Gallagher reports 20% revenue increase in Q1 with premiums up 7% at renewal

Arthur J. Gallagher reported double-digit revenue increases in both of its major business segments in the first quarter of 2024, as insurance rates continued to increase across most lines and it added more revenue through acquisitions.

Average rate hikes for middle-market accounts appeared to rise more than large account business in the quarter, the brokerage’s top executives said on a call with analysts.

Gallagher reported $3.26bn in revenue for the quarter, a 20.3% increase over the same period last year. On an organic basis, which excludes the effect of mergers and acquisitions and foreign currency fluctuations, revenue rose 9.4%.

Gallagher reported $2.86bn of revenue in its core brokerage business, up 20.6%. It reported $391.4m in revenue for its risk management segment, which includes its third-party administration unit Gallagher Bassett Insurance Services, up 18.3%.

The company closed 12 acquisitions in the first quarter, which represented a total of $69.2m in annualised revenue. Gallagher was the most acquisitive publicly traded brokerage in the period.

It reported net earnings of $612.7m for the quarter, a 25.9% increase over the 2023 period.

Global primary renewal premiums, which includes rate and exposure changes, were up about 7% in the quarter, said J. Patrick Gallagher Jr, chairman and CEO.

Property premiums increased about 10%, umbrella was up 9%, general liability up 7%, package policies up 8%, and workers compensation up 2%, he said.

Two exceptions to the increases were directors and officers liability insurance, where premiums were down about 5%, and cyber liability, where premiums were flat, Mr Gallagher said.

“These two lines appear close to be reaching a pricing bottom but combined represent around 5% of our P&C business globally,” he said.

Reinsurance pricing in the quarter was stable, with increased demand for property catastrophe coverage, Mr. Gallagher said.

Rates and exposure values are increasing more for middle and small accounts than for large account business, said Douglas K. Howell, chief financial officer.

“If you go back a year or so ago, it might have been just the opposite,” he said.

While Gallagher opposes the Federal Trade Commission’s recently announced ban on noncompete, the firm’s executives said the move likely won’t affect its ability to acquire companies or hire and retain staff.

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