NYSE:AJG Arthur J. Gallagher & Co. Q2 2025 Earnings Report $289.91 +3.65 (+1.27%) Closing price 08/7/2025 03:59 PM EasternExtended Trading$289.80 -0.11 (-0.04%) As of 08/7/2025 07:48 PM Eastern Extended trading is trading that happens on electronic markets outside of regular trading hours. This is a fair market value extended hours price provided by Polygon.io. Learn more. ProfileEarnings HistoryForecast Arthur J. Gallagher & Co. EPS ResultsActual EPS$2.33Consensus EPS $2.36Beat/MissMissed by -$0.03One Year Ago EPS$2.29Arthur J. Gallagher & Co. Revenue ResultsActual Revenue$3.18 billionExpected Revenue$3.20 billionBeat/MissMissed by -$25.85 millionYoY Revenue Growth+16.00%Arthur J. Gallagher & Co. Announcement DetailsQuarterQ2 2025Date7/31/2025TimeAfter Market ClosesConference Call DateThursday, July 31, 2025Conference Call Time5:15PM ETUpcoming EarningsArthur J. Gallagher & Co.'s Q3 2025 earnings is scheduled for Thursday, October 23, 2025, with a conference call scheduled at 5:15 PM ET. Check back for transcripts, audio, and key financial metrics as they become available.Conference Call ResourcesConference Call AudioConference Call TranscriptSlide DeckPress Release (8-K)Quarterly Report (10-Q)SEC FilingEarnings HistoryCompany ProfileSlide DeckFull Screen Slide DeckPowered by Arthur J. Gallagher & Co. Q2 2025 Earnings Call TranscriptProvided by QuartrJuly 31, 2025 ShareLink copied to clipboard.Key Takeaways Positive Sentiment: Combined brokerage and risk management segments delivered 16% revenue growth (5.4% organic), a 34.5% adjusted EBITDAC margin (+307 bps), 26% adjusted EBITDAC growth and adjusted EPS of $2.95, marking the 21st straight quarter of double-digit growth. Positive Sentiment: Brokerage segment achieved 17% reported revenue growth and 5.3% organic growth, with adjusted EBITDAC margin expanding 334 bps to 36.4%; US retail grew 5% organically, international ~3%, and wholesale & reinsurance ~7%. Neutral Sentiment: Global renewal premiums were mixed: property down 7% offset by a 8% casualty increase (GL +4%, commercial auto +7%, umbrella +11%), package +5%, D&O –3%, workers’ comp +1% and personal lines +7%; small accounts saw +3% vs. –2% for larger clients. Positive Sentiment: Risk management segment (Gallagher Bassett) posted 9% revenue growth (6.2% organic) and a 21% adjusted EBITDAC margin, and expects full-year organic growth of 6–8% with ~20.5% margin. Positive Sentiment: M&A momentum remains strong: the Assured Partners deal is on track to close in Q3, nine mergers added ~$290 M annualized revenue in the quarter, and ~40 term sheets represent another ~$500 M pipeline. AI Generated. May Contain Errors.Conference Call Audio Live Call not available Earnings Conference CallArthur J. Gallagher & Co. Q2 202500:00 / 00:00Speed:1x1.25x1.5x2xTranscript SectionsPresentationParticipantsPresentationSkip to Participants Operator00:00:00Good afternoon, and welcome to Arthur J. Gallagher and Company's Second Quarter twenty twenty five Earnings Conference Call. Participants have been placed on a listen only mode. Your lines will be opened for questions following the presentation. Today's call is being recorded. Operator00:00:16If 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. Operator00:00:57In addition, for reconciliations of the 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. Gallagher, you may begin. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:01:19Thank you. Good afternoon, and thank you for joining us for our second quarter twenty twenty five earnings call. On the call for me today is Doug Howell, our CFO, and other members of the management team. We had a great second quarter. For our combined brokerage and risk management segments, we posted 16% growth in revenue, 5.4% organic growth, reported net earnings margin of 17.3%, adjusted EBITDAC margin of 34.5%, up three zero seven basis points year over year, adjusted EBITDAC growth of 26%, our twenty first consecutive quarter of double digit growth. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:01:59GAAP earnings per share of $2.11 and adjusted earnings per share of $2.95 another strong quarter by the team. Moving to results on a segment basis, starting with the Brokerage segment. Reported revenue growth was 17%. Organic growth was 5.3% in line with our expectations despite headwinds from cat property renewal premium changes in June. Adjusted EBITDAC margin expanded three thirty four basis points to 36.4% with underlying margin up around 60 basis points. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:02:35Doug will break down the margin expansion further in his comments. Let me provide you with some insights behind our brokerage segment organic. Within our retail operations, we delivered 4% organic overall, a reflection of the heavier weighting to property business this quarter. U. S. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:02:54Organic was 5% with PC a bit below and benefits a bit above that level. Outside The U. S, our international operations primarily in The UK and Canada, Australia and New Zealand were collectively around 3% with The UK a bit above and Canada a bit below 3%. Shifting to our Reinsurance, Wholesale and Specialty businesses, in total organic of nearly 7%, this includes 5% organic from Gallagher Re and more than 7% organic from our wholesale and specialty businesses. So we continue to deliver organic growth across retail, wholesale and reinsurance. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:03:33Next, let me provide some thoughts on the PC insurance pricing environment, starting with the primary insurance market. Overall, the global PC insurance market remains rational, and we expect that to continue. Carriers today have insights into what products and geographies are generating appropriate returns and areas that need to be re underwritten or repriced to improve profitability. Accordingly, we are seeing more carrier competition across property and continued caution within casualty lines. Breaking down second quarter global renewal premium changes, which includes both rate and exposure, we saw the following by product line. Property down 7%. That's a couple points below what we were seeing at the time of our early June IR day. Casualty lines up 8% overall, including general liability up 4%, commercial auto up 7% and umbrella up 11%. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:04:31Package up 5%, D and O down 3%, workers' comp up about a point and personal lines up 7%. Breaking down renewal premiums by client size, we continue to see significant differences. For clients generating less than $100,000 of revenue, renewal premiums were up 3%. For clients generating more than $100,000 renewal premiums were down 2%. As we discussed with you in June, second quarter renewal premium changes are more heavily influenced by property coverages than the other quarters. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:05:07Excluding property, both small to midsized accounts and larger accounts are seeing global renewal premium increases in the 4% to 6% range. Now good accounts will get some premium relief from that. However, accounts with poor loss experience are likely to see greater increases. Today's environment is actually ideal for us to show our expertise, product knowledge and data driven capabilities. Our talented team can help clients navigate market complexities while finding the best coverage moving to the reinsurance market now. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:05:40June and July renewals reflected broadly similar conditions as earlier in the year. Property covers continued to favor reinsurance buyers, particularly at cat exposed risks and increased limits being purchased are somewhat offsetting rate decreases. Casualty reinsurance dynamics reflected continued concerns over prior year loss development and rising loss trends from inflation and the litigation environment. Thus pricing was flat to modestly higher. In a growing market with opportunities to differentiate clients' underwriting abilities and risk profiles, Gallagher Re will continue to perform very well. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:06:20Moving to some comments on our customers' business activity. Our second quarter in July revenue indications from audits, endorsements and cancellations continue to be a nice positive. So we see solid client business activity in our data and no signs of a broad meaningful global economic downturn nor any changes from the prospect of tariffs. We will continue to watch these carefully for any early signs of changes in our clients' business activity. Within The U. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:06:52S, we are seeing continued job growth, just not quite at the robust levels we saw during 2024. Additionally, trends from health insurance carriers continue to indicate ongoing increases in medical utilization and treatment costs. Our benefit professionals are well positioned to guide employers through these many challenges. So with a great first half of the books, we now see full year 2025 brokerage segment organic in the 6.5% to 7.5% range. Doug will unpack our organic outlook by quarter in his comments. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:07:27Regardless of market and economic conditions, believe we are very well positioned. Today, our niche expertise, extensive data and analytics offerings and global resources put us in a great place competitively. Moving on to our risk management segment, Gallagher Bassett. Second quarter revenue growth was 9% including organic of 6.2%. We saw solid new business revenue in the second quarter as the new business sold that we spoke about last quarter began to generate revenue. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:07:57Combined with our fantastic client retention, we believe we will see full year 2025 organic in that six to 8% range. Second quarter adjusted EBITDAC margin was 21%, a bit better than our June expectations. And looking ahead, we still see full year margin around 20.5%. And that would be another great year for Gallagher Bassett. Shifting to comments about mergers and acquisitions, starting with Assured Partners. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:08:25Since our early June IR day, we've had we've made terrific progress and now believe we will be in a position to complete this transaction here in the third quarter. As for other M and A activity during the second quarter, we completed nine new mergers, representing around $290,000,000 of estimated annualized revenue. For those new partners joining us, I'd like to extend a very warm welcome to the Gallagher family of professionals. Looking at our pipeline, we have around 40 term sheets signed or being prepared representing around $500,000,000 of annualized revenue. Good firms always have a choice and it would be terrific if they chose to partner with Gallagher. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:09:06I'll conclude with some comments about our Bedrock Gallagher culture. During the second quarter, I had the pleasure of spending time with thousands of colleagues across the organization, including more than 500 college students from the sixtieth class of the Gallagher internship program. This rigorous two month sales internship program is an essential investment in our future. And from many my many interactions with this talented group, I am more than confident that our sales culture will remain strong for years to come, and that is the Gallagher way. Okay. I'll stop now and turn it over to Doug. Douglas K. HowellCFO at Arthur J. Gallagher00:09:42Doug? Thanks, Pat, and hello, everyone. Today, I'll walk you through our earnings release and provide some comments on organic growth and margins by segment, including how we are seeing the rest of the year shape up. 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. Douglas K. HowellCFO at Arthur J. Gallagher00:10:07All right. Let's flip to Page three of the earnings release. Brokerage segment organic growth of 5.3% was right in line with our June guidance. With our first quarter organic at 9.5%, year to date, we are at 7.6%. Looking forward to the '25, we see we see third and fourth quarter organic each around 5% plus, which would put full year organic in the six and a half to seven and a half percent range. Douglas K. HowellCFO at Arthur J. Gallagher00:10:37Let me give you four call outs on that. First, recall from our first quarter earnings call and our June, our nine point 5% first quarter organic growth had some positive timing that is now flipping to a headwind in the second half. Second, as we discuss every quarter, organic can be dependent on those large and lumpy life cases. Given the current interest rate outlook uncertainty, clients may accelerate or even delay when to buy new policies. Third is property rates further decreases or on the other hand, a large cat here in wind season causing a quick shift higher would also influence our organic. Douglas K. HowellCFO at Arthur J. Gallagher00:11:14And fourth are casualty rates. We are seeing some lines perhaps bottoming out and other lines continuing to steadily march higher. Looking to Page five of the earnings release to the Brokerage segment adjusted EBITDAC table. Second quarter adjusted EBITDAC margin was 36.4%, up three thirty four basis points year over year and above our June IR day expectations. Let me walk you through our typical bridge from last year. Douglas K. HowellCFO at Arthur J. Gallagher00:11:42First, if you pull out last year's twenty twenty four second quarter earnings release, you'd see we reported back then adjusted EBITDAC margin of 33.1%. Now adjust that using current FX rates, which Rich for this quarter is next to nothing, so just assume adjusted EBITDAC margin levelized for FX would remain at 33.1%. Then organic growth of 5.3% gave us about 60 basis points of expansion this quarter. The rolling impact of M and A used about 40 basis points. The impact of lower rates on fiduciary interest income used about 30 basis points. Douglas K. HowellCFO at Arthur J. Gallagher00:12:24And then interest income on the cash we're holding for Assured Partners added about three forty basis points of margin this quarter. Follow that bridge and it will get you to second quarter twenty twenty five margin of 36.4%. That's great discipline by the teams. As for the second half of the year, we don't see anything that causes to change how we view underlying margin expansion potential. We call it organic greater than 4%. Douglas K. HowellCFO at Arthur J. Gallagher00:12:51We should see some underlying margin expansion. Then say at 6.5% organic, perhaps around 70 basis points of expansion, and at 7.5% organic, 90 basis points of expansion. I would say the same thing looking out towards '26. We have a long list that we will continue to benefit our productivity and quality, including a more stable labor environment, increased returns from our technology spends on client facing sales and service tools, our proven early AI successes, further centralization of back office services, all on top of an industrial strength core operating system that can handle significantly more revenue with marginal cost. So in a sound bite, in any organic environment, we still see significant opportunities to get better, faster, and more productive and therefore and thereby provide higher quality quality offerings to our clients at lower cost. Douglas K. HowellCFO at Arthur J. Gallagher00:13:47Sticking on page five, risk management segment organic at 6.2%. As Pat said, that's a bit better than our expectations due to strong new business revenues from contracts that are incepted in in q two. And for the year, we continue to see organic in that 6% to 8% range. Adjusted EBITDAC margin of 21% was better than our June IR day expectations. And looking forward, we still see full year margins closer to 20.5%. Douglas K. HowellCFO at Arthur J. Gallagher00:14:14Turning now to Page seven of the earnings release and the corporate segment shortcut table. Compared to our June IR day expectations, the adjusted interest in banking line and the clean energy line both were very close to our expectations. The adjusted acquisition cost line related to our typical tuck in acquisitions came in at $0 better, and the adjusted corporate line was $0.04 below. That's solely due to a larger noncash unrealized FX remeasurement loss because the dollar weakened in June. That has already mostly reversed here in July, so it just shows the noise that this can create in our corporate segment results. Douglas K. HowellCFO at Arthur J. Gallagher00:14:54So let's move now from the earnings release to the CFO commentary document that we post on our website. As a general statement, please read the headers and the footers on each page carefully on how