Arthur J. Gallagher & Co. Q1 2025 Earnings Report

Arthur J. Gallagher & Co. EPS Results

• Actual EPS: $3.67
• Consensus EPS: $3.57
• Beat/Miss: Beat by +$0.10
• One Year Ago EPS: $3.45

Arthur J. Gallagher & Co. Revenue Results

• Actual Revenue: $3.69 billion
• Expected Revenue: $3.85 billion
• Beat/Miss: Missed by -$160.77 million
• YoY Revenue Growth: +14.50%

Arthur J. Gallagher & Co. Announcement Details

• Quarter: Q1 2025
• Date: 5/1/2025
• Time: After Market Closes
• Conference Call Date: Thursday, May 1, 2025
• Conference Call Time: 5:30PM ET

Arthur J. Gallagher & Co. (NYSE:AJG) engages in the provision of insurance brokerage, reinsurance brokerage, consulting, and third-party claims settlement and administration services. It operates through the following segments: Brokerage, Risk Management, and Corporate. The Brokerage segment consists of retail and wholesale insurance brokerage operations. The Risk Management segment provides contract claim settlement and administration services. The Corporate segment manages clean energy and other investments. The company was founded by Arthur J. Gallagher in 1927 and is headquartered in Rolling Meadows, IL.

Arthur J. Gallagher & Co. Q1 2025 Earnings Call Transcript

Presentation

[Operator]

Good afternoon, and welcome to Arthur J. Gallagher and Company's First Quarter twenty twenty five Earnings Conference Call. Participants have been placed on a listen only mode. Your lines will be open for questions following the presentation. Today's call is being recorded.

[Operator]

If you have any objections, you may disconnect at this time. Some of the comments made during this conference call, including answers given in response to questions, may constitute forward looking statements within the meaning of the securities laws. The company does not assume any obligation to update information or forward looking statements provided on this call. These forward looking statements are subject to risks and uncertainties that can cause actual results to differ materially. Please refer to the information concerning forward looking statements and risk factors sections contained in the company's most recent 10 ks, 10 Q and eight ks filings for more details on such risks and uncertainties.

[Operator]

In addition, for reconciliations of non GAAP measures discussed on this call as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the company's website. It is now my pleasure to introduce J. Patrick Gallagher, Jr, Chairman and CEO of Arthur J. Gallagher and Company. Mr.

[Operator]

Gallagher, you may begin.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thank you. Good afternoon, and thank you for joining us for our first quarter twenty five earnings call. On the call for me today is Doug Howell, our CFO and other members of our management team. We had a fantastic first quarter. For our combined brokerage and risk management segments, we posted 14% growth in revenue, 9% organic growth, reported net earnings margin of 23%, adjusted EBITDAC margin of 41.1%, up three thirty eight basis points year over year, adjusted EBITDAC growth of 26%, our twentieth consecutive quarter of double digit growth.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

GAAP earnings per share of $3.29 and adjusted earnings per share of $4.16 another excellent quarter by the team. Moving to results on a segment basis, starting with the Brokerage segment. Reported revenue growth was 16%. Organic growth was 9.5%, which included about a point of favorable timing. Even without the timing impact, all in organic was right in line with our expectations.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Adjusted EBITDAC margin expanded three fifty nine basis points to 43.4% with underlying margins up a full percentage point. Doug will unpack this in his comments. Let me provide you with some insights behind our brokerage segment organic. Within our retail PC operations, we delivered 5% organic overall. U.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

S. Organic was north of 5%, while our international operations primarily in The UK, Canada, Australia and New Zealand were closer to 4%. Our global employee benefit brokerage and consulting business posted organic of more than 7%. Shifting to our Reinsurance, Wholesale and Specialty businesses, in total organic of 13%. This includes 20% organic from Gallagher Reed and 8% organic from our Wholesale and Specialty businesses.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

So we continue to report strong growth across retail PC, wholesale, reinsurance and benefits. Next, let me provide some thoughts on the PC insurance pricing environment, starting with the primary insurance market. Overall, the global PC insurance market continues to behave rationally with carriers looking to grow in lines and geographies where there's an acceptable return and seeking rate increases where it's needed to generate an appropriate underwriting profit. Breaking down first quarter global renewal premium changes by product line, we saw the following property down 2%, D and O down 3%, workers' comp up 5%, personal lines up 8%, casualty lines up 8% overall, including general liability up 5%, commercial auto up 6% and umbrella up 11%. Breaking down renewal premiums by client size, we continue to see a divergence between small to midsize accounts and large accounts.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

For small to mid sized accounts, which we define as accounts generating less than $100,000 of revenue, renewal premiums were up 5%. For large accounts or clients generating more than 100,000 of revenue, renewal premiums were up 1%. All that said, pricing is ultimately driven by client loss experience. Good accounts are getting some premium relief in certain lines. However, accounts with poor experience are seeing greater increases.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Having a trusted adviser like Gallagher can help businesses navigate a complex insurance and economic backdrop by finding the best coverage for our clients while mitigating price increases. Today's environment is the ideal market for us to show our expertise, product knowledge and our data driven capabilities. Let me move to the reinsurance market. First quarter dynamics, which is mostly influenced by January first renewals, reflected an environment that generally favored reinsurance buyers. Overall, reinsurers were able to meet increased client demand with sufficient capacity, while remaining disciplined on terms.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

