After steering its way through fallout from the contingent commissions controversy for much of 2005, 2006 "was a back to business year," for Arthur J. Gallagher & Co., said J. Patrick Gallagher Jr., the Itasca, Ill.-based brokerage's chairman, president and chief executive officer.

He said moving to a fully transparent model in the brokerage business "was no small feat."

"What was probably one of the most rewarding things about our move to describing to our clients exactly how we get paid was the fact that there was no push back," Mr. Gallagher said. "That told me a couple of things. The first thing it told me, and I couldn't be prouder of this, our clients recognize the value we're providing to their company.

"By the same token, I thought it was a tremendous reflection on our culture. You could have easily had production talent, even management talent, recruited away to local competitors, basically on the premise of 'We don't have to change anything,'" Mr. Gallagher said.

Looking back, Mr. Gallagher said the transparency his firm embraced in 2006 is truly a benefit that emerged from the contingent commissions issue.

"I think it's moved our relationship with our clients to a higher plane, and I think it is a good thing, which the industry never would have done if we hadn't been brought to scrutiny by regulators," Mr. Gallagher said.

On the subject of supplemental commissions that Gallagher receives from some insurers, Mr. Gallagher stressed that they are fully disclosed to clients.

He noted that 2006 was a "good growth year" for the company. Gallagher's acquisitions slowed to 10 in 2005 from a record 19 in 2004. Last year, the company completed 11--all within its brokerage segment. And, said Mr. Gallagher, "It looks like 2007 will be one of our best acquisition years of all time." So far this year, Gallagher has completed 11 acquisitions.

Gallagher, the world's fourth largest insurance brokerage, posted nearly $1.44 billion in brokerage revenue in 2006, an increase of more than 6.4% from its $1.35 billion in brokerage revenue in 2005. The company posted $128.5 million in earnings in 2006, up from $30.8 million in 2005.

Company Chairman Robert E. Gallagher, J. Patrick Gallagher's uncle, died last August after a brief illness. "He was just a wonderful influence on our company. And it's been nine months now and people still miss him quite a bit," Mr. Gallagher said.

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