numbers in this document include or exclude the impact of Assured Partners. Flipping to page three and our typical modeling helpers, most of the second quarter twenty five actual numbers were close to what we provided back in June. One call out here, a small flip from amortization to to depreciation that cost us about a penny of adjusted EPS. That's simply because we updated opening balance sheet numbers related to our recent acquisition. Douglas K. HowellCFO at Arthur J. Gallagher00:15:31Finally, this page, please look at the FX disclosures for the brokerage and risk management segments as we refine your models. Turning now to page four and the corporate segment outlook for the '25. There's not much change here from what we provided eight weeks ago. So you can flip to page five to our tax credit carryovers. As of June 30, about $685,000,000, which we get over the next few years. Douglas K. HowellCFO at Arthur J. Gallagher00:15:57And recall that those that that benefit flows through our cash flow statement, not through the p and l. Also, no change to the value of these credits from the recent US o b three tax bill, so that's good news. And while I'm at it, there isn't anything concerning to us in the other provisions of the new bill either, so that's good news too. Turning to page six, the investment income table. We've updated our forecast to reflect current FX rates and changes in fiduciary cash balances. Douglas K. HowellCFO at Arthur J. Gallagher00:16:25These numbers assume two future 25 basis point rate cuts, one in September and one in December. You also see, that the interest income associated with Assured Partners financing runs through the third quarter in this table. If we close before that, obviously, that number would come down. Shifting down the page is the rollover revenue table. Only a small change from our June CFO commentary, and that was due to a refinement in the seasonality of revenues from our second quarter twenty five acquisitions, which are more heavily weighted towards first quarter versus second, third, and fourth. Douglas K. HowellCFO at Arthur J. Gallagher00:17:02And then looking forward, you'll see in the pinkish columns to the right, they include an estimated revenues for brokerage and m brokerage m and a closed through yesterday. So there's a our standard reminder, you'll need to make a pick for future m and a. And, also, you'll need to make a pick, for when AP might close. The purple section on that page should help with that. Alright. Douglas K. HowellCFO at Arthur J. Gallagher00:17:22Moving to cash, capital management, and m and a funding. Available cash on hand at June 30 was about $14,000,000,000 and no outstanding borrowings on our line of credit. With our strong second half cash flows, we are in great position to fund another $2,000,000,000 of M and A here in '25 and it's looking like we would have about 5,000,000,000 in '26 before using any stock, all while maintaining a solid investment grade debt rate. Think about that for a minute. Another 7,000,000,000 over the next seventeen months. Douglas K. HowellCFO at Arthur J. Gallagher00:17:52That should allow us to add another 6 to $700,000,000 of EBITDA at a really nice arbitrage. And I'm bullish about this because for twenty years, we've invested in building the chassis that can support billions and billions more of revenue, provide world class service, and enable thousands and thousands of talented producers to win at the point of sale. So our m and a strategy has a fantastic outlook. So a great quarter and first half in the books, and we have an exciting future with AP, organic growth, margin expansion, M and A opportunities, all driven by a talented team with a bedrock culture. Those are my comments. Back to you, Pat. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:18:29Thanks, Doug. Daryl, you want to open up for questions, please? Operator00:18:33Sure. You got it. Thank you. The call is now open for questions. If you have a question, please pick up your handset and press star one on your telephone at this time. Operator00:18:41If 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. Additionally, we ask that each participant limit themselves to one question and one follow-up. Again, that's star one for questions. Our first questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions. Elyse GreenspanManaging Director at Wells Fargo00:19:07Hi, thanks. Good evening. My first question, when was the date that you guys sent the information, the HSR information to the DOJ and responded to that request? And did you get a timing agreement there? Or is it just a thirty day clock that starts once you gave them all the information? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:19:28Well, at least we're we aren't going to give out dates that we did this or did that. We are done responding to their second request and we do continue to engage with them and respond to certain inquiries. And and so the the review is ongoing, so I'm not gonna get into any more real details about timing. But our evaluation of where we stand given the give and take back and forth and given the relationship as it will be in a position to close the transaction during the third quarter. We're very, very excited about it. Elyse GreenspanManaging Director at Wells Fargo00:20:02Thank you. And then my second question, you guys I'm just trying to get a sense with the 5% brokerage outlook for the back half, I guess, you assuming a continuation of just pricing trends that we saw in Q2 and just the slowdown in property in June? And then if I recall from the June IR day, you were talking about some benefits business that was getting pushed to the back half. Is that still the expectation? And then what quarter, are you expecting that might come on? Douglas K. HowellCFO at Arthur J. Gallagher00:20:34Alright. So yeah. So let me just reiterate what I said is that, you know, we we see the next two quarters in the five plus range too, not to be not to quibble over picking at one single number. And, yeah, I think that there's some risk opportunity with the life business. We'll see how that comes out. Douglas K. HowellCFO at Arthur J. Gallagher00:20:50Obviously, sometimes those policies and stuff depending on interest rates with what's what's happening with the Fed holding tight right now, your guess might be as good as mine about whether they accelerate to close or whether they try to wait until a little longer, maybe into next year to to actually accept those policies. So there is some dependency on those large and lumpy life case. Other other things is where those picks are based on what we're seeing in the property environment right now, what we're seeing in the casualty environment right now. And, you know, and again, some of that's influenced a little bit by, you know, the timing that we had, you coming out of the first quarter. Was such a great first quarter. Douglas K. HowellCFO at Arthur J. Gallagher00:21:29There's a little headwind to that in the third and the fourth quarters. Overall, our business, we're excited about it, we think that we could be in that 6.57.5% range for the year. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:21:41And we are heavier in the second quarter on Property than we are the next two. Operator00:21:52Our next questions come from the line of Andrew Kligerman with TD Cowen. Andrew KligermanManaging Director at TD Securities00:21:58Thank you. On the property, Kurt, just heard an an E and S writer say that, you know, we either made the same point as you about June seeing a big drop off, maybe 20 to 30. Is that baked into your guidance for the balance of the year, something along magnitude of 20 to 30% property lines? Or is that just more J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:22:23That's a bad number. That's a bad number. Whoever gave you that number, it's not what we're seeing. Absolutely not even close. So, no, we didn't bake in a 20 or 30% decrease. Andrew KligermanManaging Director at TD Securities00:22:35Great. Douglas K. HowellCFO at Arthur J. Gallagher00:22:35Yeah. We can And property, you know, in that, you know, 7% range, a little bit plus or minus on that in June. You know, probably the pretty heavy quarter during, you know, we think in June. And so I think it's you know, the other thing too is you you gotta understand. Gotta you gotta always remember the difference between our revenues that couldn't include exposure changes also. Douglas K. HowellCFO at Arthur J. Gallagher00:22:59So as property rates might come off, when you talk pure rate, that might be one thing, but our customers are smart. When rates are dropping, they buy more cover. So when we give you a number, when we see property down 7%, that would include rates going down, but exposures are are you know, the the consumption of that of those risks is going up. Andrew KligermanManaging Director at TD Securities00:23:21Got it. And and, you know and and the number I gave you might have been off because it might have been weighted more towards ENS and large large risk. Yep. So then maybe just J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:23:30stop playing on. It's a bad number. It's a bad number. A bad number on large accounts. It's a bad number on middle accounts. It's a bad number on small accounts. Andrew KligermanManaging Director at TD Securities00:23:40Good to hear. And then and then maybe just shifting to your your pipeline. I mean, it sounds really exciting. You've done nine mergers, you know, already. You know, no disruption from Assured Partners. Andrew KligermanManaging Director at TD Securities00:23:54You can just kinda keep going at at your regular pace. