Gallagher reports 19% gain in Q4 revenue
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Arthur J. Gallagher & Co. on Thursday reported a 19% increase in fourth-quarter brokerage revenue, to $1.19 billion.
Total revenue increased 16.9%, to $1.41 billion, compared with the year-earlier period, the company reported. Net earnings increased 30.9%, to $137 million. It completed 11 acquisitions during the quarter, with estimated annualized revenue of $117 million.
For the full year, brokerage revenue increased 15.4%, to $4.9 billion. Total revenue increased 13.7%, to $5.74 billion. Net earnings increased 21.7%, to $783.5 million. The company completed 49 acquisitions, with estimated annualized revenue of $468 million.
“The p/c market has moved from stable to firm,” J. Patrick Gallagher, chairman, president and CEO, said during the broker’s earnings call Thursday.
“There’s a recognition by the underwriting community that in particular in specific lines they’ve got to get this right,” he said, adding, “We also are saddled with social inflation.” Insurers are not willing to offer the “same kind of limits at really cheap premium amounts” they were two or three years ago, he said.
Mr. Gallagher said clients were “not happy” with the rate hikes after experiencing flat or lower rates for 14 years. “A large majority of our team has never operated in a firming market” and is being coached “to get out real early and explain to clients that it’s going to be different,” he said.
The company’s client retentions are “very solid,” Mr. Gallagher said, but added, “Make no bones about it. This is the type of market that causes people to think twice the next time the phone rings and someone says, ‘I’d like to talk to you about your insurance.’”
