April 27, 2015 by Canadian Underwriter
Commercial brokerage Arthur J. Gallagher & Co. released Friday its financial results for the quarter ending March 31, reporting a 44% year-to-year drop in net earnings while revenues were up 35%.
Gallagher, based in the Chicago suburb of Itasca, Ill., reported net earnings of $32.4 million on revenues of $1.231 billion in the most recent quarter. All figures are in United States dollars. In Q1 2014, Gallagher reported net earnings of $57.8 million on revenues of $915 million. Founded in 1927, Gallagher was ranked fourth worldwide – by Finaccord Ltd. – when measured by non-life commercial broking revenues. [click image below to enlarge]
“In the first quarter, our combined Brokerage and Risk Management segments posted 30% growth in adjusted revenues, of which 6.0% was total organic growth,” stated J. Patrick Gallagher Jr., the company’s chairman, president and chief executive officer, in a press release.
Gallagher reported $289.5 million in clean coal revenues in the most recent quarter, due in part to its interest (46.54% as of the end of 2014) in Chem-Mod LLC, which provides technologies to reduce mercury, sulfur dioxide and other emissions at coal-fired power plants. [click image below to enlarge]
In its commercial insurance brokerage segment, Gallagher reported commissions of $519.7 million in Q1 2015, compared to $411.5 million in the same period in 2014.
Organic base commissions and fees were $513.8 million in Q2 2015, up 4.5% from $491.8 million in the same period in 2014.
Gallagher’s retail commercial P&C brokerage had 30 locations in Canada, the firm said in its annual report for 2014, released in February.
Also in February, Gallagher announced the acquisition of Cohen and Lord Insurance Brokers Inc. in Ottawa. Acquisitions in 2014 included an 87% interest in Noraxis Capital Corp., a brokerage that operates in Alberta, Manitoba, New Brunswick, Nova Scotia and Ontario. The Noraxis sale – by Roins Financial Services Ltd., the parent company of Royal & Sun Alliance Insurance Company of Canada – closed in July, 2014. [click image below to enlarge]
Since it closed the Noraxis deal, Gallagher has made several other acquisitions, including:
•British managing general agent Evolution Underwriting Group;
•Affinity Marketing Group LLC, a Natick, Mass. brokerage whose products include auto and home for members of associations;
•Chatham, N.J.-based O’Gorman & Young Inc., whose operations include a commercial P&C brokerage;
•Woodland Hills, Calif.-based brokerage SGB-NIA Insurance Brokers;
•Brisbane, Australia-based commercial brokerage Blue Holdings Pty Ltd.;
•Clayton North, Australia-based commercial brokerage Instrat Insurance Brokers Pty Ltd.;
•Colorado commercial brokerage Insurance Associates Inc.;
•Decatur, Ill.-based commercial brokerage Bennett & Shade Co.;
•New York City-based brokerage Hagedorn & Company;
•Beenleigh, Australia. based brokerage Parmia Pty Ltd.; and
•Cowles & Connell, a managing general agent and wholesale broker based in Brewster, N.Y. and Meriden, Conn.
Gallagher reported brokerage fees of $146.1 million in the latest quarter (up 56.4% from $93.4 million in Q1 2014) and contingent commissions of $44.5 million (up 34% from $33.2 million in Q1 of 2014).
Risk management fees were up 8.1%, from $163.8 million in Q1 2014 to $177.1 million in the most recent quarter.
Gallagher’s risk management segment “provides contract claim settlement and administration services for enterprises that choose to self-insure some or all of their property/casualty coverages and for insurance companies that choose to outsource some or all of their property/casualty claims departments,” the company said in its annual report for 2014.