The Gallagher REIT team shined with excellent retention and some fantastic new business wins. April renewals experienced similar trading conditions as earlier in the year and as expected some bit more downward pricing pressure. The January wildfire losses and continued casualty reserve increases remain a focus for the industry, but neither caused much upward movement in pricing given the large proportion of Japanese buyers in April. With that said, U. S.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Severe convective storm season is here, which then leads us to U. S. Wind season. Time will tell how the year plays out. Regardless, Gallagher Re should continue to excel in this environment.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Moving to some comments on our customers' business activity. During the first quarter, our daily revenue indications from audits, endorsements and cancellations continued to be a net positive. While the upward revenue adjustments are not quite as high as last year, we continue to see solid client business activity and no signs of meaningful global economic slowdown. Our daily revenue indications through the April are not showing any significant changes in our customers' business activity from the prospect of tariffs. Our daily indications have historically given us some early insights into our clients' business activity, so we will continue to watch these very carefully.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

We're also closely watching The U. S. Labor market, and there continues to be a strong demand for new workers. The number of open jobs in The U. S.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Stood at more than 7,000,000, still at a level that is well above the number of unemployed people looking for work. We've also seen recent health insurance carrier results show continued increases in the utilization and cost of healthcare. With these two trends as the backdrop, we are seeing more and more employers looking for ways to grow their workforce and control their benefit costs. Our experts can provide creative solutions to solve these challenges. Regardless of market and economic conditions, I believe we are well positioned to compete and to win.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

From our niche expertise, outstanding service or extensive data and analytics offerings, we have the resources and know how to service any account of any size of any complexity anywhere around the globe. So with a fantastic first quarter behind us, we continue to see full year 2025 brokerage segment organic in the 6% to 8% range. Moving on to our risk management segment, Gallagher Bassett. First quarter revenue growth was 6% including organic of about 4%. We continue to see excellent client retention and strong new business production.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

However, sold new business within the Risk Management segment typically takes longer to materialize into revenue. As these new client contracts incept and begin to generate revenue in the coming months, we are confident we will see stronger revenue growth in the second half of the year. Adjusted EBITDAC margin was 20.5%, in line with our March expectations. Looking ahead, we still see full year 2025 organic in that 6% to 8% range and margins around 20.5%. Shifting to mergers and acquisitions.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

During the first quarter, we completed 11 new tuck in mergers, representing around $100,000,000 of estimated annualized revenue. We also announced the acquisition of Woodruff Sawyer during the quarter and completed that in early April. That means through today, we already are at $400,000,000 of acquired revenue. For those new partners joining us, I'd like to extend a very warm welcome to the Gallagher family of professionals. As for the pending Assured Partners acquisition, not much to update relative to our March IR day comments.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

We are working to respond to the second request and we still expect to close in the second half of twenty twenty five. Looking at our pipeline, we have more than 40 term sheets signed or being prepared representing north of $450,000,000 of annualized revenue. Good firms always have a choice, and it would be terrific if they chose to partner with Gallagher. I'll conclude with some comments about our Bedrock Gallagher culture. During our global sales award meeting in early March, our unique Gallagher culture was on full display.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

It was inspiring to watch the interactions among thousands of our colleagues across geographies, business units and product lines. I came away even more convinced that our greatest asset is our people and our biggest differentiator is our culture, and that is the Gallagher Way. Okay, I'll stop now and turn it over to Doug. Doug?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Thanks, Pat, and hello, everyone. Today, I'll walk you through our earnings release, starting with some comments on first quarter organic growth and margins by segment, including how we are seeing these shape up for the full year 2025. Next, I'll move to the CFO commentary document that we post on our IR website and walk you through our typical modeling helpers. And then I'll conclude my prepared remarks with my usual comments on cash, M and A and capital management. Okay.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Let's flip to Page two of the earnings release. Headline Brokerage segment organic growth of 9.5% was a great quarter and it bolster our view that full year organic will be in that 6% to 8% range. And that range is in line with what we've been saying all year. As Pat mentioned, first quarter did have some favorable timing of about a point. So looking forward, we see some favorable timing again in the second quarter, but not to the same magnitude.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

And then all of the first half timing will reverse itself in the third and fourth quarters with no impact on full year 2025. So as we look through to the rest of the year, second quarter might be more like 6% to 7%. Then we will see the timing flip in the third and fourth quarters, might mean third and fourth quarter organic of about 5% each, causes a little noise across the quarters. But with a nine point five percent first quarter, the math gets us back to a full year 25% organic in that six to 8% range. That would be a terrific year.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

So flipping now to Page four of the earnings release to the brokerage segment adjusted EBITDAC table. First quarter adjusted EBITDAC margin was 43.4%, up three fifty nine basis points year over year and above our March IR day expectations. So let me walk you through a bridge from last year as we typically do. First, if you pull out last year's twenty twenty four first quarter earnings release, you'd see we reported back then adjusted EBITDAC margin of 39.9%. But now using current period FX rates, that would have been 39.8%.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Then organic growth of 9.5% gave us about 120 basis points of expansion this quarter. The roll in impact of M and A and lower interest rates each used about 10 basis points of margin this quarter. Finally, as the footnote at the bottom of that table notes, the impact of interest income from the cash that we're holding for the Assured Partners acquisition added about two sixty basis points of margin this quarter. Follow that bridge and it will get you to first quarter twenty twenty five margin of 43.4%. That is really, really great work by the team.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

