AJG - Earnings call transcript Q2 2024 | Arthur J. Gallagher & Co.

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Operator

Good afternoon, and welcome to Arthur J. Gallagher & Co's Second Quarter 2024 Earnings Conference Call. [Operator Instructions] Today's call is being recorded. [Operator Instructions] Some of the comments made during this conference call, including answers given in response to questions, may constitute forward-looking statements within the meaning of the securities laws. The company does not assume any obligation to update information or forward-looking statements provided on this call. subject to and differ are cause that statements results actual materially. forward-looking to uncertainties risks could These Please refer recent to such Risk X-K Factors the for risks information concerning contained filings the forward-looking and in uncertainties. company's details most more XX-K, and sections XX-Q on statements and

the In reconciliations other Relations to may refer the Arthur begin. non-GAAP release and of website. It Mr. measures call Co. Investor on this company's please addition, well these Gallagher, as my Gallagher J. Jr., of introduce measures, in now for materials section the Patrick as you & J. of other Chairman the pleasure discussed information is regarding earnings CEO and to Gallagher,

J. Gallagher

our second 'XX very call. quarter you Good thank much. you for Thank earnings and afternoon, for us joining

our quarter. with members of our call me other management and had Howell, We second divisions. is today an the CFO, team the excellent operating heads the of On business

Management our growth Risk For posted X.X% interest include if Brokerage revenue, growth income. XX% in combined and you X.X% and segments we organic

provided completed XX new net basis of Reported to XXX revenue. of earnings our expansion $X.XX, earnings the another we $X.XX, also margin great with June of GAAP team share line per quarter IR margin $XX per totaling XX.X%. and expansion EBITDAC annualized basis and XX% earnings estimated XX points million of points, at mergers adjusted up We up year-over-year, expectations adjusted the by of Day. share XX% year-over-year, right in

X% end of expansion basis basis, growth above if June X.X% income. at Reported was growth Organic revenue Day expectations. a our and was include margin Moving the segment. points EBITDAC interest to midpoint was the results starting upper IR XX with you segment Brokerage of the Adjusted on at XX%. guidance,

Canada, in interest X% Brokerage retail and X% our just we operations, give Australia U.K., and do include delivered level in not following organic. New behind And me you some the Within to income. our set, Zealand. insights the segment U.S. figures Let the PC

about our X%, the from Re specialty reinsurance, global and Our U.S. wholesale This to benefit XX%. XX%, Gallagher have U.K. without reinsurance. or at brokerage some of and employee would wholesale impact case specialty XX%, that posted organic at organic excellent lumpy sales. Shifting includes life wholesale and at been of overall businesses, whether X% consulting XX% growth, business retail, timing

renewal provide me pricing thoughts let exposure rate environment, insurance the primary and both include about some insurance were the changes, Next, quarter starting X%. PC premiums, on marketplace. Global with which second up

at from product X most June broad-based, change investor ago what major our premium continue increases lines. meeting. discussed all we our weeks up and Renewal So geographies be no across of to

up to example, X%, X% X% up about up XX%. to comp X%, over X% auto was to Cyber For was X% X%, XX%, general property down workers' up umbrella and up to and D&O X%, flat commercial liability lines personal

lines many are still So seeing increases. strong

ILS market. declines the needed the reserve to view, and reinsurance Reinsurers geography. the combined Moving Casualty resulting increases. was year some an carriers continue our reinsurers increased insurance premium it trends. In loss to by is reinsurers renewals tighten prior by profit underwriting unfavorable and scrutinize overall. U.S. year-over-year midyear terms from and due rationally, increased behave rates and development the and current modest price most continue line, given growth, generate reinsurance conditions Offsetting renewals. price and adequate to exposure of heavily flat by submissions industry's of where cost raising this to industry end view reinsurers capacity both saw the the with towers reinsurance reinsurance saw at concentrated and modest the renewals to in Property for top traditional underlying market demand,

to hand, increases the close leader, accounts. lines. premiums we in increases casualty quarter. Shifting the with casualty in small within see the renewal and around are we to classes, large signs renewal may year-over-year. Yet we differentiation of exposure an but other increases second industry property premium approaching space, X% that and moderating, premiums And price seeing adequacy. where are our Carriers premium client and we data renewal greater to between million and continue property are are midsized of the flattish on seeing or Underlying increases believe accounts mostly We are greatest for be seeing these advancing. this thus, property seeing $X

second high by fact, differentiation client in and increases the umbrella commercial are global auto renewal size. there digits, quarter little In single is premium and

historical social inflation, highlighting casualty. been thus, And believe in are growing come to to continue for We quite medical and increases concerns further expenses worsening reserve have we some time. rate

while renewal our job navigate a current and complex insurance Having increases, increases increased trusted response as are mitigating multiple carrier in While of the best our clients businesses the that's Gallagher our for have years price a like environment, experienced premium rational by brokers. can clients adviser costs. help coverage finding market

