Summary of Arthur J. Gallagher (AJG) Quarterly Investor Meeting - June 04, 2025 Company Overview - **Company**: Arthur J. Gallagher & Company (AJG) - **Meeting Type**: Quarterly Investor Meeting - **Date**: June 04, 2025 Key Points Competitive Position and Growth - Gallagher is operating from a position of strength with a strong growth profile, achieving double-digit revenue growth for 17 consecutive quarters [6][7] - The company has a trailing twelve-month adjusted EBITDAC margin of 34.5%, up over 700 basis points in the past five years [7] - Gallagher operates in approximately 130 countries with over 57,000 employees, providing services across various sectors including insurance, reinsurance, and claims management [8] - The global insurance market is estimated at over $7 trillion in annual premiums, with Gallagher touching around $125 billion, indicating significant growth potential [9][10] Market Conditions - The primary global property and casualty (PC) insurance market is behaving rationally, with payers seeking growth in profitable lines while pursuing necessary rate increases [12] - In Q2 2025, global casualty renewal premiums increased by 8%, with U.S. increases exceeding 9% [14] - Property renewal premiums are down about 5% in Q2, influenced by seasonal factors and recent severe weather events [14][15] - Small to midsize accounts (under $100,000 revenue) saw renewal premiums up 3%, while large accounts (over $100,000 revenue) experienced a 2% decline [16] Mergers and Acquisitions (M&A) Strategy - Gallagher sees significant opportunities for growth through M&A, with over 30,000 agencies in the U.S. and a similar number globally [23] - In Q2 2025, Gallagher completed seven new mergers, adding nearly $300 million in estimated annualized revenue, with a total of over $400 million year-to-date [25] - The current M&A pipeline includes more than 30 term sheets representing around $400 million in annualized revenue [25] - The acquisition of Assured Partners is progressing, with all regulatory approvals outside the U.S. received, and the company expects to respond to the second request from the DOJ by mid-Q3 2025 [26] Financial Outlook - Full-year 2025 organic growth is expected to remain in the 6% to 8% range, with Q2 growth anticipated at 5.5% [27][29] - Margin expansion is projected at approximately 280 basis points for Q2, with underlying margin expansion of about 50 basis points [31] - The risk management segment is also expected to see organic growth in the 6% to 8% range, with adjusted EBITDAC margins around 20.5% [36] Economic and Industry Trends - The labor market remains strong, with continued demand for employee benefits and risk management services [21] - Medical inflation and increased litigation are expected to drive higher costs in workers' compensation, presenting opportunities for Gallagher Bassett to demonstrate its capabilities [50][51] - The excess and surplus (E&S) market is growing due to insurers' desire for flexibility in product offerings, while the Managing General Agent (MGA) market is thriving as talented underwriters access capital more easily [82][84] Additional Insights - The company emphasizes the importance of technology investments, with plans to spend close to $1 billion on enhancing client-facing sales and service tools [92] - Gallagher's culture promotes teamwork and collaboration across divisions, contributing to its competitive advantage [11] Conclusion Arthur J. Gallagher & Company is positioned for continued growth through a combination of organic expansion and strategic M&A activity, supported by favorable market conditions and a strong operational foundation. The company remains focused on enhancing its service offerings and leveraging technology to drive efficiency and client satisfaction.

Core Viewpoint - Arthur J. Gallagher & Co. has acquired Wilkins & Associates Insurance Services, enhancing its retail brokerage capabilities in Nevada [1][3]. Company Overview - Wilkins & Associates, founded by Tom and Melanie Wilkins, is a retail insurance broker serving commercial and personal lines clients in Reno and western Nevada [2]. - The team from Wilkins & Associates, including Steve and Jared Wilkins, will operate under Scott Firestone, who leads Gallagher's Southwest region retail property/casualty brokerage operations [2]. Strategic Implications - J. Patrick Gallagher, Jr., Chairman and CEO, emphasized that Wilkins & Associates is a highly regarded firm with a client-focused culture, which will contribute positively to Gallagher's operations in Nevada [3]. - Arthur J. Gallagher & Co. is a global insurance brokerage, risk management, and consulting services firm, operating in approximately 130 countries [3].

