Broker Arthur J. Gallagher enjoyed strong growth in the second quarter of 2014 driven by its acquisition of 17 businesses.
Its brokerage and risk management segments combined grew by 28 percent in adjusted revenues to $910 million, compared with $711.5 million in the second quarter of 2013. Some 4.4 percent of this was organic growth. The brokerage segment grew by 34 percent and the risk management segment by 8 percent.
The company’s total revenues reached $1.18 billion in the quarter, compared with $779.5 million in the second quarter of 2013.
Under the accountancy term EBITDAC, which Gallagher defines as net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables, the broker made $241.3 million in its combined segments, up 38 percent from $175.1 million in the same period of 2013.
“Our second quarter was one for the record books,” said J. Patrick Gallagher, chairman, president and chief executive officer. “Closing 17 acquisitions in the quarter, including Oval in April, Crombie/OAMPS in June, followed by Noraxis on July 2, plus doing a secondary offering in April and a debt raise in June, were feats unto themselves, yet our team also delivered on all other measures.
“The insurance carriers are making rational pricing decisions. In lines and accounts where rate increases are needed, the underwriters are sticking to their pricing objectives, and conversely, they are giving decreases when deserved. Based on our recent internal survey, for P&C accounts renewing in the second quarter, we saw 35 percent of our customers renewing at higher rates, 30 percent renewing about flat, and 35 percent getting decreases. Given this quarter’s mix of renewals, decreases in commissions from lower property rates were partially offset by increases in commissions from higher casualty rates. This is still a very good environment for our production team.”
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AJG, Arthur J. Gallagher, North America, Second Qaurter 2014 Results, J. Patrick Gallagher, Europe