Moving customers' to business comments activity. our on

the daily across last show levels similar most quarter, to indications During continue year's midyear and endorsements, geographies. policy second cancellations, with audits our positive

not So of remains seeing activity solid, economic slowdown. and signs global we are

costs. continued U.S., unemployed the medical cost remain in wage employers jobs focused and growth retaining balance remains open market the attracting intact more controlling than people while looking labor work. And inflation, and talent for Within with on with further

in and XX% and brokerage So net provide, time, and data value that match due we services leading extensive client can't and demand competing offerings. expertise, Frankly, share to value the is to the about our Gallagher. XXXX. Across for more the market and believe outstanding that to 'XX smaller for continue operations, I brokers win advice wins proposition, niche local our just analytics we are see our superior the I solid service of against, we in brokerage

all we outstanding full and brokerage year would see that to when X% 'XX the X% year. So in pull be to together, organic continue we this range, another

last line organic with up of XX%, Adjusted year, margins X.X%. Moving on was IR XX.X%, were Day including versus segment, in to June basis Gallagher our growth Bassett. and points our expectations. Risk Management EBITDAC Revenue XXX

claims. We wins, continue retention outstanding new to new from business higher in benefit customer rising activity business increases and

quarters see year the in approximately would year. around and organic next that that, outstanding X around XX.X% organic we bring XX.X%, be margins to an 'XX margins forward, and Looking and to too, full X% would X%

to Let We and professionals. very Gallagher welcome mergers the of our new joining new family like of me completed extend for estimated I'd to and to revenue. partners XX about shift a million warm us, growing acquisitions. representing our $XX mergers quarter, thank of all during annualized second

Looking ahead, very our pipeline remains strong.

have very choose excited signed we and annualized Gallagher. to choice, be if of have XX around prepared, being million revenue. will join $XXX and they representing We term around firms sheets always Good a

conclude public of reflected me bedrock Chairman culture. with Michael anniversary Last XXth becoming at Let maintain a month, some CEO and our we the the Gallagher, must now Bob of company. time, above comments we our regarding all, on in Gallagher service. and are that and Gallagher captured values client Way day to day our XX Thanks global Way. culture integrity and out. with breathe colleagues Those tenets unique the the the in live teamwork, all of

is XX% stronger total is as differentiate That and years. more us culture to shareholder drive and our over average that to Gallagher firm the culture more return continues annual it's Our ever, than a of Way. than past an help the and XX vibrant

and I'll stop to Doug. now Okay. over Doug? it turn

Douglas Howell

came Thanks, release. our margins website, with cash, shape Then comments we growth and the M&A I'll shift margin second of right quarter earnings for start the I'll organic by I'll I'll we how comment remarks my capital Pat, growth on we seeing the management. and I'll in you conclude hello, Day that are also and that provide. few IR our typical Punchline document and everyone. commentary year. helpers Today, line with commentary. update and our second IR half on on June modeling is in prepared segment. up I'll with we organic the through CFO a walk to And posted on

Okay.

from our sales had quarter the later not IR of above release. day, signaled Let's shifted of in timing Headline Brokerage Page we few June we a growth of Notably, June forecasted X% where a if IR would year. have to the flip segment to earnings quarter organic large possible that's X%. been second right X.X%. second X.X% to with our this Day. X Again, range line live We to in

again, basis that income about points. XX here. that foreshadowed also from late just points. headwind small about we all basis pushed XX finally, new and a So did, June by by organic reminder, contingents Recall no include that And If that in interest we have higher would inorganic news don't a adversely impacted we organic.

We believe favorable data production globe. and and sales have client investments business are strong the made tools, people, to and the niche in new analytics experts leading across that retention we

changes of supportive growth. Pat insurance the the Additionally, backdrop quarter. said X% premium in market renewal remains

U.S. and unreasonable expect this far thus second hurricane change half with louder casualty of reserves premium However, again growing changes And to protected or our July's premium around active not season it's renewal second 'XX. above quarter. in renewal the is greater an noise mid-single-digit quarter,

investments, organic combined support insurance year conditions, continues market XXXX organic segment with outlook. the Brokerage our our to full So

seeing in X% We are it still to X% that range.

X to the to flip So segment the Brokerage of now Page earnings adjusted table. release EBITDAC

last EBITDAC and end up Day at adjusted basis June margin expectations. points upper over the quarter of XX year was our Second XX.X%, IR

a through from you last walk me bridge Let year.

out quarter, reported XXXX XX.X%. adjusted EBITDAC you we if margin second pull then back First, see you'd last of year

a very rates, limited adjust to need FX quarter. impact you on Second, for had this current margin period which

XX.X%. also was margin FX adjusted XXXX So

interest therefore, by of great XXXX used That's of M&A really organic XXX divestitures second and nearly gets expansion the us XX.X%, quarter quarter and this really, that's XX of gave XXX nearly team. basis margin margin. about and That Third, margin basis then of points points to you work the basis brokerage of impact expansion. margins and points

expecting we 'XX, are XXX the basis look second half in margin we to points expansion range. of the still to XX ahead As

the of Buck look and second a like fourth impact third first quarter So still had quarter. roll-in acquisition. will quarter lot 'XX Recall, the

about about posted which So would year organic in 'XX year Buck, full that full for range. year basis math will full be the of points show XX right, without XX we X% assuming but points basis feels X% about expansion, to the

segment to and and the organic the Pages of X and Let's move earnings EBITDAC on the now X tables Risk release. Management

at Another in We X.X% and line our We and business, right retention IR growing were solid saw June new fantastic count. both outlook. with excellent XX.X%, organic posted Day quarter. margins claim of

next year That around of in X Pat organic be of organic as to and would X% the finish around If approximately Looking see the of great margins XX.X%. by forward, XX.X%. and we quarters we would team. post each margins that, we also X% with were said, the work

release second expectations. Page the end quarter corporate the numbers to shortcut of the of in IR than earnings just came segment Day and favorable X better table. June Turning Adjusted our

within some line. All due was to that expense tax of favorable All right. items the corporate

comments. few a move Now the document, starting to on X, let's commentary CFO Page