Core Insights - A recent survey by Gallagher indicates that U.S. business owners are increasingly concerned about external threats to their businesses, particularly supply chain disruptions, severe weather, and cyber-attacks [1][3][7] Business Concerns - 69% of U.S. business owners are worried about supply chain disruptions, while 69% also express concern over severe weather, and 72% are apprehensive about cyber-attacks [1][3] - The concern over cyber-attacks has risen from 69% in 2024 to 72% in 2025 [3] Insurance Claims and Coverage - Nearly 87% of U.S. business owners with insurance coverage made a claim in 2024, with 73% of those claims being $25,000 or more [2] - Coverage for claims varied, with 29% related to property, 28% to employment practices liability, 27% to cyber, and 27% to flood insurance [2] Cybersecurity and AI - 36% of U.S. business owners are looking to acquire or expand their insurance coverage for cyber-attacks [3] - 93% of business owners are somewhat worried about AI's impact on their businesses, an increase from 85% the previous year [4] - 95% agree that AI misuse requires stronger regulation, and 90% seek better protection [4] Supply Chain Investments - To mitigate supply chain disruptions, 40% of U.S. business owners are investing in AI and machine learning technologies, while 37% are focusing on supply chain automation and cloud computing [5] - 75% have contingency suppliers in place to manage potential disruptions [5] Weather-Related Concerns - 57% of U.S. business owners are considering relocating or investing in more resilient facilities to combat severe weather [7] - Flooding is viewed as a significant threat by 35% of business owners, yet only 30% currently have flood insurance [8] - Among those with flood insurance, 71% have made at least one claim, and 27% have made multiple claims [8] Precautionary Measures - After filing weather-related claims, business owners have taken steps to protect against various weather conditions, including floods (40%), fires (39%), and hurricanes (32%) [9] Expert Commentary - J. Patrick Gallagher, Jr., emphasizes the necessity of advanced mitigation strategies to manage the complexities of global risks, advocating for proactive planning and investment in resilience [6][10]

Financial Data and Key Metrics Changes - The meeting confirmed the election of 10 nominees to the Board of Directors and the ratification of Ernst and Young LLP as the independent public accountants for the fiscal year ending December 31, 2025 [7][8] - The compensation of named executive officers was approved during the meeting [8] Business Line Data and Key Metrics Changes - No specific business line data or key metrics were discussed during the meeting [9][10] Market Data and Key Metrics Changes - No specific market data or key metrics were provided during the meeting [9][10] Company Strategy and Development Direction and Industry Competition - The company did not provide detailed comments on its strategy or competitive landscape during the meeting [9][10] Management's Comments on Operating Environment and Future Outlook - Management did not offer insights into the operating environment or future outlook during the meeting [9][10] Other Important Information - The meeting was conducted virtually, and participants were reminded to follow the rules of conduct [4][5] - The meeting was attended by various board members and representatives from Ernst and Young LLP [3][5] Q&A Session All Questions and Answers Question: Were there any questions from stockholders? - No questions were received from stockholders during the Q&A session [9]

Investors: Ray Iardella, VP - Investor Relations Media: Paul Day, Senior Media Relations Manager 630-285-3661/ [email protected] 630-285-5946/ [email protected] SOURCE Arthur J. Gallagher & Co. ROLLING MEADOWS, Ill., May 6, 2025 /PRNewswire/ -- Arthur J. Gallagher & Co. today announced the acquisition of Dallas, Texas-based Dean R. Casey & Associates. Terms of the transaction were not disclosed. Dean R. Casey & Associates is an employee benefits brokerage firm serving primarily small- and mid-size group cli ...

In August 2024, I first wrote about Arthur J. Gallagher (NYSE: AJG ), giving it a buy rating based on its consistent earnings growth. The stock has performed well with a total return of 14% compared to only 1% for theI'm a passionate investor from the Netherlands with 12 years of stock market experience. My articles usually contain a good overview of important investment criteria. A stock for my portfolio is of interest to me if the company has the following characteristics:1. Companies that are growing in ...

