July 29, 2015 by Canadian Underwriter
Arthur J. Gallagher & Co. released Tuesday its financial results for the second quarter, reporting a 24% year-over-year increase in adjusted brokerage revenues during a time when it made 13 acquisitions in its brokerage and risk management business.
Itasca, Ill.-based Gallagher reported revenues of $1.371 billion in three months ending June 30, up 16.3% from $1.179 billion during the same quarter in 2014. Q2 2015 revenues include $297 million from clean coal activities. All figures are in United States dollars.
Gallagher reported its brokerage segment completed 11 acquisitions in the second quarter while the risk management segment completed two acquisitions.
The firm reported net earnings of $147.6 million in Q2 2015, up 30% from $113.7 million in Q2 2014.
Gallagher’s brokerage has more than 30 locations in Canada, the company stated in an earlier filing with the U.S. Securities and Exchange Commission. In Canada, Gallagher places a variety of commercial coverages, including property, liability, boiler and machinery, surety, political risk and cyber, among others. Gallagher also places personal insurance for high net worth Canadian individuals.
Brokerage revenues, as adjusted, were $882.1 million in the latest quarter, up 24% from $711.9 million in Q2 2014.
Adjusted revenues exclude certain items, such as net gains realized from sales of books of business.
Gallagher reported total brokerage and risk management revenues, as adjusted, of $1.07 billion in Q2 2014, up 22% from $878.9 million in the same quarter of last year. Of that growth, 5.8% was “organic,” stated J. Patrick Gallagher, the company’s chairman, president and chief executive officer, in a press release.
In the brokerage segment, “organic change in base commission and fee revenues excludes the first 12 months of net commission and fee revenues generated from acquisitions accounted for as purchases and the net commission and fee revenues related to operations disposed of in each year presented,” the company stated.
In the risk management business, “organic change in fee revenues excludes the first twelve months of fee revenues generated from acquisitions accounted for as purchases and the fee revenues related to operations disposed of in each year presented,” the firm added. “In addition, change in organic growth excludes the impact of the period-over-period impact of foreign currency translation.”
Gallagher reported commissions, company-wide, of $643.4 million in Q2 2015, up 19.2% from $539.5 million in Q2 2014. It earned fees of $367.3 million in the latest quarter, up 15.7% from $317.4 million in Q2 2014, while contingent commissions were up 5%, from $21.8 million in Q2 2014 to $22.8 million in the latest quarter.
Last February, Gallagher announced it acquired Ottawa-based Cohen & Lord Insurance Brokers Ltd., whose markets include commercial realty and condominiums, construction and fleet, as well as personal lines for wealthy individuals. In 2014, Gallagher completed the purchase of a majority interest in insurance brokerage Noraxis Capital Corp. from Roins Financial Services Ltd., which owns the RSA Canada group of companies.