The past Risk foreign the has impacts make these updated in you segment. models your sure First, Management dollar weakened and so exchange. Brokerage incorporate FX over revenue for please EPS month, and from the

amortization segment adjusted we Late -- the M&A time. balance a This received Recall, we Brokerage a reported line sheet on so GAAP results, few me, earnings. acquisitions time some bit noisy it made quarter, while adjusted this excuse impacts third-party from end non-GAAP of this expense. updated doesn't also to Second, also adjustments be on impact third or estimates quarter. can valuation and a recent the at out

that see the the at bottom in You'll page. footnote of X

expect all cause some quarter. out, reported the expense it noise per in Again, that we does $XXX results. is of but GAAP amortization forward, million about adjusted Looking of

and depreciation amortization Now line. management it's risk the

estimates impact valuation to too, The is which our M&A Here EPS $X.XX received about also we is to results Footnote recent quarter. updated non-GAAP net X. in for described this acquisition,

amortization we're and report. depreciation now a level a forward, lower valuation as of of expecting M&A that result Going

Page the the credit June our no Turning tax carryforwards. at on shows Flipping $XXX X about for to fourth our X, and change to third segment Page Corporate outlook to It million quarter. XX. to

show won't in which benefit by $XXX benefit does helps M&A. million this to P&L, million a the our about it us cash up While future year, flow $XXX fund

are not X growth and X computations equity of and brokers. in help table. Day. investment these from here investment has at included modeling breaks finance none the on in Turning book items And premium is now our that X, changed the June we what income IR call our organic we components earnings this of We present to release. much Pages of investments revenues, down reminder, income, punchline our as provided a third-party gains Page The

was better a performing $XXX and 'XX divestitures. few and 'XX, well We our cuts table, June. $XXX The million still page on rollover XX-basis-point during $XXX embedding IR we the our of to current are table column, this subtotal rate FX you in outlook than revenue X shows second for due rates. When million quarter half very the ship estimates updated have down to acquisitions million second in the before that Day

through Looking forward, to the estimated for right include pinkish closed revenues the yesterday. M&A columns

pick need a just you'll M&A. reminder, So to for make a future

on Risk rollover segment see down you'll been quarter page, revenues updated Moving acquisition. our early for Management that have third

we X in quarters, $XX million, respectively. sure these the next additional approximately expect to million For $XX Please reflect your models. revenues make and

and remember, XX M&A combined approaching cash, which pipeline with maintaining while M&A And repurchases hand as solid are first continue for was during all, the of M&A share free positioned to could we we than 'XX Moving In the opportunities $X funding. flow in it spend and debt well million. cash we opportunities. total, at investment-grade management half it well. capital on When we opens in to billion June rating. now half, our if to $X.X stronger door all of fund 'XX, another billion don't $XXX expected estimate cash a second is 'XX, typically Available for our have

Okay.

Another quarter fantastic of the first excellent year. and half

ahead, 'XX. to we a back terrific and to M&A the growing organic pipeline, Thanks strong to another Pat. and culture, improvements. in well you, and believe all due by see that and Looking growth net the for here hard new to positioned to opportunities winning a continued productivity I wins, Add work deliver business year team, large many too are very we

J. Gallagher

please? up Operator, Doug. you open want Thanks, do questions, it to for

Operator

Greenspan Our from Instructions] Elyse Fargo. is coming Wells [Operator with question first

Elyse Greenspan

growth. organic wholesale the on is question first My

in to the You came X% on in you guys reflected at that expected open it Day the brokerage, the property believe IR guide X%, the and XX% quarter. I was think I side. I in think, said slowdown

to relative came changed what and results guidance, how quarter? So that in, the the in

Douglas Howell

continued XX% a is Listen, to up. of up not submissions market so to wholesalers. of terrific the during use finish and a Submissions shift end June. back -- seeing is the really the guidance There up were were primary we a had significant our We're June. clearly and any

Elyse Greenspan

IR you XXXX. a Okay. that Day, your about feels said year, also next lot And then you had like at -- think we when it

I X% organic perhaps in range X% the assumption think within something is of still to brokerage. the right

margin the remains year, of noise, And could terms was X% that. next that -- the Assuming you weeks. been if if in case for points few next I'm if of if would the margin X% Buck obviously assuming this basis the still XX that case, It's without then a in and year year's confirm expansion expansion organic M&A rule you're be the thumb to growth range? that's

Douglas Howell

reaffirm let's be to this similar year, we yes, very Well, year. see next that it could

what see interest with rates, hurricane the happens season, rates, Let's casualty election.

nothing margin in. When a X% would a but that season. us feels unknowns to see that cause systemic environment, organic think budget XXX-basis-point there's to October. in our still year happening, that our there's a we But some comes believe it lot that before next to where like We'll bit good IR So are there during year could you We will come X% that out that in on start expansion, this us work have a let margins to Day. up in should idea range. September XX- that little

