Gallagher reports higher quarterly revenue, continues buying spreeReprints
Arthur J. Gallagher & Co. reported higher revenue amid solid organic growth as it continues to actively engage in acquisitions.
The Rolling Meadows, Illinois-based brokerage reported revenue of $1.56 billion in the second quarter of 2017, up 9.6% from the same period last year, according to the company’s earnings report released after the Thursday market close.
“Our first half renewals, as well as our mid-year internal insurance rate survey, suggest P&C pricing is mostly stable,” Chairman, President and CEO J. Patrick Gallagher Jr. said in the earnings statement. “Almost two-thirds of our survey respondents expect no significant change in the 2017 pricing environment.”
The company’s brokerage segment reported revenue of $998.1 million in the second quarter of 2017, up 5.2% from the same period last year.
The unit reported 4.2% growth in total organic revenue for second quarter 2017, with its domestic operations posting about 3.5% growth and international operations posting about 5.5% growth. Mr. Gallagher said he was “pretty bullish” about continued growth in the international segment amid acquisitions made in countries such as Canada and New Zealand.
“Just a fantastic job by our international team,” he said during the company’s second-quarter earnings call Friday.
Gallagher’s risk management segment, which includes third-party administrator business Gallagher Bassett Services Inc., reported revenue of $188.7 million in the second quarter of 2017, up 6.9% from the same period last year.
The company closed nine acquisitions in the second quarter of 2017, with total estimated annualized revenue acquired of $30.3 million, according to the report. This compares with 13 acquisitions with total estimated annualized revenue acquired of $40.4 million in the same period last year.
Gallagher is likely to spend between $700 million to $800 million on acquisitions in 2017, similar to last year, Chief Financial Officer Douglas Howell said on the call.
“If it’s a little lower than last year, it wouldn’t be by much,” he said.
Gallagher officials were asked about the potential impact on their business from USI Insurance Services L.L.C. agreeing to purchase Wells Fargo Insurance Services USA Inc. in June.
“Whenever there is change in the business and people are maybe looking for another place to rest their head, we provide a pretty nice house,” Mr. Gallagher said during the call.
Total revenues for the first half of 2017 were $2.98 billion, up 9.1% from the same period last year.