Gallagher reports higher revenue, varying rate changes

Arthur J. Gallagher & Co. reported double-digit revenue growth in the first quarter as it completed several acquisitions and saw strong organic revenue growth in its reinsurance and specialty businesses.

Pricing changes in its property/casualty insurance brokerage business varied significantly by line and account size, but overall, its clients continued to see revenue growth despite the Trump administration’s tariff hikes, the company’s top executive said on a call with analysts Thursday.

Gallagher reported $3.73 billion in total revenue for the quarter, a 14.5% increase over the same period last year, and up 9% on an organic basis, which excludes the impact of acquisitions and foreign currency fluctuations.

Its core brokerage business reported $3.31 billion in revenue for the quarter, a 15.7% increase over the prior-year period and up 9.5% on an organic basis.

Retail brokerage organic revenue rose 5%, wholesale and specialty was up 8% and reinsurance was up 20%, said J. Patrick Gallagher Jr., chairman and CEO of the brokerage.

Renewal premium changes varied significantly by line and size of account. Directors and officers liability was down 3%, property down 2%, workers compensation up 5% – due to higher payrolls and medical costs – general liability up 5%, commercial auto up 6%, and umbrella up 11%, Mr. Gallagher said.

Accounts generating less than $100,000 of revenue saw premium increases of 5%, and accounts with more than $100,000 and more clout in the market saw 1% increases, he said.

Tariffs have not yet had a significant effect on Gallagher’s clients, according to the brokerage’s audits of business activity, Mr. Gallagher said.

“While the upward revenue adjustments are not quite as high as last year, we continue to see solid client business activity and no signs of a meaningful global economic slowdown,” he said.

Risk management, which includes its third-party administrator, Gallagher Bassett Services Inc., reported $373.4 million in revenue, a 5.8% increase for the quarter and up 4% on an organic basis.

The company reported net earnings of $872.7 million for the quarter, a 12.9% increase over the same period last year.

Gallagher completed 11 acquisitions in the quarter with approximately $100 million of estimated annualized revenue. Last month, Gallagher also completed its purchase of Woodruff Sawyer & Co., which added about $250 million in revenue.

Gallagher’s proposed $13.45 billion acquisition of AssuredPartners Inc. remains delayed pending the U.S. Department of Justice’s antitrust review. However, Gallagher expects to supply the government with its request for more data by the middle of the third quarter and to close the deal in the fourth quarter.