As for second quarter headline margin expansion, it's still looking like we will be pushing around 300 basis points, again driven by strong underlying margin expansion of approximately 60 basis to 80 basis points, assuming organic in that 6% to 7% range and also interest income related to the cash we're holding for AP, plus a small offset by the rolling of M and A and lower interest rates. Looking out towards the third quarter, we would still expect underlying margin expansion and then we'll also have the impact of investment income on the funds we're holding for AP. So in total, we're thinking expansion could be two fifty to two eighty basis points. This, of course, would change if we get AP closed before September 30. As for fourth quarter, we would hope we'd have AP close, so we would have underlying margin expansion still, but lose the extra investment income, yet have AP's fourth quarter results in our books.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

The punch line here is there's nothing we're seeing that causes to change how we view underlying margin expansion potential. We believe at organic greater than 4%, we should see some underlying margin expansion. At 6% organic, maybe 60 basis points of expansion. And at 8% organic, perhaps around 100 basis points of expansion. So again, there's no new news here.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

We still believe we are positioned to expand underlying full year margins by about 60 to 100 basis points. Sticking on Page four, Risk Management segment organic was 3.9. That's a bit below our 5% expectation due to lower new business revenue. As Pat mentioned, we expect this to improve in the second half of the year as we have already sold new contracts, but these have yet to start generating revenue. So we see organic moving back towards 6% to 8% throughout the year.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Adjusted EBITDAC margin of 20.5% was in line with our March IR day expectations. And looking forward, we still see full year margins again around 20.5%. Turning now to Page six of the earnings release and the Corporate segment shortcut table. For the adjusted interest in banking, clean energy and acquisition lines, all were very close to our March expectations. The corporate line was better than our March expectations due to some expense timing, a few favorable tax items, including the tax benefit from stock based compensation, somewhat offset by an unrealized FX remeasurement loss.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

So now let's move from the earnings release to the CFO commentary document that we post on our website. First is an overall statement. Please read the headers and footnotes carefully on how these numbers in this document include or exclude the impact of Assured Partners. That said, let's flip to Page three in our modeling helpers. Across the board, first quarter twenty twenty five actual numbers were fairly close to what we provided back in March.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

'1 thing to call out in our 2025 outlook are changes from FX for both the brokerage and risk management segments. With the dollar weakening since mid March, we have provided updated estimates for revenue and EPS impacts for the remainder of the year. Just take a look at this disclosure as you refine your models. Turning now to Page four and the corporate segment outlook for '25. Within the corporate line of the corporate segment, like I mentioned earlier, we had some favorable expense timing in the first quarter, so you'll see some of that comes back over the rest of the year.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

We've increased after tax expense by about $1,000,000 per quarter for the remainder of $25,000,000 However, the rest of our outlook for the Corporate segment is unchanged from six weeks ago. Flipping to Page five to our tax credit carryovers. A reminder this is a reminder page that as of March 31, we have about $710,000,000 of tax credit. We continue to expect additional cash flow of more than $180,000,000 this year and even more in '26 and later years. And don't forget, this benefit will show up in our cash flow statement rather than our P and L.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

So it's still a nice sweetener to fund the future M and A. Turning now to Page six, the investment income table. We've updated our forecast to reflect current FX rates and changes in fiduciary cash balances. And you'll see here that we're still assuming two twenty five basis point rate cuts during 2025. You'll also see that we provided a separate line to show our estimates interest income associated with the funds that we're holding to pay for Assured Partners.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Shifting down on that page to the rollover revenue table, first quarter twenty five column subtotal is around $80,000,000 and $92,000,000 before divestitures. These numbers are consistent with our March IR Day expectations. Looking forward, the pinkish columns to the right include estimated revenues for brokerage M and A closed through yesterday. And just a reminder, you'll make a pick that you'll need to make a pick for future M and A. Then below that table, we have a separate section for Assured Partners.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

We show you what we expect for monthly pro form a revenues in purple. And then finally, continuing down on the page, you'll see the risk management segment rollover revenues too. So moving to cash, capital management and M and A funding. We had no outstanding borrowings on our line of credit at March 31. And you might have seen that in early April, we amended our credit agreement.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

We extended the maturity date to February and also increased our borrowing capacity from $1,700,000,000 to 2,500,000,000.0 Our current cash position, potential borrowing capacity and strong expected free cash flow position us well for our pipeline of M and A opportunities. So even after the $13,500,000,000 for Assured, paying for Woodruff and paying for the Willis Re earn out and after the 11 other 11 deals we have already done through Q1, we still have over $2,000,000,000 of M and A capacity here in 2025 and another $5,000,000,000 of capacity in '26 before using any stock. So our M and A strategy has a tremendous runway. So another excellent quarter in the books. As we look ahead, we see strong organic growth, a terrific M and A pipeline.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

We continue to see opportunities to improve our productivity and quality. And as Pat said, we have a winning culture. So it looks like we're well on track for another great year. Back to you, Pat.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thanks, Doug. Operator, I think we're ready to go to questions and answers.

