), which faced pressure due to a delay in closing its $13.4 billion acquisition of AssuredPartners, but is expected to benefit from stronger synergies [10] - Fiserv, Inc. (FI) was also purchased, seen as a leading provider of payment processing and financial services technology, with a recent stock pullback providing an attractive entry point [11] - Exited positions included ZimVie, Inc., Core Laboratories, Inc. (CLB), and Bio-Rad Laboratories Inc. (BIO) to pursue more compelling opportunities [12] Economic Outlook - As Q4 approaches, U.S. markets are balancing elevated valuations against emerging macroeconomic headwinds, with the Federal Reserve's rate cut providing some support [13] - Investor sentiment remains positive, driven by AI momentum, although risks related to market concentration and policy uncertainty may lead to increased volatility [14] - There is a belief that small-cap equities may outperform large caps over the next two years, with small caps trading at historically attractive levels [14]

Group 1 - Arthur J. Gallagher & Co. has acquired Strategic Services Group, Inc., based in Rochester Hills, Michigan, although the terms of the transaction were not disclosed [1] - Strategic Services Group specializes in employee benefits consulting services across various industries in Michigan and the Midwest [1] - The existing team led by Doug Roehm and Greg Sudderth will continue operations at their current location under Brian Lomas, who oversees Gallagher's Great Lakes region employee benefits consulting and brokerage [1]