Gallagher studies greater revenues, extra market consolidation – company insurance
Arthur J. Gallagher & Co. reported total revenue of $ 1.9 billion for the second quarter, up 22.2% from the year-ago period, although organic revenue growth was less than some of its competitors have previously reported .
The brokerage firm also reported multiple acquisitions during the quarter, but the largest ever proposed acquisition agreed during the quarter was thwarted by Aon PLC's decision to end its acquisition of Willis Towers Watson PLC. A side agreement to sell various Willis companies to Gallagher was added to this deal to address antitrust concerns.
Gallagher's core brokerage unit had sales of $ 1.39 billion, up 15.7%. Organic sales rose by 6.8%, which is below the double-digit organic growth of some competitors. Part of the reason for the lower organic growth was the timing of recording various factors affecting revenue that year, and over two years Gallagher's growth in the second quarter was likely comparable to that of other broker, Douglas K. Howell, CFO von Gallagher said on a call with analysts on Thursday.
The property / casualty rates continued to rise in the second quarter, said J. Patrick Gallagher Jr., chairman, president and CEO of the company, in the conference call.
"Overall, global P / C rates remain firm and at the same time we are seeing increased economic activity," he said.
The second quarter premium renewal increases were similar to the first quarter, he said. U.S. retail sales rose about 8%, Canada 9%, the UK 8% and Australian prices 6%, Gallagher said.
In its risk management business, which includes its claims management business, Gallagher had sales of $ 245 million, an increase of 28.4% and an increase of nearly 20% on an organic basis, Gallagher said.
The unit benefited from new business, increased employee compensation claims and "and an easier pandemic year-to-year comparison," he said.
Gallagher reported net income of $ 201.8 million, an increase of 24.7% over the same period last year.
During the quarter, Gallagher completed seven brokerage acquisitions that are expected to generate annualized sales of $ 34.1 million.
Mr. Gallagher said that while the company was excited about the prospect of buying much of Willis' reinsurance business and other Willis businesses, it has a full pipeline of smaller acquisition targets and will continue its "tuck-in" acquisition strategy.
When asked by an analyst about hiring restrictions in the terminated agreement to purchase a majority of Willis' business, Mr. Gallagher said the agreement contained some restrictions.
“We intend to honor them; They are not extensive, but in general we are not limited in our ability to hire general production talent, ”he said.