[Part I. Financial Information](index=9&type=section&id=Part%20I.%20Financial%20Information) [Financial Statements (Unaudited)](index=9&type=section&id=Item%201.%20Financial%20Statements%20(Unaudited)) Presents unaudited consolidated financial statements for Q1 2025 and Q1 2024, detailing earnings, assets, cash flows, and equity Q1 2025 vs Q1 2024 Consolidated Earnings | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $3,727.4 | $3,256.7 | +14.5% | | **Earnings Before Income Taxes** | $872.7 | $772.7 | +12.9% | | **Net Earnings** | $708.9 | $612.7 | +15.7% | | **Diluted Net Earnings Per Share** | $2.72 | $2.74 | -0.7% | Consolidated Balance Sheet Highlights | Metric | March 31, 2025 (in millions) | Dec 31, 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Cash and Cash Equivalents** | $16,691.8 | $14,987.3 | +11.4% | | **Total Assets** | $74,095.7 | $64,255.2 | +15.3% | | **Total Liabilities** | $51,742.0 | $44,075.6 | +17.4% | | **Total Stockholders' Equity** | $22,353.7 | $20,179.6 | +10.8% | Q1 2025 vs Q1 2024 Consolidated Cash Flows | Cash Flow Activity | Q1 2025 (in millions) | Q1 2024 (in millions) | | :--- | :--- | :--- | | **Net Cash from Operating Activities** | $871.8 | $789.3 | | **Net Cash used by Investing Activities** | $(275.4) | $(191.9) | | **Net Cash from Financing Activities** | $1,107.0 | $(5.4) | - During Q1 2025, the company acquired 11 firms for a total purchase price of **$438.3 million** and signed definitive agreements to acquire AssuredPartners for **$13.45 billion** and Woodruff Sawyer for **$1.2 billion**[44](index=44&type=chunk)[45](index=45&type=chunk) [Management's Discussion and Analysis of Financial Condition and Results of Operations](index=41&type=section&id=Item%202.%20Management's%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Provides management's analysis of Q1 2025 financial performance, segment results, non-GAAP measures, and liquidity Q1 2025 Adjusted (Non-GAAP) Performance Summary | Segment | Metric | Q1 2025 | Q1 2024 | Change | | :--- | :--- | :--- | :--- | :--- | | **Brokerage** | Adjusted Revenues | $3,308.2M | $2,820.6M | +17% | | | Organic Revenue Growth | 9.5% | N/A | N/A | | | Adjusted EBITDAC Margin | 43.4% | 39.8% | +359 bps | | **Risk Management** | Adjusted Revenues | $373.2M | $351.5M | +6% | | | Organic Revenue Growth | 3.9% | N/A | N/A | | | Adjusted EBITDAC Margin | 20.4% | 20.7% | -18 bps | | **Total Company** | Adjusted Diluted EPS | $3.67 | $3.45 | +6% | - The company highlights a **positive outlook for 2025**, expecting continued property/casualty rate increases and opportunities for organic growth through strong new business and client retention[138](index=138&type=chunk) [Brokerage Segment Analysis](index=49&type=section&id=Brokerage%20Segment%20Analysis) Details the Brokerage segment's 16% revenue growth to $3.31 billion, driven by organic growth and acquisition contributions Brokerage Segment Financials (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Revenues** | $3,314.6 | $2,864.9 | +15.7% | | **Earnings Before Income Taxes** | $1,099.1 | $876.1 | +25.5% | | **Net Earnings** | $816.1 | $652.6 | +25.0% | | **Adjusted EBITDAC** | $1,436.6 | $1,123.8 | +27.8% | - Organic growth in base commissions and fees was **9.1%**, driven by strong customer retention, new business, and increasing renewal premiums[152](index=152&type=chunk)[155](index=155&type=chunk) - Interest income increased significantly to **$238.4 million** from $84.7 million YoY, with **$142.6 million** earned on proceeds from the AssuredPartners financing[157](index=157&type=chunk) [Risk Management Segment Analysis](index=58&type=section&id=Risk%20Management%20Segment%20Analysis) Covers the Risk Management segment's 6% revenue increase to $373.4 million, led by organic fee growth Risk Management Segment Financials (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Revenues before reimbursements** | $373.4 | $352.8 | +5.8% | | **Net Earnings** | $41.1 | $39.3 | +4.6% | | **Adjusted EBITDAC** | $76.5 | $72.7 | +5.2% | - Organic fee revenue grew **3.9%** in Q1 2025, with favorable trends of strong client retention and positive new business expected to continue[172](index=172&type=chunk)[173](index=173&type=chunk) - Compensation expense increased by **$17.2 million**, driven by acquisitions and higher base compensation to support organic growth[176](index=176&type=chunk) [Corporate Segment Analysis](index=63&type=section&id=Corporate%20Segment%20Analysis) Explains the Corporate segment's increased net loss of $148.3 million, driven by higher interest and operating expenses Corporate Segment Financials (Q1 2025 vs Q1 2024) | Metric | Q1 2025 (in millions) | Q1 2024 (in millions) | Change | | :--- | :--- | :--- | :--- | | **Total Expenses** | $282.7 | $157.0 | +$125.7 | | **Interest Expense** | $158.4 | $92.2 | +$66.2 | | **Operating Expense** | $73.2 | $27.9 | +$45.3 | | **Net Loss** | $(148.3) | $(79.2) | +$69.1 | - The increase in interest expense was primarily due to **$65.8 million** of interest on senior notes funded for the AssuredPartners deal[189](index=189&type=chunk) - Operating expenses in Q1 2025 included **$20.5 million** in acquisition-related professional fees and a **$23.0 million** net unrealized foreign exchange loss[185](index=185&type=chunk) [Liquidity and Capital Resources](index=66&type=section&id=Liquidity%20and%20Capital%20Resources) Details the company's strong liquidity, with $16.7 billion in cash and significant financing activities for acquisitions - Cash provided by operating activities increased to **$871.8 million** in Q1 2025 from $789.3 million in Q1 2024, driven by core business growth[199](index=199&type=chunk) - The company raised substantial capital for the AssuredPartners acquisition, including net proceeds of **$8.35 billion** from a stock offering[220](index=220&type=chunk) - On April 3, 2025, the company amended its Credit Agreement, increasing the facility size from **$1.7 billion to $2.5 billion** and extending the maturity to April 2030[213](index=213&type=chunk) [Quantitative and Qualitative Disclosures About Market Risk](index=73&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) Outlines exposure to market risks, primarily interest rate sensitivity on its $13.1 billion debt and foreign currency fluctuations - The company holds **$13.1 billion** in fixed-rate borrowings; a hypothetical 1% rate increase would decrease its fair value by approximately **$1,679.6 million**[229](index=229&type=chunk)[230](index=230&type=chunk) - A hypothetical **10% adverse change** in the average foreign exchange rate for Q1 2025 would have increased pre-tax earnings by approximately **$37.2 million**[233](index=233&type=chunk) - To manage currency risk, the company uses **forward contracts and options** to hedge a significant portion of future revenues and disbursements in key international markets[234](index=234&type=chunk) [Controls and Procedures](index=75&type=section&id=Item%204.%20Controls%20and%20Procedures) Confirms the effectiveness of disclosure controls and procedures as of March 31, 2025, with no material changes reported - The CEO and CFO concluded that the company's disclosure controls and procedures were **effective** as of March 31, 2025[235](index=235&type=chunk) - **No changes** in internal control over financial reporting occurred during the quarter that have materially affected, or are reasonably likely to materially affect, these controls[236](index=236&type=chunk) [Part II. Other Information](index=77&type=section&id=Part%20II.%20Other%20Information) [Legal Proceedings](index=77&type=section&id=Item%201.%20Legal%20Proceedings) Discloses an ongoing IRS promoter investigation into the company's 'micro-captive' advisory services business since 2013 - The company's IRC 831(b) ('micro-captive') advisory services business has been under an **IRS promoter investigation since 2013**, and the company is fully cooperating[108](index=108&type=chunk)[149](index=149&type=chunk) [Risk Factors](index=77&type=section&id=Item%201A.%20Risk%20Factors) Refers to the comprehensive risk factor discussion in the company's 2024 Annual Report on Form 10-K - The report refers to the risk factors previously disclosed in the company's **Annual Report on Form 10-K** for the fiscal year ended December 31, 2024[238](index=238&type=chunk) [Unregistered Sales of Equity Securities and Use of Proceeds](index=77&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Reports no shares were repurchased under the public plan in Q1 2025, with all purchases related to employee plans Issuer Purchases of Equity Securities (Q1 2025) | Period | Total Shares Purchased | Average Price Paid per Share | Shares Purchased as Part of Publicly Announced Plans | | :--- | :--- | :--- | :--- | | Jan 2025 | 5,503 | $288.96 | — | | Feb 2025 | 3,146 | $332.24 | — | | Mar 2025 | 84,746 | $327.82 | — | | **Total** | **93,395** | **$325.68** | **—** | - The company **did not repurchase any shares** under its $1.5 billion common stock repurchase plan during the quarter, which remains in effect[239](index=239&type=chunk)[243](index=243&type=chunk) [Exhibits](index=79&type=section&id=Item%206.%20Exhibits) Lists all filed exhibits, including an amended credit agreement and required CEO/CFO certifications - An **Amended and Restated Credit Agreement**, dated April 3, 2025, was filed as an exhibit[242](index=242&type=chunk) - **Certifications by the Chief Executive Officer and Chief Financial Officer** under Rule 13a-14(a) and Section 1350 are included as exhibits[242](index=242&type=chunk)