[Operator]

If you have a question, please pick up your handset and press star one on your telephone at this time. If you are on a speakerphone, please disable that function prior to pressing star one to ensure optimum sound quality. You may remove yourself from the queue at any point by pressing star two. Our first questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Hi, thanks. Good evening. My first question, I wanted to start with the pretty impressive 20% growth that you guys saw in reinsurance. Can you just try to break that down between what's coming from pricing, retention, new demand? And then it would give us a sense like if it's new new or if it's business that you're taking from peers.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

That's a pretty strong number.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Well, thanks, Lisa. Let me let me try to break down some of the, 20% organic. The first the the reinsurance folks are just on fire. They had a great quarter, and a lot of it, you know, came with the January 1 renewals. So let me break down three pieces.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Our new business spread was responsible for more than half the organic this quarter. In fact, we had about 15 new client wins within more than a million each. These are big chunky deals. This is not, similar to what we do on the retail side. Increased renewal premiums from Care Growth was another 5% or so.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Inflation, people buying more cover. As you see some rates come down, people have some room for additional cover, etcetera. And the remainder was some favorable timing. We have now better insights into it. And as I noted, it'll reverse itself in the in the in the latter half of the year.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

But let me be clear. We said from the very beginning that we thought this was a group of folks that when working with our overall company, when the when we integrated them into working with retail and our wholesale and specialty people, that it would be a good match. And that's what we're seeing. These guys and gals are just doing a tremendous job, and the new business was outstanding. Congratulations to them.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

That's great. And then, my my second question, So it sounds like you guys are still working, I guess, not allowed to update us. You said like working on a response to the DOJ. So is that something, I guess, you guys would expect to respond? I think there's like a thirty day clock once that happens.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Is that something that based on the timeline of a q four close, Doug, is that would you expect to just respond to comments? I guess that would be something that would happen in in the q two. Is that your expectation?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Alright. So it's how we're gonna do it. We're obviously putting together all the information that's been requested, and we're working hard on it both on our side and then the the AP team is doing the same thing. We'll we'll get that over to them sometime in in mid third quarter, and then it does start a clock ticking. They have the right to ask some questions, but there is a process here.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

First, getting that over, certifying to it, and then, and then they'll have, you know, thirty days to to get back to us on that.

[Elyse Greenspan, Managing Director at Wells Fargo Securities]

Okay. And then and then I just you mentioned that there was, I guess, some timing that impacted the first quarter, some kind of was it a pull forward from other quarters? I think it was 1%, and then there was also gonna be an impact in the q two.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Yeah. Alright. So let's go through that a little bit because I think it's a it's a good question. First, it doesn't do anything to full year. Second, we're just getting some better insights into the the the the development of revenues.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

You know, we've implemented our new reinsurance system last fall, so that's up and running. We've got a new benefit system. So those systems help us look into the treaties and then to the expected headcount in our benefits business. So while the timing this quarter was mostly in reinsurance, let's call that about twothree, and the other onethree is across our benefits business and a little bit in the specialty business. But without this timing, the first quarter for reinsurance was still in the upper teens, and it impacted specialty and benefits each about a point.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

But we're going to have a little bit of that again in the second quarter, but to a lesser magnitude. And then, again, this this the timing will reverse itself compared to last year in the third and fourth quarters. So no impact for a full year organic, and we would say, you know, that this is this is the result of of just putting in new systems and be able to make better estimates earlier on in the year.

[Operator]

Our next questions come from the line of Greg Peters with Raymond James.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Hey, Craig.

[C. Gregory Peters, Managing Director - Insurance at Raymond James]

So,

[C. Gregory Peters, Managing Director - Insurance at Raymond James]

Pat, in your comments, I think it was, yeah, Pat or you, that talked about the bifurcation of renewal pricing in the small to mid account, which was you define as less than $100,000 and then the mid to large account. Just wondering if you could provide some more color because the commentary we're hearing in the marketplace around that seems to suggest that the larger account business might be under a little bit more rate pressure, specifically in the property areas.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Well, that's exactly what I said, Greg. I mean, I think we're seeing in the large account area and it it's it's the typical economics. You got a bigger account, you got more swag. Right? You can you can get a better deal, especially if you've got good results.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

And these larger accounts are better managed from a risk management standpoint, and they're seeing the results of that. Our people are are clearly helping with that. You get down into the smaller accounts all the way down to your personal lines, you don't have the negotiating power. And at the same time, they don't have the great results. So it's it's a fluid market, but it makes sense to me that if you're bigger, you get a little bit better deal than if you're smaller.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Yeah. It's pretty linear too, Greg. If you look at it, let's say over a hundred, we said it's, you know, it's up a point or so or something like that. But, know, when you go to, like, 25 to a hundred thousand, you know, maybe it's three and a half, 4%. You get a little lower than that 20 a 10 to $25,000 account.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Maybe you're getting a mid fours, and then we get less than $10,000 as a account side. Now this this is you know, for premiums, you know, you're seeing you're seeing it being up in the in the mid five. So it is it's consistent even within that under a hundred thousand that the smaller it gets, the higher the rate increases. Now you we saw that not going up as fast on the other side too when rates were going up. So I don't know if it's as much that they're just, you know, reversion to the mean.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Also, the the smaller accounts are catching up.

[C. Gregory Peters, Managing Director - Insurance at Raymond James]

That makes sense. For my second question, my follow-up question, I'm gonna pivot back to the pending acquisition of Assured Partners. Yeah. This has been, you you you've obviously been working very closely with them for the last several months now and trying to get this to the finish line. And I know you were pretty forthcoming with details about how you expected margin improvement to materialize and retention and organic revenue growth to develop.