Elyse Greenspan

And then one. last Okay. my

pipeline guys said said have of the You And that buyback might TBD? the this did in there to see, Or does given it you first the like you kind some guys this still billion year. of year? -- How feel M&A fund year? spend it half is much $X.X be you you

Douglas Howell

year. million I thus around far $XXX think So spent this we've

We are the opportunities also. some with gains see some have dogs generally That's for election. that's some the there's to of I see ago the number. capital drop on that November large us earn-out include hour -- and We don't lot in M&A a of maybe the do our just the of happens see. M&A. There upward sitting proposals kind that to XX%. commitments that, the thinking we'll right that in one starting year payable first out here off what I anticipate pressure bird Maybe. there to have feel goes it the we'll are rate after Republican, that with we Do of having that down If due We there. phone an really U.S., he's -- buybacks? but got

If have that try So January. be Democrats win, people the might you year. might that the into get the push of things then to there sold push to before a end

where that revolves years we X.X we and X.X So on before sitting were similar flow presidential very M&A ago. where were years ago election. of around a election to There we're lot the is uncertainty an

using got we've what we'll shot not, at on think I look of a happens all. a share if great repurchases. it take So And

Operator

is next Zaremski Mike from Capital Our Markets. question with BMO

Michael Zaremski

But good premium it the by renewal makes pricing this kind give hope commentary you of give always I on and question and sense. you changes on the line. environment, overall product

has RPC, And what delta interchanging your year? Why year with versus between there last is how your organic to bigger growth? right, we that is and now this around the a more so X%, organic early desalt recently and saw RPC

Douglas Howell

right. All

lower So opt-out buyers of coverages. maybe to we you opt behavior. a up, about have great talked a haven't going just When quarters, increase don't prices but about might certain out coverages, buyers' mean for a are always and it thing they the few limit which directly of opt-in, the think or the quite deductible, buy

slower they couldn't coverages and afford just amounts their prices to said, increases, deductibles, tend or buy raised we they As reduce before. maybe they back their They opt limits to start of moderate in. they and

our what go you is growth organic investor delta back a always materials, and there exposure So rate the into if and all our between way is.

X% XX%, our property by lines when actually property our why They're revenue. that's X%, in periods is we're so growing up growing X%, XX%. see that's you not And

can opt-in, to that. the impact. Then always other to versus the accounts small opt-out and do you remember is of you got thing that mid-market the dynamic have So accounts large influence

a go Prices you behavior. giving buying -- market, of rational our more. going go actual feel customers by vary can the Prices on what's of buy in on we're I buy So I depending behavior down, the up, but less.

J. Gallagher

-- Doug Mike. that me let well, hit As on as said

forget job what not our Let's is.

looks rate well, up write on you renewal you're XX% When your come seeing that not hit like exposure your in right book. Doug and say, and So it. it's

like gets promise where with this coming. job good we here's clients' of to a front in out and see broker start with is Our their A that. the mitigate minute, that right market wait we months.

see are we what before market, what here Let's add up. do Here's what's it. in about it? coming, retentions the you now to it's is going we dropped to take to time Remember, cover

So parts X there's of between a those lot moving numbers.

Michael Zaremski

Got And great disclosed it. obviously, it's it. you guys

guess want a put I so it. to I And on point just final

organic do fair I is as disconnect year-over-year? doing And clients job out would on for there and -- cause putting the to say the lines clients it in is related a RPC it's same that separately of, So guess, they that amount little have continue? rate [indiscernible] to flexibility you're do year-over-year of a other your a good bit pressure basis, your on

J. Gallagher

in Yes, think premium growth that. definitely. show numbers on be Absolutely. answer Number one, continue what we to change a is softball, and the our for are the Absolutely. clients, exposure unbelievable. these doing in always good of being do. business. think numbers yes, tools if growth we yes, show And the between And reported rates you based best throw the in me to as toolbox what's our And we And see it. we're you'll the units job some going

insurance a want buy to captive? up? attention you your look It's Would just, do at So don't. you take to or not you do like

insure of with are things way, the Let's you'll things first things There's last for that lot single risk people is on not the It's going start you every the should that our By with a day. individual. prescriptive. appetite work very maybe and self-insure. the that

a for dealer book, has take works. an based says, a how in AI this can't on not lot." that much it risk no of appetite You "Oh, the auto cars number It's there's

then and I'm comes It's pretty where that's with bold advice So people, just, well, and dealing is our here. those our critical. profession in not

makes it we do. think way. of retention I a million Wait, wait, this wait, lot get we $X paid sense. looks to better what And think that's

Michael Zaremski

like largest And reinsurance a just data have That's a reinsurance. helpful. view, mean kind extent inflation. share of the of we great And I demand of to but done pivoting lastly, mid-teens-ish kind some only keep think your there's you kind high Okay. have personal that because organic reinsurers about able of taking year. guys increased a today market lines, one that out what's job you the being in to on of lot going of put this To demand, not if showing

but remain expect you year? would know for way to I of to historical think kind high levels kind of don't curious, demand 'XX relative reinsurance. to relative all you just pretty So and at the if this into yet,

