Gallagher ups brokerage revenues 35% y/y, rates look unrelenting

Global re/insurance broker  Arthur J Gallagher increased first quarter net profit by nearly 11%, including a 35% or $160 million increase in net income from its core brokerage operations to $613 million.

Revenues in the brokerage segment rose 32% over the prior year period to $2.12 billion. Combined with the smaller risk management division, organic revenue growth stretched into the low double digits.

“Overall, first quarter rate and exposure increases were broad-based, driven by firm global P/C rates across nearly all geographies and lines of business, and our clients’ continued growth," CEO Patrick Gallagher said.

Gallagher claims Q1 global P&C renewal premium gains of 8% and benefits to its HR consulting business from an "extremely tight" labour market, he said.

Premium growth rolls on. "Whether retail, wholesale or reinsurance, premiums are still increasing almost everywhere," CEO Gallagher told the Q1 earnings call.

The shift from Q1's focus on workers' comp to the Q2 focus on US property cat could lead to overall premium increases in Q2 "very similar" to Q1 levels, he said.

“Carries will likely continue their cautious underwriting stance due to rising loss cost and an increase in reinsurance pricing,” CEO Gallagher added. “From our seat, it looks like carriers will continue to push for rate and don't see a dramatic change in the near term.”

Treaty reinsurance broking operations bought in late December 2021 brought $337 million in total revenues during the first quarter and $172 million of management's preferred earnings measure of adjusted EBITDAC.

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