Gallagher revenue climbs 8.4% in fourth quarter

Arthur J. Gallagher & Co. reported revenues of $1.66 billion in the fourth quarter of 2018, up 8.4% from the same quarter in 2017, the broker said in its earnings statement Thursday.

For the year, revenues rose 10.9% to $6.93 billion.

Net income for the fourth quarter rose 62.8% to $127.8 million, while net income for the year was up 30.7% to $675.9 million.

In the brokerage segment, fourth-quarter revenues grew 11.7% to $1.00 billion as yearly revenue rose 10.1% to $4.25 billion.

Brokerage segment fourth-quarter organic growth was 5.6%, according to J. Patrick Gallagher Jr., chairman, president and CEO, speaking on the company’s earnings call after markets closed Thursday.

In the broker’s domestic property/casualty operations, “base organic [growth] was over 6%,” Mr. Gallagher said, while “U.K. operations posted 8% organic and Canada was up 6%, and Australia and New Zealand grew about 9%.”

Rate and exposure growth both contributed to the bottom line, Mr. Gallagher said.

“Property/casualty rates and exposure combined are trending higher across all major geographies and continue to be a modest tailwind to organic growth,” he said.

Commenting on rates, “In retail property/casualty markets, commercial auto and property lines are up about 5% and workers compensation is down about a point,” Mr. Gallagher said. “U.K. retail is flat to modestly positive across most lines except professional liability, which is up about 5%. In Canada, property is up about 4% and in Australia and New Zealand property is up 9%.”

The market seemed to be moving higher from a year ago, Mr. Gallagher said.

“Overall, the property/casualty market remains stable, similar to past quarters, but we do see it trending a little higher than fall 2018,” he said. “Looking forward, 2019 brokerage organic growth feels like it will be about 5%.”

The broker also remained active with mergers. In 2018, Gallagher completed 44 mergers representing about $318 million in annualized revenue, Mr. Gallagher said.