J. Gallagher

go of Yes, It'll I up. lot reasons. do a for

that been I look going more the have to And there you're think that see reasonable. of to the at certain. buy opportunity purchase cutbacks more prices in

real, is the a and to want [indiscernible] with it high doesn't verdicts nuclear are going, tower, with I on The much sitting to a comes downward more does end, some up still other that are there's it here award. us thing cost the And seeing be the and billion activity. that top jury lot they're people of buy these $X

Operator

Raymond is Our Peters the from James. with line Gregory question next of

Charles Peters

that. business up the new quarter we new additional your versus, net if second net for first the us in Everyone could year about the wondering how my Day, reflect second say, question, and color quarter that. wins business I give metrics results new about net you quarter the during you some or how I around spoke last was think your more business in wins and guess some on your Investor clearly, shaped should

Douglas Howell

look think numbers irrelevant. The can me best absolute are year-to-date, lost kind you but between of out, and expanded new it'll we've a the it take it. And dig probably spread tell I actually that's point. to a June We I way by at minute that the to full

also is back. coming nonrecurring Our

but might they're have been of recurring a on just now our in line the with Before organic, putting drag business. being nonrecurring slight just actually revenues some

at we've something of spent as would sale clients years. Arguably, an see the those rate see a that. got spread our better with rebuilding a rate expansion field COVID, more wholesalers, a you'd is resources the and up data a of reinsurance not and built showing the bear, compelling I of with them deliver market business billion going folks it rate job environment few absolutely X that our X and of after the of think last environment, COVID. client better maybe I -- complicated. that seeing team our loss less our we've the that our and and that it X the it of years. We've to new I that we our chaotic actually more stable behavior. amazed at over and consumed environment trying calm really more were do $X save net offer developed our and into a spent versus over wares like of we you're How do on just more capabilities over much And think lost. with the on in have capabilities a our analytics So think we point new, been consumed seeing kind tell between gets years, the years. will some been in to digital capabilities chaotic business, forward so have with last stack now money that's Put Three in their guys last be last Two bring you, kind of those expertise. some I new would

in and to us of at think to and going business to new point up. market, going give out little continue you're the calm that's our So I sale come a see go the

Charles Peters

color. Excellent

maximize for centers also drive your do One opportunities this in of you is in to the for to margin of kind Or dovetails past offshoring see improvement? you -- the And about offshore opportunities? further expansively margin expansion. the of Gallagher sense of it more with J. sort excellence. things Arthur help Is that talked those you've opportunities for potential some the

J. Gallagher

This Greg. Pat, is

that, It's which sale. people any don't I about do, giving we expand. It's business. not be into retention the XXX numbers It's feeds benefits the using of opportunity think to checking help we're that that, throw and everything being XX ball heads ago of And about having our years differentiator I that things, Everywhere of But them of a XX doing recruiting. in level and a supporting the XX,XXX other the any take and from side the them attain. me of Let differentiator means. It's It the time see look, policies kind and those Doug things, that differentiator centers professionalism is a doing do in I'll continues by operational for I should XXX of do unbelievable point people. discussion to when just doing new have any see and and excellence. to I We unbelievable countries. that is with slowing freeing the sense up that should something that replacing they be off us people over down services or now started We at there. not

product the unique they a beneficial So all we as the grow and resource, is we them of one And the acquisitions people think to are into of Gallagher. I which immediately join of excellence alone, at our point offering provide are they everyone us. think this join another to list -- back through reasons invested we our about us those a things sales things very in centers add start plugging of Doug's we've I

do. So thing that it's very to differentiating me, we a

absolutely team I'll spectacular, and Doug our there address numbers. is let think I the

Douglas Howell

Yes.

of our about or us. a I think, only you us. for part our growth path they of they they are team. the I excellence, talk an think work if There isn't centers offshore integral They're we of

be at some there. to we're of there'll be you if XX,XXX $XX almost billion going of revenue, If look outlook, our folks

really this So nearly is on the more deploy service spent our will AI growth XX-year processes. standardize, when that, areas. It to of head than terrific centers and XX path make now journey going in consistent. repeatable is of our faster nearly to years other count grow information we operations environment. AI our this have on we've have India the that And and we've us But other you been into importantly to behaviors area and consistency allow is doing this. and

the our [indiscernible], different will our folks I and compared there better, I of can for finance And will in going our sales finance, AI with can think will believe, entire most type it speak, of we're XX% And make operating folks XX%. job have the centers the I've folks it by better. We I that that out better, of decade. to there, of now using make I service to a worldwide global almost see a my and make some our team tests folks better, got

it differentiator going hard to we've work sales for service the us of be last So is for put and a XX in because years. the

Charles Peters

probably a know Just this number, And of I I point should but remember. clarification. Doug, don't

well, you last repurchase? share we On your get you the you guys capital might the earn-out, the active management do in repurchase. through share listen, time When can't if you deals, consider side, said, was were

Douglas Howell

Brexit was when at, years ago, Well, let's was. maybe Brexit in, probably XXXX whenever see, it 'XX or was

Operator

of Motemaden with Our line next questions David Evercore. are from the

David Motemaden

is more you just I kind was lines. there? color on it bit hoping a Is a going casualty a little what's is pausing, bit get Doug, around a the moderation question. acceleration? the July that acceleration or little maybe What of had just property to on -- I RPC mentioned,