[C. Gregory Peters, Managing Director - Insurance at Raymond James]

And I'm just curious, now that, you know, we're here in May, if you have a different perspective for there's any different changes you have on the views on the opportunity to ensure partners, you know, for all of the areas I mentioned.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Well, thank you for the question, Greg. But I'll tell you, it's actually gotten stronger. I mean, we did our board meeting this week, and that was, of course, one of the key questions. Their turnover is actually better than ours, not by a lot, by maybe half a point to a point. So they're they're staying very consistent with what they've had in the in the past, and that's after bonuses have been paid.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

So we're not seeing an uptick. I said when we did the deal, I didn't expect any break breakage. We've seen a a producer here or there to part, but, you know, that's common business, across all of our our platforms. In terms of the people, we've had to be careful given the request for another bit of information, but there are certain work streams that have been allowed to continue. And I'll tell you what, just every single day, our people are more affirmed in the fact that they're dealing with folks that they really like.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

They understand the business. They love the business, and they can't wait to get the two organizations together. There's no waffling. There's no mama crying. It's people that just wanna go out and sell a lot of insurance.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

And we're very, very excite more excited than we were in in January.

[C. Gregory Peters, Managing Director - Insurance at Raymond James]

Got it. Can you just just a detailed question on that? Is the organic profile at Assured based on what you've seen just similar to what you're seeing inside your retail business?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Yeah. It is. We have

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Perfect.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Yeah. I mean, they account for $6.00 6 differently, but let's just say it is. You can throw a hat over them.

[C. Gregory Peters, Managing Director - Insurance at Raymond James]

Perfect. Thank you.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thanks, Greg.

[Operator]

Thank you. Our next questions come from the line of Mike Zaremski with BMO Capital Markets. Please proceed with your questions.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Thanks. Good evening. Doug, the or I think Pat might pull this too. One point of timing benefit in brokerage organic, is that in addition to the 26,000,000 reversal on on page six of the CFO commentary, which I'll admit is kind of over my head? So Alright.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Yeah. I think you're calling out the fact last year, and we we highlighted it last year, there was a gross up of revenues and a gross of gross up of expenses as we implemented our conforming accounting policies on some historical acquisitions that caused a gross up. So we didn't take credit for the 26,000,000 as revenue last year, and and so we shouldn't be measured by that again this year. It's just as you gross up the revenues, you gross up the comp on the revenues, and a lot of those revenues triggered some extra earn outs on it, it all washed to nothing. And we did talk about it last year, but it kinda sticks out a little bit more now.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

You can see that we repeated the note about that on page six. I think it's in the in the third footnote or second or third footnote there. So it's it we're levelizing for a change in purchase accounting, which I think is a % appropriate.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Okay. I I got it. I'll I'll make sure to go through that. Switching gears a bit, a question on also brokerage organic. The RPC stat that you began giving out in recent years, which is helpful, I think it was 4% this past quarter.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

And organic, obviously, tremendous, five plus points above that. But if we look kind of going back the few years that you disclosed RPC, the it's much the gap between organic and RPC is much narrower. Curious, should the gap stay wider than historical, kind of implied by your guidance? And maybe part of the reason is reinsurance isn't included in RPC. But any am I am I asking a question you think is is is fair?

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Well, it's a fair question, Mike. But here are a couple of things. We're a different company than we were then. And number one, our we've got many more large accounts. Our large account penetration continues to grow every month, and a lot of that business is on fees.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Then also, when you take a look at the business and how we're selling it, I I I think that we're better sellers today. We've got we've got tools that are just unbelievable in terms of helping our producers get out and and drive new business, whether it be, we call Gallagher win, which is Salesforce, and then you've got the data analytics and Gallagher drive, which I think most of you have seen these tools. We presented them to you. And, you know, they're maturing now. They're in the hands of solid producers that have got anytime the market's influx, that's great news for our producers up and down.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

And frankly, right now is a great time and it's it's a great message for our client base and our prospect base. Work with Gallagher, we think we've got an opportunity to really do a great job on your pricing as well as your coverage and your terms. So we're a different company, better opportunities, more fee business, larger platform, stronger players.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Okay. That that makes sense. If I could just sneak one last one a follow-up in to you know, you said that you'll respond to the the, I guess, government about the assured data request in a in a number of months. Any any color on, you know, why this data request would take such a a long

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

I'll give you one bit of color, Mike. We're not talking a lot about this. That's intentional. It's a lot of data from both parties.

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

Appreciate

[Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets]

it, Pat.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Sure, Mike.

[Operator]

Thank you. Our next questions come from the line of Mark Hughes with Truist Securities. Please proceed with your questions.

[Mark Hughes, Analyst at Truist Securities]

Yes. Thank you. Good afternoon.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Hey, Mark.

