Arthur J. Gallagher & Co. (AJG) reported second quarter 2022 results yesterday, with an earnings per share (EPS) growth of 19%, total revenue growth of 22%, and adjusted EBITDAC growth of 23%. Here are five things you should know about the AJG earnings call.
AJG Earnings Report Highlights:
- AJG reported an organic growth of 10.7% in Q2, with their U.S. retail business posting 11% and their U.S. wholesale operations posting 8%. The brokerage segment reported a 32% adjusted EBITDAC ((Earnings Before Interest, Taxes, Depreciation, Amortization & Change) margin, while Risk Management segment reported an 18.9% adjusted EBITDAC.
- During 2Q22, AJG completed nine mergers with approximately $53M in annualized revenue. Looking forward, more than 40 term sheets were signed or are being prepared, representing nearly $350 million of annualized revenue. CEO J. Patrick Gallagher noted that although all of them will not close, “we believe we will get our fair share.”
- The 2Q22 global Property & Casualty (P&C) renewal premium increase of 10.5% was above both 1Q22 and 4Q21 and nearly all lines of coverages saw renewal premium increases equal to or higher than the previous quarter, with professional liability being the lone exception.
- CEO J. Patrick Gallagher stated that he was not seeing any significant signs of economic slowdown with second quarter mid-term policy endorsements, audits and cancellations continuing to trend more favorably than a year ago. Renewal premium increase remained consistent, citing their duty as broker to help clients mitigate premium increases and find budget solutions as a factor to success.
- There are very real signs of hardening in the reinsurance market. Property reinsurance pricing is up across the board. Prices for U.S. and Australia property risk are up anywhere from 15% to more than 40%. On the casualty side, reinsurance placements experienced more modest price increases. Carrier partners are proceeding with cautious underwriting as inflation and geopolitical tensions lead to economic uncertainty.
To learn more about the AJG earnings report, visit: Arthur J. Gallagher & Co. Second Quarter 2022 Financial Results
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This earnings summary has been prepared by Marsh, Berry & Co., LLC. and is not intended to provide investment recommendations on any company. It is not a research report, as such term is defined by applicable laws and regulations, and it does not contain sufficient information upon which to make an investment decision. It is not to be construed as an offer to buy or sell or a solicitation of an offer to buy or sell any securities, financial instruments or to participate in any particular trading strategy. These materials are based solely on information contained in publicly available documents and Marsh, Berry & Co., LLC has not independently attempted to investigate or to verify such information.