Douglas Howell

quarter. actually, bit us actually of is saw a Well, here property. And both. a actually, it quarter We pretty the property heavy in second little for in

of our you XX% think business, think might of our X/X second mix. quarter, the it If I comprise in it's here about

July. in talking what is I'm they're acceleration. property pricing coming year Casualty in because We'll second the slight rates We terms of We X advancement the point or some, about -- the point X points. -- see they showing or not of see in I X here So of up. so. I'm tick used with carriers. are word the happens where talking did a with out steady. the to half but X say It's are wouldn't X.

more. expect would I So advance to that

again, seeing overnight. both our last looked and certainly, on and a tick come casualty. property dailies, on but up, jump a not I they at So it up we're night, out

David Motemaden

wondering, Got was adjusted seen the That's show eye, is next or is on with can't centers in, a we the think first that related to my expansion line a effort into to caught -- where I about you to more guess, noted comp do headcount year as it. that how something press I've time some this remember margin ratio long. I'm just just in controls. the I concerted this And with and savings to a that of is offshore do there release that the year? --

Douglas Howell

is answer the this. that think I

we've then. if hiring of we First all, you out look back been and folks, few what during actually took since we did a at quite COVID,

Our business has grown into that.

everything. stopped an so not haven't it's indication any We hiring of means, by

I right teams their are we're workload think of are we in the just staffed seeing that models probably now. the okay that environment

need into in capacity I the it, read we've systemic, that hired but we maybe back into that 'XX. So would nothing that just but

David Motemaden

Got it.

sneaking That's more one And Okay. maybe helpful. in. just then

lot Just contingents? that made on you more I'm those guys the true-up come potential how for this that the guess, quarter. a the noise wondering reserve of more on casualty recent impact about commission quarter accruals contingent how we the of this to feel adjustments to years. have on seen I through reserves, you the and particularly had might

Douglas Howell

All right.

I could. on second. year-to-date. I but of it. We're well probably we've have pretty we And did the happened. the we word done will to supplementals, development -- not cautious use we were Casualty, bullish, accruing for that want maybe on we're the Contingents, some as, don't as First as all,

programs systemic careful a performance-related there. don't bit of we're compensation But couple some shift see in I we that $X of talking operations, is some a believe on got million million little per year-to-date. of binding Some compensation little our a quarter, to Maybe how our a going and happen. but bumps you a number to bit $XXX be our on total

small. So pretty it's

Operator

with Hughes Truist Securities. next of The from is question Mark line the

Mark Hughes

in business, for about quarters. Or Could we've a gotten a years? just extended lull? this bit your there little Is of it been prior expectation? relative the this growth And what good have of is to a number? might management in the the maybe the you what's period environment next maybe used talk couple risk the of to an elevated time, quite growth X% On

Douglas Howell

Right.

we large think wins about XX% excuse $X that for in of XX%, near need This talk all, first in -- actually is 'XX, is we're I X%, been year. mid-'XX. a 'XX, This XX%. double-digit and was starting XX% asked 'XX a that very grower very more has million if let's So that growth, had the to see history of it -- in in that great to now make of right was was about a get our customer business and we're did we is pushing we $XX about million organic time and sure not is posted couple that it reassuring, about year, annual you was long me, more incepted opportunities type reassurance. 'XX What year last book seeing we a we is

the say, of at happening it's ago, outcomes are carriers seeing are relative size, X to that beginning the our the If a are understand that nearly but double you to, better. doubled we amount let's solution. Self-insureds customizable that years look sales too, highly new now. are offer business We're

that nearly by that we market primarily measured think one the general total or in comp -- pay paid. X, billion when liability claims a tiers workers' there's as $XX would I X, X that U.S. billion awakening So top the claims $XX be of and we

in So the becoming known services more expertise and industry. is more the customizable

the out of couple triples and trips see plate. doubles Maybe So there. to but a of think to going we're getting a we're fewer lot many home more I runs,

X a pretty year, wouldn't have because call did in years of lull So we X% in it I now wins there. big we're but some this

J. Gallagher

But we difficult, lot That's now. big is not, more the a more [indiscernible] we're seeing but wrote stuff the all than ones. lumpy

Douglas Howell

Yes.

Mark Hughes

way Yes. the Understood. to within the brokerage binding. break -- the and versus to the wholesale out And open then MGA any

Douglas Howell

in programs that and think that range. binding XX% Yes. And is I that. right something think low-mid-single XX% digits, maybe Listen, to that now, open brokerage like I might be the in

J. Gallagher

experience that Mark, is markets, moving of with pleased nice what keep with property number impressed these you're brokerage with most open My types the and I'm with I'm especially digits. seeing is that substantially double in what -- kind line up stay month, you that they our see submission are. the of slow down, of the submission for There for count where for people is first quarter, the the is a sort fact year.

seeing to We business flow back the are primaries. not

So check is do, norm out where seen that we're earn wholesaler can what people more losing I business, want we that the that then the and we've change were excess of much becoming to a and and think not it. surplus

So business that's submission up, retention counts is rates up, are and new are up, pretty exciting.