Core Insights - Arthur J. Gallagher & Co. (AJG) reported first-quarter 2025 adjusted net earnings of $3.67 per share, exceeding the Zacks Consensus Estimate by 2.8% and reflecting a year-over-year increase of 6.3% [1] - Total revenues reached $3.7 billion, marking a 16% year-over-year growth, although it fell short of the Zacks Consensus Estimate by 1.7% [2] Financial Performance - Total expenses increased by 15% year over year to $2.8 billion, driven by higher compensation and operating costs [3] - Adjusted EBITDAC grew 24.3% from the prior-year quarter to $1.4 billion [3] Segment Results - Brokerage segment reported adjusted revenues of $3.3 billion, up 17.3% year over year, but missed the Zacks Consensus Estimate by 2% [4] - Adjusted EBITDAC for the brokerage segment climbed 27.8% to $1.4 billion, with a margin expansion of 360 basis points to 43.4% [4] - Risk Management segment saw adjusted revenues increase by 6.1% year over year to $373.2 million, but also missed the Zacks Consensus Estimate by 2.3% [5] - Adjusted EBITDAC for the Risk Management segment rose 5.2% year over year to $76.5 million, with a margin contraction of 20 basis points to 20.5% [5] Financial Update - As of March 31, 2025, total assets were $74.1 billion, a 15.3% increase from the end of 2024 [7] - Cash and cash equivalents increased by 11.4% to $16.7 billion from the end of 2024 [7] - Shareholders' equity rose by 10.8% to $22.3 billion as of March 31, 2025, compared to December 31, 2024 [7] Acquisition Activity - In the reported quarter, the company completed 10 acquisitions with estimated annualized revenues of $62.7 million [9]

