October 28, 2015 by Canadian Underwriter
Itasca, Ill.-based Arthur J. Gallagher & Co. (AJG) reported on Tuesday a 9% growth in adjusted revenues for its combined Brokerage and Risk Management segments for the third quarter of 2015 ending Sept. 30.
“We had another excellent quarter,” said J. Patrick Gallagher, Jr., AJG chairman, president and CEO, in a statement. “In the third quarter, our combined Brokerage and Risk Management segments posted 9% growth in adjusted revenues, of which 4.1% was total organic growth, adjusted EBITDAC increased 11% and our adjusted EBITDAC margin improved 30 basis points. Total company adjusted net earnings per share grew 15%.”
Gallagher defines EBITDAC as “net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables.”
Total Brokerage and Risk Management revenues, as reported, were about US$1.01 billion for the third quarter of 2015, compared to US$925.5 million for Q3 2014. For the nine months ending Sept. 30, the revenues were US$3.01 billion in Q3 2015 compared to US$2.52 billion in Q3 2014.
For the Brokerage segment in particular, adjusted revenues increased 10%, of which 3% was total organic growth, adjusted EBITDAC increased 10% and the company improved its adjusted EBITDAC margin 10 basis points. During the third quarter, AJG completed five acquisitions with annualized revenues of US$61 million, bringing its year-to-date totals to 27 acquisitions with estimated annualized revenues totaling US$177 million. [click image below to enlarge]
AJG’s Risk Management segment had an “outstanding” quarter, the statement said. Total organic revenues increased 9.3%, adjusted EBITDAC increased 15% and the company improved its adjusted EBITDAC margin 90 basis points. “Our clean energy investments had another quarter of consistent production and demand for our remaining plants is robust,” the statement said. “Accordingly, we anticipate annualized net after-tax earnings from our clean-energy investments could increase by approximately 15% per annum in 2016 and 2017.”
“Domestically, we see the rate environment flat within professional lines, casualty and auto, and we see modest weakening within property, workers comp and certain specialty lines such as marine and aviation,” the statement added. “Interestingly, we are seeing smaller accounts holding firm, with some weakening in larger accounts. We are seeing similar conditions as we start the January 1, 2016 renewal season.”
Internationally, AJG said it is seeing a “similar market in U.K. Retail and in Canada, but substantially more softening in London Specialty, Australia and New Zealand.”
Arthur J. Gallagher & Co. is an international insurance brokerage and risk management services firm, which has operations in 31 countries and offers client-service capabilities in more than 140 countries around the world through a network of correspondent brokers and consultants.