Operator

Koh line is of Rob next Our question Goldman Sachs. from with the

Robert Cox

on back going the dynamics. question a opt-in, opt-out the Just

curious, driving Just and said something net new new of entirely? of that's through June net is higher, business? point else business X that kind year-to-date the does you flow that what's Or

J. Gallagher

some think of sizable dropping so instance, is with and of -- very retentions, and premiums flows primary our clients, I limits, sector, And back necessarily they're a the if lot you don't bigger Yes, very, entity well, for that entity that. they're that good public [indiscernible]. they're they comfortable example in taking the are not know, a of public -- as we're rising,

factor the layer, an will the what time, us. and call when up restraints and we it their back is that they opportunity we're new extra their stays buy are. at up, to they budget with the But had reductions of comes renewal expand the same that facing on those oftentimes, business. coverage, available a what's And So stuff

Douglas Howell

like goes slightly as a If premium in little of that to change XX% think a split would business. maybe deductible it new a client be goes to I a -- tough It's apart. new guess, through a I that wholesale retention, write cover and new would us. go and that business. a different it's lower change. XX% going -- through for a or change. slightly XX%, our new it premium -- new business renewal writes higher cover so If goes through little if an sometimes business, go they were low through tough would if Yes, existing it's Probably But level to renewal or part that goes the

Robert Cox

the on then the Okay. are And from endorsements Thanks there. for remaining positive. us nuances just indications the cancellations, walking revenue and through audit those

if change is decelerating the at rate this accelerating those curious either of Just is or point? on that

Douglas Howell

right. question. All Great

banking last quite of crisis. they bit So what same we're came second surface, of the second happened we on a about had year's last were quarter, the mini quarter. endorsements But year. as actually that out the

we're increasing flat didn't 'XX. pretty of interestingly, lot repeat year-over-year, banks crisis. a having March, that their in that have probably of not D&Os up nice. a this thing out, that But carve still We of good year, April seeing April were You -- that's

Operator

is Mike Ward question The from next with Citi. of the line

Michael Ward

the leveraging think to if I was at multiple you're reinsurance update businesses with together. programs, with your could wondering us you progress I integrated Bassett going where about a on market Gallagher you approach talked time? and

Douglas Howell

All right.

Then those So you're having that that across introductions there's also, the going program the development happen on good combines X yes, units. some together.

program integrally create relations reinsurers carrier on least I reinsurance from market, at well. folks capital, of think our out wins the working our that. seeing some Getting chair. to We're it's fronting our involved folks folks find with the to very our CFO's nice very well, the the going coming introductions to is carriers the

J. Gallagher

casualty people, well service the do I people table what extremely and base folks. think let's our we're as the now our And saying, was just accounts saying talking talking Yes. about about. we talked taking production meeting that's that, the and at was reinsurance our Doug benefits insurance as us, that people, of well our That are claims really marketing about about working on. property on together the talk broad We're is and XYZ about what is relationship. for Mike, side What when way weren't and on is company. all the manufacturing talking we this to companies hitting we're quite we now with individual regularly, Doug want

Now at broad base of the same a time, programs. in across RPS, looking

doing XXX those that we at well. doing looking and the be are the we not, are what should okay, Where retailers We about as got be we've programs to saying, company. reinsurance, a, those programs make using claims sure are our doing the in

and not to reference like you just say I XYZ last it's say that to a it's bag, talking and we we what or the were mixed So now gives of to well. take nothing. the and account as around or hope market a the bit nothing, color all or it's all of time it's little client kind about

Michael Ward

any, that question helpful. if And you political then guess, political No, kind risk prospects scenario second Yes. term pipeline, the type to we the theme. of those I near in credit in Curious was any and other see? election generation just tax the that's on have

Douglas Howell

most already Well, of are our in tax bank. credits the

all that or we about we was ] really working that pretty above think tax feel I reduction at, I market comfortable are much XXQ that. credits -- under broader, more the -- inflation credit passed previous So above-the-line [ What but think with on? the I'm don't defined, X suited X more for it's the next for pretty made we're common, years. to not don't tax the much it, I well generate just us X all new that team and years. The credits there forms energy think exciting. of shelf things sit on But credit there out to and big in we something because now the in X.X need the years. tax right clean we on see is plunge are to projects X doing for they across happening exciting I next some that are working are

market tax what about then by Let's burn that see there credits. time, a through do. these out And be there'll we we'll credits robust first, can and for

get it that now ensure to the You more credit. on much insurance can

it good the into pretty is it of suited I to think us a change a a probably years now, So either. lot with that's something have and for investment do in law. not well do Right capital the to few law in

Michael Ward

Okay.

the would this sort you I know, the caught. you bolster should That don't scenario And have do interest in maybe if of, rates in having terms leverage PE a M&A I bolster dynamic that I'm think. right, update are should about the of thinking -- So if market? competitive on it like of sort edge, your help help in extra

Douglas Howell

listen the update. belabor Well, not PE to

are IR doing the than buy And I to order I I day that that dog. my during the what said off brokers. now box equity with about I I bird phone just soap you, less call transparent our is had in the to tell new, got nice got structures family-owned As PEs the

sellers one more needs Get the I got that at Gallagher, I'm linear okay, everything own at. I of employees, and the if of and in to That's bird talked a people out the getting happens the get think little. on goes a a when up telling the of dog bit draft line. I PE more aware that today, the down little sellers they're the apparent becoming what very that last trough. spot that the you to work looking said, there. And their that, with firms it's people it of lifetime this more and that, has give something you structures, looks think is And really family's that and owners, to he are be of across looks call it that be now sell you X into do -- They to the on curtain I pulled and okay, been there's At think on don't more same and starting equity. PE equity, board. back equity models business same the how the not all on works the have it,