Core Insights - Arthur J. Gallagher (AJG) reported revenue of $3.68 billion for the quarter ended March 2025, reflecting a year-over-year increase of 14.4% [1] - The earnings per share (EPS) for the quarter was $3.67, up from $3.49 in the same quarter last year, with an EPS surprise of +2.80% compared to the consensus estimate of $3.57 [1] Financial Performance Metrics - The total company commissions were reported at $2.25 billion, a +12.8% change year-over-year, but below the average estimate of $2.27 billion [4] - The risk management segment reported revenues before reimbursements of $373.40 million, which is a +5.8% change year-over-year, but lower than the average estimate of $382.24 million [4] - Total company fees were $984.80 million, representing a +3.5% year-over-year change, but below the average estimate of $1.06 billion [4] - The brokerage segment's supplemental revenues were $113.90 million, exceeding the average estimate of $96.15 million, with a year-over-year increase of +21.3% [4] - The brokerage segment's contingent revenues were $92.90 million, slightly above the average estimate of $91.80 million, reflecting an +8% change year-over-year [4] Stock Performance - Over the past month, shares of Arthur J. Gallagher have returned -6.8%, compared to a -0.7% change in the Zacks S&P 500 composite [3] - The stock currently holds a Zacks Rank 3 (Hold), indicating expected performance in line with the broader market in the near term [3]

Core Insights - Arthur J. Gallagher (AJG) reported quarterly earnings of $3.67 per share, exceeding the Zacks Consensus Estimate of $3.57 per share, and showing an increase from $3.49 per share a year ago, representing an earnings surprise of 2.80% [1] - The company posted revenues of $3.68 billion for the quarter ended March 2025, which was below the Zacks Consensus Estimate by 1.75%, but up from $3.22 billion year-over-year [2] - The stock has increased approximately 13% since the beginning of the year, contrasting with a -5.3% decline in the S&P 500 [3] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $2.31 on revenues of $3.19 billion, and for the current fiscal year, it is $11.12 on revenues of $13.77 billion [7] - The estimate revisions trend for Arthur J. Gallagher is mixed, leading to a Zacks Rank 3 (Hold), indicating expected performance in line with the market [6] Industry Context - The Insurance - Brokerage industry is currently ranked in the bottom 14% of over 250 Zacks industries, suggesting potential challenges for stock performance [8] - Empirical research indicates a strong correlation between near-term stock movements and trends in earnings estimate revisions, which can be tracked by investors [5]