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Gallagher reports double-digit growth in fourth quarter

Posted On: Jan. 25, 2018 6:12 PM CST

Arthur J. Gallagher & Co. reported robust revenue growth in the fourth quarter of 2017 and the full year driven by strong organic and acquisition-based expansion.

Gallagher reported revenue of $1.6 billion for the fourth quarter of 2017, a 15.5% increase over the same period in 2016.

In its core brokerage segment, Gallagher reported fourth-quarter revenue of $1 billion, a 12.9% increase over the 2016 fourth quarter. Its risk management segment, which includes its claims management business, reported fourth-quarter revenue of $197.1 million, a 6.2% increase over the 2016 fourth quarter. Its corporate segment, which includes the firm’s investments in clean energy, also saw significant revenue growth.

Fourth-quarter organic growth was 6.8%, said J. Patrick Gallagher, chairman, president and CEO of the firm, on a conference call with analysts.

“We smashed it in the fourth quarter. Our sales people killed it,” he said.

In the United States, Gallagher’s property/casualty brokerage business generated 5.7% organic growth, with retail up 5.6% and wholesale up 6.3%, Mr. Gallagher said.

The organic growth occurred despite little movement in average U.S. insurance rate increases.

However, “When it comes to exposures, we are seeing better signs of exposure growth in the recent couple of quarters,” he said.

Australia and New Zealand, which is seeing the strongest price increases of all the regions Gallagher operates in, reported organic growth of 9%, Canada reported 6% and the United Kingdom was up 5%, Mr. Gallagher said.

For the full year, Gallagher reported revenue of $6.16 billion, a 10.1% increase over 2016. Its 2017 brokerage revenue was $3.83 billion, up 8.6% over 2016, and its risk management revenue was $768.6 million, up 7%.

Organic growth in its brokerage segment for the full year was 4.4% and in its risk management segment 5.2%, Mr. Gallagher said.

Gallagher reported a profit of $113.2 million for the fourth quarter, a 12.1% increase over the same period in 2016, and a profit of $499.2 million for the full year, a 12.2% increase over 2016.

The acquisitive firm reported nine acquisitions with total annual revenues of $29.3 million in the fourth quarter of 2017, the same number of deals as in 2016, and 36 deals with a total of $159 million in annual revenues in the full year, one less than in 2016.

“Our merger and acquisition pipeline remains robust, with over $300 million of revenues associated with more than 40 term sheets either agreed upon, issued or being prepared,” Mr. Gallagher said. “Not all these acquisition transactions will close, but I feel good about our ability to attract acquisition partners.”