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:23:58I tell you what, I I have to agree. If I was an outsider, I'd be pretty impressed. Our machine, and we're in just a great position, is driven by literally hundreds of people in the field around the world talking to folks that they admire and working with people who have been hired by folks to sell their business. And we're on that shortlist of virtually anybody that wants to take a look at possibly selling their enterprise, large or small. Our tuck in acquisition business purchases are not all 50,000,100 million dollars There's lots of twos, fives, tens. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:24:38These are family businesses, and they're not PE roll ups, and 're looking for a home for their people. And I couldn't be proud of the fact that they were still at the high end of that checklist. They wanna know, you know, is Gallagher still the kind of company I'd like to join? And you're exactly right to pick up on the fact that nine closures at the very time that they know we're doing the biggest transaction in our history. So it is a testament to the company. Operator00:25:11Thank you. Our next questions come from the line of Charlie Lederer with BMO Capital Markets. Please proceed with your questions. Charlie LedererVice President - Equity Research at BMO Capital Markets00:25:19Hey, thanks. On the RPC numbers that you gave Pat, would you be able to I I don't think I missed it or I may have missed it, but did did would you be able to give a an all in RPC number? And I guess, what what would that look like with, you know, three q and four q's mix instead of two q? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:25:42Well, the the it'd be about 4%. Douglas K. HowellCFO at Arthur J. Gallagher00:25:45Yeah. I think you're picking up on something, Charles. There seems to be a a a heavy focus on property. You know, property for us in the course of a year might be 35% of our business casually, and we're seeing a steady march of casualty rates going forward. You know, recollection says that casualty is up about 8%, and the mix and the weight of the business. Douglas K. HowellCFO at Arthur J. Gallagher00:26:06So I I think overall, you're seeing a market that's still mid single digits going up in terms of rates. So you're right to sniff out the difference between those two and wonder but the combined number in that, you know, that mid single digits number is still spot for the in your the second part of your question, we see that happening for the rest of the year. We are just in the beginning of wind season. So let's see what happens here. Over the next three months, that could change the market. Douglas K. HowellCFO at Arthur J. Gallagher00:26:35We're at $80,000,000,000 of of cat losses, the biggest first half of the year ever in the history of our business. It's only been five months ago that the tragic California fires were there. I think carriers still have to digest that and how that's impacting their reserves still. There's still development to come out of that. So between the casualty rates still marching higher, property is you're at the plate taking a swing at it. Douglas K. HowellCFO at Arthur J. Gallagher00:27:04We'll see what happens for the rest of the year. Charlie LedererVice President - Equity Research at BMO Capital Markets00:27:08Got it. Thanks. And I guess the 4.7 in base organic, are you expecting acceleration off of that in the back half of the year? Or I guess, are you expecting supplemental and contingents to kinda drive organic a little yeah. Douglas K. HowellCFO at Arthur J. Gallagher00:27:26I I kinda look at base and supplementals together, and that's pushing, like, four, nine, or 5%. So right in there, what we're seeing going forward. The contingents, I think the carriers are doing well. We do well in the environments where carriers do well. So I I think that it's nice to see that base is base and supplemental together still around 5%. Douglas K. HowellCFO at Arthur J. Gallagher00:27:46Supplementals maybe topping that up a little bit. So I I I think you're reading through that right. But, you know, we're holding in there. We're our fee accounts are doing well too. So it wouldn't surprise me that that's the same number the next three quarters or next two quarters also. Operator00:28:08Thank you. Our next questions come from the line of Gregory Peters with Raymond James. Please proceed with your questions. C. Gregory PetersMD - Insurance at Raymond James00:28:15Hey, good afternoon. So I think, Doug, as you're going through in rapid fire formation, your comments, you, alluded to the opportunities that you have to expand margins in all type of organic revenue environments. And I think it's particularly interesting as we think about next year. So could you go back and sort of unpack some of those comments and talk about the drivers, not for this year, but what you're seeing, you know, for '26 and beyond? Douglas K. HowellCFO at Arthur J. Gallagher00:28:51Well, listen. Here's the thing. How about I promise this? I'll give you a little bit more detail in September when we do our IR day on some of those exact points. But in a nutshell, there is a culture of change inside of Gallagher that every day people are waking up and getting after making ourselves better. We know that we've got to get more productive every day. We've got some terrific AI projects that are underway that are starting to show early success. We now have 15,000 associates that that we can use that are in our our centers of excellence that that provide good value to us. Douglas K. HowellCFO at Arthur J. Gallagher00:29:29You know, they are they are the the early founders of of of standardization, centralization that allows us to deploy AI into that information. The technologies we're developing now have kinda toggled from hardening our environment against cyber and against just just uptime and and run times. They're now really enabling the business that that the present lay presentation layers that we're providing our producers that show customers like you bought this and and being on the adviser. Because it's a it's a list of of that keeps going on and on and on. And every time you think the list is gonna get smaller of of opportunities to to get better, it just grows. Douglas K. HowellCFO at Arthur J. Gallagher00:30:11And so we've got a runway for years of how we can make ourselves better. And, you know, the acquisition pipeline feeds that because we're putting more revenue over a cost structure that doesn't change dramatically. C. Gregory PetersMD - Insurance at Raymond James00:30:27Alright. I'll wait till September for more detail. Douglas K. HowellCFO at Arthur J. Gallagher00:30:30I'll do my best. C. Gregory PetersMD - Insurance at Raymond James00:30:31I C. Gregory PetersMD - Insurance at Raymond James00:30:32I guess, I wanna go back to the Assured Partners transaction. I think the last time we were talking about it or you were talking about it, I should say, you you mentioned or highlighted that you had to suspend, I think, 11 of the 13 work streams on the integration process. And with the timing with a little bit more visibility on the timing, have you kick started those sub work streams, or processes for integration back up? I guess, ultimately, what I'm getting here is, you know, we we previously mapped out, you know, some revenue and margin assumptions, for the acquisition. And just wondering if because of this delay, it's called just it's gonna cause a delay in the recognition of some of the the benefits as we start to integrate that operation at the end of this year or next year. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:31:29I think, Greg, it is fair to say we had to suspend some actual work streams that were things like what producers would work with what other producers on accounts, what branches would be sharing what here or there. But we've had, you know, we've had a lot of time, and we have been allowed at the at the senior levels to continue to have dialogue, to work on the plan here. And so it's been we we follow the rules very closely. We've had a longer period of time to review this, and we've been allowed to do more integration planning, just not getting into some of the details of some of these work streams. So I'd say that we're really ready to hit the ground running. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:32:07I think that if you recall when we announced this acquisition, we're very proud of the fact that we said it in its first year would be accretive. We still maintain that. I think we're gonna see a bump in opportunities to sell stuff in geographies and places that we have not been represented. Remember, only '94 with 94% of these acquisitions done by AP, we didn't have a chance at. So these are fresh new bodies that are are, you know, coming on our team. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:32:37Seems like they're very excited, and we're we're looking forward to getting going. Douglas K. HowellCFO at Arthur J. Gallagher00:32:42Yeah. And, Greg, just to clarify, I think you had your numbers backwards. I mean, there were 12 or 13 work streams, and we really had to spend two of them or three of them or something like that. So you're you're you I think if you spoke backwards on that. But I gotta say, like Pat said, is that that we've used this time to get ready when things happen. Douglas K. HowellCFO at Arthur J. Gallagher00:33:01If we're delayed seven months in closing, eight months in closing, maybe we lost two or three months in that journey, to be honest. So we didn't lose the entire time. So we're still bullish on the opportunity to put two great companies together and and and and get a J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:33:15lot of benefit out of it. C. Gregory PetersMD - Insurance at Raymond James00:33:18Got it. Thanks for the clarification on that too, Doug. Douglas K. HowellCFO at Arthur J. Gallagher00:33:20Sorry. Bye. Operator00:33:25Thank you. Our next questions come from the line of Jing Li with KBW. Please proceed with your questions. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:33:32Hi. Good evening. Thank you for taking my question. My first question is on pricing. You mentioned that casualty, some lines bottoming out and some lines getting higher. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:33:47Just curious any specific lines that you wanna pull out. Just kinda wanna know the mix that drives it. Casually, line pricing is, 8% in two q, which is lying with one q, look pretty steady. Do you expect casualty rates going to be flat or bumpy when when it increases from here? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:34:11Alright. Let let me try to answer a little bit of that right off of my script, Chang. I I think we're seeing property down seven, casualty overall up eight, but we did unpack that. General liability is up about four. Commercial auto continues to be up seven and umbrella up 11. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:34:29That tells you a lot about what's going on in the underlying business of underwriters. Package, which is packaged together with other property type covers, is up five, but d and o, interestingly enough, is down three. Workers' comp is up about a point and overall personal lines are up seven. I think that's about as unpacked as we could get for you by line today, and I think that's pretty good data. What I'm seeing in the casualty market is a continuing caution as talked about under our reinsurance report. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:35:03Carriers from a reinsurance perspective are still concerned about prior years. And when they look at that and look forward, they're not willing to throw the to to throw the numbers out to some additional credits that have caused that problem from the past to get bigger. And I think if you add that to Doug's comments, I mean, we're one storm away from the market turning in property. I mean, that so you're in a really interesting time in the market. These carriers are very good at knowing where they are, aren't making money, and they're very determined to try to keep their their revenue coming in above loss cost. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:35:41So it's a good time for us to be talking to clients about all this because they're confused, to be honest with you. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:35:51Got it. Thank you. My second question is on the ES market. One of your competitors kind of mentioned seeing some early signs of business coming back on ES to the the middle market. Are you seeing any similar trend, or or why you're expecting from here? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:36:11Yeah. I would I would tell you this. First of all, every retail broker in the world has game plan number one in a market like this, and that's to reinstitute a direct play to take the wholesale commission away from the wholesaler. Now that's that's a bold statement. There are wholesalers that have helped you write accounts. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:36:31You're gonna work together. So it's not you can't say every single account. But that is clearly a strategy that a retailer will use to not have to split commissions. Douglas K. HowellCFO at Arthur J. Gallagher00:36:41And we're actually seeing in our submissions. Our submission count is actually up. So so when it comes to to opportunities, we're still we're still having a lot of opportunities to to to process in our, obviously, in our wholesale and e and s market. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:36:54Now, also, there's a differentiation between programs and MGA type lines of coverage where you've got something that's in a in an underwriting environment that's excess and surplus. Those are growing nicely right now. They're continuing to grow. So it is a mixed bag. But as you saw in our results, our excess surplus in specialty business was up 7% at a very strong quarter. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:37:19So this is not like all the businesses returning to the primaries. It's a it's a logical balance. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:37:29Got it. Thank you so much. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:37:32Thank you. Operator00:37:34Thank you. Our next questions come from the line of David Botemaden with Evercore ISI. Please proceed with your questions. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:37:42Hey, good evening. I just wanted to confirm that in the outlook for 5% plus organic growth in brokerage in the back half of the year that you guys are assuming a continued 7% decline in property RPC? And then maybe if you could help us think through some of the sensitivity around that, if pricing came in maybe a little bit better or if it came in maybe a little bit worse, what sort of impact that might have to organic in the second half? Douglas K. HowellCFO at Arthur J. Gallagher00:38:16Right. So yes, on the first part of the question, we're assuming property pricing that happened in June continuing through the year. But again, we're not as heavily weighted to property in the second half of the year. Second thing, think the sensitivity in it is I think that we lose 40 basis points of organic every time there's a 2% drop in in, rates, without, without any changes in ex including increases in exposure that would come along with that. So it may be down a little bit more because of of the changes in rates, but then because of of increased consumption and people opting back in. Douglas K. HowellCFO at Arthur J. Gallagher00:38:50I think the net impact is is about 40 basis points to for 2% of drop on on net net property. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:39:00Got it. Great. That's that's helpful. And then maybe just following up on that, I think you said in June, is is that different than the down seven or is that more than the down seven? Because I think you said five in April and May and then it was it sounds like June was definitely worse than seven. Yeah. Maybe June being seven for the quarter. Douglas K. HowellCFO at Arthur J. Gallagher00:39:20Yeah. Maybe June was eight or nine, something like that by the time it averages. But July is is we're not seeing that in July. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:39:28Got it. Okay. But you're assuming, like, the the eight, nine in in the outlook going forward? Douglas K. HowellCFO at Arthur J. Gallagher00:39:34You know, I think there's some moderation as you get halfway. Binding property business in in in the middle of the storm season can have so is not gonna get quite the cut that you get it in in earlier. So let's let's see what happens during storm season here. But I think that I think that the carriers have you know, they've got they've got a target of what they wanna write and, you know, I think they may have you know they're gonna hit that harder in the May and June time frame because you get a you get seven months of the unearned premium. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:40:02Right. Nope. That's fair. Thank you. And then for my my second question, and I know it's early, but just wondering, just given all the dynamics within the different lines, I think you had said up 4% to 6% ex property and then obviously everything that's going on in property. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:40:24Any sort of early thoughts in terms of how you're thinking about organic and brokerage in 2026? Douglas K. HowellCFO at Arthur J. Gallagher00:40:30Yes. We're working through that right now. I think that our reinsurance business is still killing it. I think opportunities there. Our benefit business in the first quarter was very good. Douglas K. HowellCFO at Arthur J. Gallagher00:40:42So on a overall year in and year out basis, maybe where we close this year, you know, I I think we got a shot at that next year. You know, wherever we end up this year, we probably could repeat that next year. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:40:57Got it. Thank you. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:40:59Thanks, David. Operator00:41:01Thank you. Our next questions come from the line of Mark Hughes with Truist Securities. Please proceed with your questions. Mark HughesAnalyst at Truist Securities00:41:08Yeah. Thank you. Good afternoon. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:41:10Hey, Mark. Mark HughesAnalyst at Truist Securities00:41:11Pat, if I heard you properly, think you said workers' comp was up one. Yep. And and if I am looking at it right, it was up five last quarter. I know you said the job growth may not be as robust and maybe there's a little less wage inflation, but anything else impacting that number? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:41:31I'm not seeing it, Mark. I I think comp is surprising to me. The last ten years has been pretty flattish. So I wouldn't read too much into that. We we can unpack it every single quarter, but it's in a pretty tight range of not much movement. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:41:47This is just not an indication of it falling through the floor, and the second in the previous quarter was not an indication of a start to run up. Mark HughesAnalyst at Truist Securities00:41:56The benefits organic, I think you said it was maybe a little bit faster than the overall US retail. Is that right? Do have a specific number on that? Douglas K. HowellCFO at Arthur J. Gallagher00:42:08We didn't provide that, but it might be two points better, maybe a point point and a half better. Mark HughesAnalyst at Truist Securities00:42:16Okay. Very good. Thank you. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:42:18Thanks, Mark. Operator00:42:21Thank you. Our next questions come from the line of Andrew Anderson with Jefferies. Please proceed with your questions. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:42:27Hey, good afternoon. I think I heard you say a 5% organic in Reinsurance, and that's relative to some really strong quarters in recent history. Can you maybe break down just any impact on pricing on that organic number? And would also be interested in hearing maybe any benefit you saw from ILS activity? Douglas K. HowellCFO at Arthur J. Gallagher00:42:46In the second quarter, not much benefit from ILS. We've had a relatively speaking, it's not a big quarter on reinsurance. And just ask your question about the reinsurance 5% again. Maybe I didn't hear you right. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:43:00Just any impact from pricing that was a headwind to that 5%? Douglas K. HowellCFO at Arthur J. Gallagher00:43:05Maybe a little bit, but we're we're seeing some some the carriers are realizing there's some opportunities here that can increase their their purchase of reinsurance, so that that more than offset that. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:43:20Great. And then I think in the the script, you mentioned some early AI successes. Could you maybe elaborate a bit on those? Douglas K. HowellCFO at Arthur J. Gallagher00:43:27Well, listen. I told Greg I wasn't gonna talk about it till September, so that wouldn't be very fair of me to go ahead and answer. Listen. We're we're doing some really Gallagher Bassett is really having some terrific results in their claim submissions. We're starting to do really well with policy review. Douglas K. HowellCFO at Arthur J. Gallagher00:43:42You know, on the back office side, we're starting to get some momentum on on kind of what I call near AI, on bank reconciliations, etcetera, which still you know, we still have a lot of those going on. And so there's a smattering of of of business. But the big things that stand out right now are are claim summarization and policy review. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:44:04Thank you. Operator00:44:08Our final questions will come from the line of Katie Sakis with Autonomous Research. Katie SakysSenior Research Associate at Autonomous Research00:44:13I think I heard you guys mention 7% growth on E and S business in the quarter. Would you be able to break that down a little bit further thinking about the difference between open brokerage and MGAs? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:44:32Yeah. I think the faster grower of the two MGAs programs and open market is clearly MGA business. I don't have a stat really off the top of my head. Let me just look down the table here. Douglas K. HowellCFO at Arthur J. Gallagher00:44:46Yeah. Listen. I can I can tell you this is that the the binding and is up towards double digit? And the the issue you've gotta look at in open brokerage is the submissions are up, but because some of the renewal premiums are flat, it's primarily a property quarter. You know, for me to say that it was flat, that might be a little unfair without context that we're still getting tons of submissions going into the into the open brokerage spot. Katie SakysSenior Research Associate at Autonomous Research00:45:15Thank you. I I appreciate the additional context. And then, just on on thinking about the the closure of the Assured Partners acquisition. I can appreciate that you don't have a whole lot of additional detail for us. But is there any changing in your thinking about the need to potentially divest some parts of that business or offer other remedies in order to get the deal over the finish line? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:45:40Absolutely not. Katie SakysSenior Research Associate at Autonomous Research00:45:43Excellent to hear. Thank you. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:45:46Thanks, Katie. Okay. I think that's our last question. I've got just a quick thank you for everybody for joining us. I know it's late this afternoon. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:45:53Appreciate it. We feel we had a great 2025. Most importantly, I wanna thank the 59,000 colleagues that we have for all their hard work. Thank you. And to all our clients around the globe, we're proud to be your trusted advisers. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:46:09Thank you, and thank all of you for joining us. Have a great evening. Operator00:46:14Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.Read moreParticipantsAnalystsJ. Patrick GallagherCEO & Chairman of The Board at Arthur J. GallagherDouglas K. HowellCFO at Arthur J. GallagherElyse GreenspanManaging Director at Wells FargoAndrew KligermanManaging Director at TD SecuritiesCharlie LedererVice President - Equity Research at BMO Capital MarketsC. Gregory PetersMD - Insurance at Raymond JamesJing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISIMark HughesAnalyst at Truist SecuritiesAndrew AndersenVP - Equity Research at Jefferies Financial GroupKatie SakysSenior Research Associate at Autonomous ResearchPowered by Earnings DocumentsSlide DeckPress Release(8-K)Quarterly report(10-Q) Arthur J. Gallagher & Co. Earnings HeadlinesArthur J. Gallagher (AJG) Expands with MACK Insurance AcquisitionAugust 5 at 11:38 AM | gurufocus.comArthur J. Gallagher & Co. Acquires MACK Insurance ServicesAugust 5 at 10:00 AM | prnewswire.com$100 Trillion “AI Metal” Found in American Ghost TownJeff Brown recently traveled to a ghost town in the middle of an American desert… To investigate what could be the biggest technology story of this decade. In short, he believes what he's holding in his hand is the key to the $100 trillion AI boom… And only one company here in the U.S. can mine this obscure metal. | Brownstone Research (Ad)Arthur J. Gallagher & Co. (NYSE:AJG) Price Target Cut to $322.00 by Analysts at UBS GroupAugust 5 at 3:43 AM | americanbankingnews.comArthur J. Gallagher & Co. Acquires Dion Leadership, Inc.August 4, 2025 | prnewswire.comArthur J. Gallagher & Co. (NYSE:AJG) Price Target Raised to $372.00August 4, 2025 | americanbankingnews.comSee More Arthur J. Gallagher & Co. Headlines Get Earnings Announcements in your inboxWant to stay updated on the latest earnings announcements and upcoming reports for companies like Arthur J. Gallagher & Co.? Sign up for Earnings360's daily newsletter to receive timely earnings updates on Arthur J. Gallagher & Co. and other key companies, straight to your email. Email Address About Arthur J. Gallagher & Co.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.View Arthur J. Gallagher & Co. 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PresentationSkip to Participants Operator00:00:00Good afternoon, and welcome to Arthur J. Gallagher and Company's Second Quarter twenty twenty five Earnings Conference Call. Participants have been placed on a listen only mode. Your lines will be opened for questions following the presentation. Today's call is being recorded. Operator00:00:16If 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. Operator00:00:57In addition, for reconciliations of the 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. Gallagher, you may begin. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:01:19Thank you. Good afternoon, and thank you for joining us for our second quarter twenty twenty five earnings call. On the call for me today is Doug Howell, our CFO, and other members of the management team. We had a great second quarter. For our combined brokerage and risk management segments, we posted 16% growth in revenue, 5.4% organic growth, reported net earnings margin of 17.3%, adjusted EBITDAC margin of 34.5%, up three zero seven basis points year over year, adjusted EBITDAC growth of 26%, our twenty first consecutive quarter of double digit growth. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:01:59GAAP earnings per share of $2.11 and adjusted earnings per share of $2.95 another strong quarter by the team. Moving to results on a segment basis, starting with the Brokerage segment. Reported revenue growth was 17%. Organic growth was 5.3% in line with our expectations despite headwinds from cat property renewal premium changes in June. Adjusted EBITDAC margin expanded three thirty four basis points to 36.4% with underlying margin up around 60 basis points. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:02:35Doug will break down the margin expansion further in his comments. Let me provide you with some insights behind our brokerage segment organic. Within our retail operations, we delivered 4% organic overall, a reflection of the heavier weighting to property business this quarter. U. S. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:02:54Organic was 5% with PC a bit below and benefits a bit above that level. Outside The U. S, our international operations primarily in The UK and Canada, Australia and New Zealand were collectively around 3% with The UK a bit above and Canada a bit below 3%. Shifting to our Reinsurance, Wholesale and Specialty businesses, in total organic of nearly 7%, this includes 5% organic from Gallagher Re and more than 7% organic from our wholesale and specialty businesses. So we continue to deliver organic growth across retail, wholesale and reinsurance. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:03:33Next, let me provide some thoughts on the PC insurance pricing environment, starting with the primary insurance market. Overall, the global PC insurance market remains rational, and we expect that to continue. Carriers today have insights into what products and geographies are generating appropriate returns and areas that need to be re underwritten or repriced to improve profitability. Accordingly, we are seeing more carrier competition across property and continued caution within casualty lines. Breaking down second quarter global renewal premium changes, which includes both rate and exposure, we saw the following by product line. Property down 7%. That's a couple points below what we were seeing at the time of our early June IR day. Casualty lines up 8% overall, including general liability up 4%, commercial auto up 7% and umbrella up 11%. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:04:31Package up 5%, D and O down 3%, workers' comp up about a point and personal lines up 7%. Breaking down renewal premiums by client size, we continue to see significant differences. For clients generating less than $100,000 of revenue, renewal premiums were up 3%. For clients generating more than $100,000 renewal premiums were down 2%. As we discussed with you in June, second quarter renewal premium changes are more heavily influenced by property coverages than the other quarters. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:05:07Excluding property, both small to midsized accounts and larger accounts are seeing global renewal premium increases in the 4% to 6% range. Now good accounts will get some premium relief from that. However, accounts with poor loss experience are likely to see greater increases. Today's environment is actually ideal for us to show our expertise, product knowledge and data driven capabilities. Our talented team can help clients navigate market complexities while finding the best coverage moving to the reinsurance market now. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:05:40June and July renewals reflected broadly similar conditions as earlier in the year. Property covers continued to favor reinsurance buyers, particularly at cat exposed risks and increased limits being purchased are somewhat offsetting rate decreases. Casualty reinsurance dynamics reflected continued concerns over prior year loss development and rising loss trends from inflation and the litigation environment. Thus pricing was flat to modestly higher. In a growing market with opportunities to differentiate clients' underwriting abilities and risk profiles, Gallagher Re will continue to perform very well. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:06:20Moving to some comments on our customers' business activity. Our second quarter in July revenue indications from audits, endorsements and cancellations continue to be a nice positive. So we see solid client business activity in our data and no signs of a broad meaningful global economic downturn nor any changes from the prospect of tariffs. We will continue to watch these carefully for any early signs of changes in our clients' business activity. Within The U. