Arthur J. Gallagher & (AJG) - 2025 Q2 - Quarterly Results

Executive Summary & Company Overview CEO Commentary 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] - Second quarter net earnings margin increased 343 basis points to 17.3%[6] - 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] - Completed 9 new mergers in the quarter with approximately $290 million of estimated annualized revenue[7] - The pending AssuredPartners acquisition is on track to close in the third quarter of 2025[7] - Global P/C insurance market remains rational, with property declining 7% and casualty increasing 8% in renewal premium changes[8] About Arthur J. Gallagher & Co. 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] - Headquartered in Rolling Meadows, Illinois, the company provides services in approximately 130 countries[34] Consolidated Financial Performance Summary of Financial Results - Second Quarter 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 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 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) 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] Brokerage Segment Analysis Organic Revenues (Non-GAAP) 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 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] - 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] Compensation Expense and Ratios 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] - Adjusted compensation expense ratio decreased by 2.7 percentage points, mainly benefiting from higher interest income and headcount control savings[15] Operating Expense and Ratios 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] - 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] Net Earnings to Adjusted EBITDAC (Non-GAAP) 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] Reported Statement of Earnings and EBITDAC - Brokerage Segment 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 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 Organic Revenues (Non-GAAP) 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 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 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] - Adjusted compensation expense ratio was flat, benefiting from headcount controls and temporary help, offset by incentive compensation[21] Operating Expense and Ratios 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] - 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] Net Earnings to Adjusted EBITDAC (Non-GAAP) 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 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 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 Corporate Segment Reported GAAP Information 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 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] - Clean energy related costs consist of operating results from Gallagher's investments in new clean energy projects[29] - Acquisition costs primarily include external professional fees, due diligence costs, and gains/losses from forward currency hedges for acquisitions[30] - Corporate costs include overhead allocations for staff compensation, other corporate activities, net unrealized foreign exchange remeasurement, and various tax items[31] - Consolidated effective tax rates for Q2 2025 and 2024 were 22.3% and 21.9%, respectively[32] Reported Statement of Earnings and EBITDAC - Corporate Segment 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 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 Information Regarding Non-GAAP Measures 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] - 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][43] - EBITDAC is defined as net earnings before interest, income taxes, depreciation, amortization, and the change in estimated acquisition earnout payables[43] - 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] Forward-Looking Statements & Risk Factors 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] - 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] - 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][38] Webcast Conference Call 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] - To listen to the call or access the replay, visit Arthur J. Gallagher & Co. - Events & Presentations (ajg.com)[33]