[Mark Hughes, Analyst at Truist Securities]

Pat, if I heard you properly, you said workers' comp up 5% versus, I think it was up 1% last quarter. Yep. Is something going on there? Or

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Not really. I mean, we we we did actually plumb for that among Gallagher Gallagher Bassett's biggest line of cover is, of course, is comp. We were asking ourselves, is there is there any systemic change there? We don't see it. You know, most of comp is fee schedule stuff.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

So I I think it's underlying comp costs are up with with medical. But I also do think it's it's it's a it's a better economy than I think people are writing about. Our daily our daily check-in on the economy is that our middle market accounts, in particular, are pretty robust.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Yes. We're still seeing good employment growth in those folks. We are I think there is starting to be more chatter around medical inflation. So there could be some proactiveness there by the carriers on that in order to make sure they stay ahead of it. It's not a huge portion of our book really, but it is an interesting uptick.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

That is both remember, that's both rate and exposure. So it's moving north and our our our educated guess is is is more exposure and and and higher medical inflation.

[Mark Hughes, Analyst at Truist Securities]

And then on the property market, Pat, what's your sense of how this thing plays out? You've obviously, it's sensitive to cat losses, so a lot of it depends. But in your experience where you've had kind of a run up and then you start to see it turn back a little bit, how is this gonna work over the next few quarters, couple of years?

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Well, again, Mark, let me go back in my history, which is a long one now. The property markets, I would define it as fragile. Right? When you're when you're minting money, it's a it's a great place to be. And, of course, you're gonna give customers back some of the some of the money you've made.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

But, boy, the bill comes hard when it comes, and it's not gradual. And so, you know, it it just seems that we're all concerned. In fact, you might recall a year ago or so, we surveyed over a thousand of our customers, middle market customers. Their number one concern was weather related, climate change, And I think we all see it. We never we never had tornadoes in the fall.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

These convective storms have got everybody scratching their head. The prediction for the hurricane season is, you know, more storms than normal. And now that last year, there was that prediction as well, and it wasn't as severe. But I'll tell you, whoever saw California wildfires coming, you combine those with some storms both in California and around the world. Well, the the thing about property is it can change on a dime.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Now we certainly hope that doesn't happen because our customers have been shocked. You know how I feel about hard markets. I'd much rather have a market that's pretty stable, lets us show our tools, help us contain the cost for our clients. It's hard to explain to people why rates are jumping. You can do it in property because you can show them the losses.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

But I think you're right to ask the question. It's all well and good now. I think customers deserve a bit of a decrease. Carriers are on a little bit of an edge, if you will. You know, they they know they've got to give some money back.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

The market's competitive, but if the wind blows, the story could change very quickly.

[Mark Hughes, Analyst at Truist Securities]

Very good. Well, everything is definitely, crazy out there with the Cubs in first place. So I'm I'm with you.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

No, Mark. That's the new normal.

[Mark Hughes, Analyst at Truist Securities]

Okay. Alright.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

We waited a hundred we waited a hundred years. Some people have a bad decade. We had a bad century. We're back for good.

[Mark Hughes, Analyst at Truist Securities]

Alright. I'll

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thanks, Rob.

[Operator]

Thank you.

[Operator]

You. Our next questions come from the line of David Motemaden with Evercore ISI. Please proceed with your questions.

[David Montemaden, Analyst at Evercore]

Hey, good evening. My question I missed it, just on the RPC, for this quarter. I think you had said it was 5% last quarter. It was trending around 4% on the first two months, of the quarter, this 1Q. Where did that end up for for 1Q?

[David Montemaden, Analyst at Evercore]

And within your outlook, what are you guys assuming for the rest of the year?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

So let me see if I can break that apart. What's your question? You want to know what the renewal premium change was in the first quarter and what our outlook is for the rest of the year? Is that the question?

[David Montemaden, Analyst at Evercore]

Yeah. What's what's embedded in the the the outlook that you gave, the organic cadence that you gave?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Basically, about the same. We we don't see it further. You know, property, you know, down 2%, call it flat. We you know, the the casualty rate, you know, we've had a lot of quarters on casualty rates as I look across the grid here consistently in that 87, 8, 10, 9, 9, 9, 10. As I look at casualty rates coming across, so I think there's still some concerns over casualty on that.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

So our outlook as we shape our organic for the rest of the year is assuming similar to what we saw right now or this quarter.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

David, back to Mark's comments before about a long time to look back. In my past experience, when markets became a little squishy, you'd see them fall quite dramatically across all lines. That is not what we're seeing today. Umbrella cover up this past quarter 11%, continuing push up of casualty, a little bit down on property. As we said at our opening remarks, this is a pretty this is a pretty logical market.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

So I don't think you're gonna see any major change. And if we do, we'll give it to you at our IR day updates.

[David Montemaden, Analyst at Evercore]

Got it. Thank you. And and then I guess I'm also wondering, you know, that difference between the the middle market and and large account. I guess I'm wondering just, you know, I know that there's typically the large account business is more cyclical and you guys are underweight that. But outside of that, when you look at your middle market property book and small market property book, Would you say that's more SCS exposed and therefore, the pricing might be a little bit more durable there?

[David Montemaden, Analyst at Evercore]

Or is that just is that not the right way to think about it?

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

I don't like to think about it that way, and I'll tell you why. Convective storms are you know, they're they seem to be localized to the Midwest. You know, you got fire risk in lots of states I never thought of before, like New Jersey. But I don't I don't I don't think that's necessarily something you'd say is more akin to hurting those accounts. Although you have to say there are a heck of a lot more small accounts than there are large accounts.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

You know, there's a thousand Fortune 1,000 accounts. There's a thousand small accounts in Schaumburg. So I guess in one sense, I'd argue, no. I don't think those storms fall necessarily harder on one book of business than another except by virtue of the fact that the numbers are just greater. I think it's buying power.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

That's what I'd say, David. It's just real simple. You know, if I if I've got if I got an account that's gonna pay me a hundred grand or account that's gonna pay me a hundred million, who gets the better deal? A hundred million.