J. Gallagher

take that another too, Let me side of Mike.

because quarter risen, XX% that, been properties years. over stupid our equity interest private That's transactions. buyers I Second of actual multiples XX There down interest the believe March that money. was the of was partners. quarter, out I have for I believe a There's properties that paying Barry the these think were that it of in reporter space. of alone. put quarter Having the in we've Optus second do not in lot said

maybe you've down. the but of So count amounts coming got transaction smarter money, is maybe money, smaller

going names, look I they won't at are, you well, point little It when any bit where how roll-ups your Doug think to sellers do public. said, at to have joined with said, And I shop think and public, see same pretty change, and more investors, are you the think, that's sellers, me the until by from that slog, and now go think everybody want goes. getting easy they discerning. it's of time way, all to it's some to easy know well. And you in as to the I Better, as stack. a who Doug I an somebody as mention as isn't I go you that a are seeing happened let's who join nothing family are the a take what's that

for employee that this. give everybody that plan. acquisition, We've in on an the purchase other we we on in point this stock an acquisition one to got Now equity. comment When participate do from opportunity

and management We got have our people in and an our of program kinds growth. ways for senior success to LTIP producers. We've for all participate

PE the said Well, You and sell model. do owners baby. I that hopefully to the PE do great, people, like our great, investors

Operator

Grace of Carter of Our with next the Bank America. question is from line

Unknown Analyst

the wanted guidance. start on I risk to management

you around all think mentioned X% maybe for I year. the

I prior that's maybe guide to anything the you was X% June? XX%. we changed think that last maybe Could over since go spoke in

Douglas Howell

year the on difference between X% and -- couple I XX%. think talking on the degree listen, of about of difference a dollars the a million full we're on

say I that made So wouldn't it's million. $X

that upper end So got than is for the of the we've and the coming think that it. there's range -- so year lower end maybe the nothing it of just that's to better rest of we insight

Unknown Analyst

at are to to And maybe ] narrowing organic the X.X also Investor Day. [ on that mentioned considering guide, had I brokerage think you all growth it you X.X the

just Or of just [ to range uncertainty that entirely? reading am wider anything a the much Or does at changed X% into since in it it ] keeping then? I has too environment? Just reflect X%,

Douglas Howell

latter. the Maybe

point, just it's the We X that's to I we got more X close June. of finally you. talked and weeks think since been data

anywhere it's go So X% either terrific last hit a we'll talk year, grew terrific in. anywhere look you X% range. X% that that, at X% back [indiscernible] that's to And you another before. range And to again year, When we it way, all we is top year. on XXXX, September. in of X% next in that growth in in again year.

Operator

will Our KBW. last Shields be of line the from question Meyer with

Meyer Shields

Two quick ones.

commissions you hurricane hopefully, season? to exposure contingent First, as a sense to us to I can need give the know was won't this, hoping we -- but

Douglas Howell

very small. it's No,

J. Gallagher

and exposed to and surplus, largest of subject Most is none the we're that small. especially the markets of E&S all Very are Meyer, in of excess contingents. I the business, in excess of in -- and lot that think, the surplus state. an broker, those A that

Meyer Shields

good That news. Perfect. Okay. is

brief for beyond a net that? question, additional lines, guess, your I Second personal overview just looking within for appetite acquisitions in and high of worth both

Douglas Howell

being not Well, do. you're not at auto personal it. about We're that's just a probably pure to talking great writer, what We're we're going adviser. line an

client. what us like we'd insurance, worth are terrific So job High mid-market sand of that best business planes, in if the we our somebody as there's is very worth much folks business, important now. on an use how views boats, some to right needs [indiscernible], it. have commercial them There's in. landslide adviser probably spot there's the going to bars, as high complex of buy any a on you net net that's -- do and houses there's is advice use to to I'm our the risk, be help an their are telling that's of

the to and auto If [indiscernible] writer, what of space. on going going in we're be trying advice takes that will one there an auto it's not probably Just to buy do. be to looking is

J. Gallagher

We're actually very excited [indiscernible]. about

a I real Doug think that's -- it's, for a us. said, opportunity

Douglas Howell

Just go ahead, we'll with it. help you

J. Gallagher

our I think last comment. that's

Thank all your world don't position means people to of few around last just and hard business much you for Thanks our all a quarters net our Gallagher know thanks it's let their just here. again, little very the to that you, a their is new out and enviable in on question, we're late, colleagues work our way for happen. of dedication. us. These joining I your up. make just efforts, So the me comments a really

can year-to-date I'm And Our the I'm and of proud bullish beyond. tell, M&A pipeline financial is 'XX performance. as you growing. on

looking compound I'm years, to rate, XX for years. Thanks being forward us. annual good XX% the with XX. pretty TSR, So average growth XX

Operator

does call. conclude conference That today's

You may at your lines this disconnect time.

Arthur J. Gallagher & Co. (AJG) 25 Jul 242024 Q2 Earnings call transcript