Gallagher ready to hire broker power in reinsurance; margins no barrier

Global broker  Arthur J Gallagher would rather hire new brokers to its reinsurance team for accelerated growth than to push the segment to higher margins, officials have indicated.

“There is a ripe opportunity right now to hire brokers in that space that would like to join us,” CFO Doug Howell told his company’s Q2 earnings call when asked if  Gallagher would push for increased margin from its reinsurance business.

“It’s a hot thing right now so it would be nice to take and hire folks into that business.”

Reinsurance brokerage at  Gallagher is chiefly the Willis Re operations purchased in 2021 from Willis Towers Watson.  Gallagher is claiming 7% organic growth and a margin in the mid-30’s.

“We are nine months into this and they are generating 7% organic. That's fantastic,” CEO Patrick Gallagher added.

The initial purchased was calculated with margins largely matching current performance, Howell insisted.

“We are very happy with that margin,” Howell said. “Holding that margin is the right answer for that business.”

Gallagher proceeded to the purchase after the asset had lingered in anti-monopoly regulator purgatory for months while Willis Towers Watson worked, ultimately unsuccessfully, to secure a larger merger with peer Aon.

“They had been underinvested for the past 3-4 years,” Howell said of the Willis Re team. “It takes heavy investments.”

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