[David Montemaden, Analyst at Evercore]

Yep. Nope. That that makes sense. And then, lastly so I might be nitpicking here, but I think, you guys just called out 5% organic in U. S.

[David Montemaden, Analyst at Evercore]

Retail, and it sounds like that was maybe a little bit lighter, than what you guys were talking about in March. I think you guys were saying 6%. Was there anything behind that outside of just the general RPC trends that we spoke about?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Listen, I think that when you get down to a point one way or another on the organic, I would say they're almost the same number. There could be a mix difference in there. When something moves a point, I'll be honest, we don't dig into it as deeply if something moves five points. So the point is consider it mixed. But still, the point is on this is it's still going up.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

And

[Douglas K. Howell, CFO at Arthur J. Gallagher]

if

[Douglas K. Howell, CFO at Arthur J. Gallagher]

you look across everything that we've said is we still have a market that is arguably flat in a couple spots and going up in a lot of spots. Right? So I think that the fact is is there still is a need for for rate. The carriers see that. You've seen that in the releases that they've had in it.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

I think that you blend all that together. We're selling more than we're losing. We feel pretty good about a 6% to 8% year. That'd be a terrific five or six year run on that.

[David Montemaden, Analyst at Evercore]

No. Definitely agree. Thank you.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Thanks, David.

[Operator]

Thank you. Our next questions come from the line of Katie Sakas with Autonomous Research. Please proceed with your question.

[Katie Sakys, US P&C Insurance, Senior Associate at Autonomous Research]

Hi, thank you. I guess my first question, I wanted to go back to Doug's comments on the cadence of brokerage organic growth that you expect to see for 2Q, 3Q and 4Q. Back of the envelope math, I'm kind of getting to the midpoint of the 6% to 8% full year guide. Which of those quarters, Doug, do you kind of see the most potential to upside versus your current estimates right now? And how does seasonality perhaps inform that view?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

I think the upside could come in the fourth quarter. I think if we have a storm season and like Pat says, the property shifts, I also still believe that there's going to be development issues as you get into your third quarter actuarial reserves as they start to do their third quarter reviews of how they feel their development is. When it goes from a into a paid loss triangle versus an incurred loss triangle, kind of wake up to that when you do your actuarial reviews in the third quarter. Fourth quarter is probably the quarter where there's the most upside. Okay.

[Katie Sakys, US P&C Insurance, Senior Associate at Autonomous Research]

Super helpful. And then I apologize if this next question is a little bit nitpicky, but I noticed in the CFO commentary that the average EBITDAC multiple that you guys paid for your tuck ins this quarter was slightly elevated at 11.5x versus the 10x to 11x guide. Is that just a result of some noise from one off transactions, or is there any additional color that we should be aware of there?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

If I peel apart the 11 that we closed in the quarter, I don't see anybody really off the map on that. Being 10 to 11 is still pretty close.

[Katie Sakys, US P&C Insurance, Senior Associate at Autonomous Research]

You.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thanks, Katie.

[Operator]

Thank you. Our next questions come from the line of Andrew Anderson with Jefferies. Please proceed with your questions.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Hey, good afternoon. The supplemental commissions within brokers were pretty strong. Was there any timing benefit there? And just maybe more broadly, could you talk about how you're thinking about that those line items, the contingents and supplementals?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

All right. So supplementals in the first quarter, we've had some pretty good work as we start to negotiate contracts for the coming year. I think the team has done a good job of getting more carrier relationships under our supplemental. So I wouldn't say that there's anything systemic there. Maybe there's a couple million flip between contingent and supplemental, but as carriers switch back and forth between those.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

They're still, by and large, volume based. Volume's up. Things are good.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Gotcha. And then just within specialty, could you maybe talk about the growth difference between open brokerage and MGA? And I suppose where I'm going with this is I'm not sure if the MGAs are kind of weighted to property, but if we're seeing some compression in property rate, could that impact your MGA growth in the back half of the year?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Listen, our binding business had a terrific quarter. I think they're in the the mid teens. The brokerage business was probably, you know, five to 6%, something like that. So, you know, I I think between the two, brokerage and binding, our affinity business had a terrific quarter. Captives were a little slow this quarter, but by and large, you know, the binding business did a really great job.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

And and the open brokerage is is still continuing to show really, really nice, you know, mid single digit growth.

[Andrew Andersen, Equity Research Vice President at Jefferies Financial Group]

Thank you.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thanks, Andrew.

[Operator]

Thank you. Our next questions come from the line of Meyer Shields with KBW. Please proceed with your questions.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Great. Thanks so much. Two big picture questions, if I can. First, if memory if if my memory is correct, then one of the benefits you were talking about when you bought Gallagher Re was that you could introduce reinsurance brokerage capabilities to all the carriers that place you place business with. And I'm wondering whether the 20% organic growth that you had in in the first quarter, does any is that still a factor, or

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

has that played out? This is

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

just the execution of the current team.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

No. That's a big factor. And that's, you know, 15 deals. Again, I we're not getting granular as to who, what, where, and when, but that's exactly what we talked about. It's it's coming out the way we dreamed it.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

These people are working together. We've introduced them to some other players that they didn't know. They've introduced us to plenty of players we didn't know. The cross pollinization, both in what we're doing in retail and things like pools, and what they're doing with carriers that we didn't know about has been very good for our retail team. And of course, we've got deep relations with carriers across the board that all of us at this table have traded with for years.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

And it's not it's it's it's a it's just really been a a very positive development in our repertoire.

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Listen. In our culture, the fact that people run together to help each other, we're really seeing that. We're seeing a lot of joint meetings between our retail folks, our wholesale folks, our reinsurers. It's just been a week in London and all the opportunities that we have with MGAs and capital formation using the reinsurance opportunities. I think we're just scratching the surface of what Gallery will bring to us.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

Okay. That's very helpful. The second question, I'm just trying to put this together in my head. You've got more leverage with the big accounts because they've got more swag. I think that's the way Pat put it.

[Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)]

On the other hand, there's a higher propensity towards fees there. So overall, is the larger account business more or less sensitive, from your perspective, the revenue growth more or less sensitive to the cycle than in small and mid?

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Oh, it's probably less because we're on fees. I mean, that that's there's no question about that. You know? And the nice thing about a fee account in a softening market is that you you you don't get asked to take a pay cut for doing a better job.

[Operator]

Our last questions will come from the line of Cave Motzuari with Deutsche Bank.

[Cave Montazeri, Analyst at Deutsche Bank]

Thank you. I know you guys have a pretty good real time pulse on the economy. I know in your prepared remarks you mentioned that The U. S. Labor market was still strong.

[Cave Montazeri, Analyst at Deutsche Bank]

But just wondering in your conversations with clients, especially the middle market clients, what are they saying on the impact of of tariffs on their business?

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

I think that you've you've read all the stuff, Keith, that there is out there. I mean, everybody's got questions, and it's too it's it's very it's very client specific. What business are you in? Where does your product mix come from? What's your supply chain?

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Is it something that you can change one way or another? How do your clients feel about it? The the the the good news for us is that anytime there's consternation, anytime there's change, anytime there's concern, we're there to help them through it. So if in fact tariffs create some additional loss cost or some additional value increases, There's ways to mitigate that, whether we move towards a captive, higher retentions, change the language, etcetera, etcetera. But there's there's concern as to what it means to them as individuals.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

And I'd say that's much more pronounced in the middle of small account market.

[Cave Montazeri, Analyst at Deutsche Bank]

That makes sense. My follow-up is on your international organic growth. I think you mentioned 4%, if I remember correctly. I guess it's not a bad number in absolute terms, but it is a bit of a drag on the overall brokerage organic. Could you give us a bit of maybe regional color on what you're seeing internationally?

[Cave Montazeri, Analyst at Deutsche Bank]

Maybe like some regions being better than others?

[Douglas K. Howell, CFO at Arthur J. Gallagher]

Canada is a flat market. Australia and New Zealand First Quarter is slow because of you know, their their their heavy periods are in in in the summer. The UK retail is is hanging in there kind of similar to our retail. So if you're thinking about maybe a soft button, call Canada flat and the rest of them maybe five to six percent.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

And remember, nowhere in the world has our casualty book. Nobody's got our tort nobody's got our tort system. So we are seeing pressure on casualty rates, and carriers are seeing pressure on their past casualty years.

[Cave Montazeri, Analyst at Deutsche Bank]

Yeah. That makes sense. In fact, I

[Cave Montazeri, Analyst at Deutsche Bank]

have to squeeze one more in on the topic of international. Like, from an from an M and

[Cave Montazeri, Analyst at Deutsche Bank]

A, inorganic growth point of view,

[Cave Montazeri, Analyst at Deutsche Bank]

internationally, like, where where is your appetite, you know, geographically? Where do you think there's gonna be good opportunities to to grow in the future?

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Well, first of all, you know, we now trade extensively throughout the world. As we said in our prepared comments, there's not an account anywhere in the world we can't do of any size. But if you take a look at premium written premium, that's the ball we're following.

[Cave Montazeri, Analyst at Deutsche Bank]

Sure.

[Cave Montazeri, Analyst at Deutsche Bank]

Thank you.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thanks, Keith. Well, thank you everyone for joining us this afternoon. We had a great first quarter and a great kickoff to 2025. It's important that we thank the 57,000 colleagues around the globe for doing the work that creates these results. Their creativity, dedication, and unwavering client focus, it was is what really makes these results.

[Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher]

Thank you all, and have a great evening.

[Operator]

Thank you. This does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your

Participants

Analysts

• Patrick Gallagher, Jr, CEO & Chairman of The Board at Arthur J. Gallagher
• Douglas K. Howell, CFO at Arthur J. Gallagher
• Elyse Greenspan, Managing Director at Wells Fargo Securities
• C. Gregory Peters, Managing Director - Insurance at Raymond James
• Michael Zaremski, Managing Director & Senior Equity Research Analyst at BMO Capital Markets
• Mark Hughes, Analyst at Truist Securities
• David Montemaden, Analyst at Evercore
• Katie Sakys, US P&C Insurance, Senior Associate at Autonomous Research
• Andrew Andersen, Equity Research Vice President at Jefferies Financial Group
• Meyer Shields, Managing Director at Keefe, Bruyette & Woods (KBW)
• Cave Montazeri, Analyst at Deutsche Bank