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:06:52S, we are seeing continued job growth, just not quite at the robust levels we saw during 2024. Additionally, trends from health insurance carriers continue to indicate ongoing increases in medical utilization and treatment costs. Our benefit professionals are well positioned to guide employers through these many challenges. So with a great first half of the books, we now see full year 2025 brokerage segment organic in the 6.5% to 7.5% range. Doug will unpack our organic outlook by quarter in his comments. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:07:27Regardless of market and economic conditions, believe we are very well positioned. Today, our niche expertise, extensive data and analytics offerings and global resources put us in a great place competitively. Moving on to our risk management segment, Gallagher Bassett. Second quarter revenue growth was 9% including organic of 6.2%. We saw solid new business revenue in the second quarter as the new business sold that we spoke about last quarter began to generate revenue. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:07:57Combined with our fantastic client retention, we believe we will see full year 2025 organic in that six to 8% range. Second quarter adjusted EBITDAC margin was 21%, a bit better than our June expectations. And looking ahead, we still see full year margin around 20.5%. And that would be another great year for Gallagher Bassett. Shifting to comments about mergers and acquisitions, starting with Assured Partners. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:08:25Since our early June IR day, we've had we've made terrific progress and now believe we will be in a position to complete this transaction here in the third quarter. As for other M and A activity during the second quarter, we completed nine new mergers, representing around $290,000,000 of estimated annualized revenue. For those new partners joining us, I'd like to extend a very warm welcome to the Gallagher family of professionals. Looking at our pipeline, we have around 40 term sheets signed or being prepared representing around $500,000,000 of annualized revenue. Good firms always have a choice and it would be terrific if they chose to partner with Gallagher. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:09:06I'll conclude with some comments about our Bedrock Gallagher culture. During the second quarter, I had the pleasure of spending time with thousands of colleagues across the organization, including more than 500 college students from the sixtieth class of the Gallagher internship program. This rigorous two month sales internship program is an essential investment in our future. And from many my many interactions with this talented group, I am more than confident that our sales culture will remain strong for years to come, and that is the Gallagher way. Okay. I'll stop now and turn it over to Doug. Douglas K. HowellCFO at Arthur J. Gallagher00:09:42Doug? Thanks, Pat, and hello, everyone. Today, I'll walk you through our earnings release and provide some comments on organic growth and margins by segment, including how we are seeing the rest of the year shape up. 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. Douglas K. HowellCFO at Arthur J. Gallagher00:10:07All right. Let's flip to Page three of the earnings release. Brokerage segment organic growth of 5.3% was right in line with our June guidance. With our first quarter organic at 9.5%, year to date, we are at 7.6%. Looking forward to the '25, we see we see third and fourth quarter organic each around 5% plus, which would put full year organic in the six and a half to seven and a half percent range. Douglas K. HowellCFO at Arthur J. Gallagher00:10:37Let me give you four call outs on that. First, recall from our first quarter earnings call and our June, our nine point 5% first quarter organic growth had some positive timing that is now flipping to a headwind in the second half. Second, as we discuss every quarter, organic can be dependent on those large and lumpy life cases. Given the current interest rate outlook uncertainty, clients may accelerate or even delay when to buy new policies. Third is property rates further decreases or on the other hand, a large cat here in wind season causing a quick shift higher would also influence our organic. Douglas K. HowellCFO at Arthur J. Gallagher00:11:14And fourth are casualty rates. We are seeing some lines perhaps bottoming out and other lines continuing to steadily march higher. Looking to Page five of the earnings release to the Brokerage segment adjusted EBITDAC table. Second quarter adjusted EBITDAC margin was 36.4%, up three thirty four basis points year over year and above our June IR day expectations. Let me walk you through our typical bridge from last year. Douglas K. HowellCFO at Arthur J. Gallagher00:11:42First, if you pull out last year's twenty twenty four second quarter earnings release, you'd see we reported back then adjusted EBITDAC margin of 33.1%. Now adjust that using current FX rates, which Rich for this quarter is next to nothing, so just assume adjusted EBITDAC margin levelized for FX would remain at 33.1%. Then organic growth of 5.3% gave us about 60 basis points of expansion this quarter. The rolling impact of M and A used about 40 basis points. The impact of lower rates on fiduciary interest income used about 30 basis points. Douglas K. HowellCFO at Arthur J. Gallagher00:12:24And then interest income on the cash we're holding for Assured Partners added about three forty basis points of margin this quarter. Follow that bridge and it will get you to second quarter twenty twenty five margin of 36.4%. That's great discipline by the teams. As for the second half of the year, we don't see anything that causes to change how we view underlying margin expansion potential. We call it organic greater than 4%. Douglas K. HowellCFO at Arthur J. Gallagher00:12:51We should see some underlying margin expansion. Then say at 6.5% organic, perhaps around 70 basis points of expansion, and at 7.5% organic, 90 basis points of expansion. I would say the same thing looking out towards '26. We have a long list that we will continue to benefit our productivity and quality, including a more stable labor environment, increased returns from our technology spends on client facing sales and service tools, our proven early AI successes, further centralization of back office services, all on top of an industrial strength core operating system that can handle significantly more revenue with marginal cost. So in a sound bite, in any organic environment, we still see significant opportunities to get better, faster, and more productive and therefore and thereby provide higher quality quality offerings to our clients at lower cost. Douglas K. HowellCFO at Arthur J. Gallagher00:13:47Sticking on page five, risk management segment organic at 6.2%. As Pat said, that's a bit better than our expectations due to strong new business revenues from contracts that are incepted in in q two. And for the year, we continue to see organic in that 6% to 8% range. Adjusted EBITDAC margin of 21% was better than our June IR day expectations. And looking forward, we still see full year margins closer to 20.5%. Douglas K. HowellCFO at Arthur J. Gallagher00:14:14Turning now to Page seven of the earnings release and the corporate segment shortcut table. Compared to our June IR day expectations, the adjusted interest in banking line and the clean energy line both were very close to our expectations. The adjusted acquisition cost line related to our typical tuck in acquisitions came in at $0 better, and the adjusted corporate line was $0.04 below. That's solely due to a larger noncash unrealized FX remeasurement loss because the dollar weakened in June. That has already mostly reversed here in July, so it just shows the noise that this can create in our corporate segment results. Douglas K. HowellCFO at Arthur J. Gallagher00:14:54So let's move now from the earnings release to the CFO commentary document that we post on our website. As a general statement, please read the headers and the footers on each page carefully on how numbers in this document include or exclude the impact of Assured Partners. Flipping to page three and our typical modeling helpers, most of the second quarter twenty five actual numbers were close to what we provided back in June. One call out here, a small flip from amortization to to depreciation that cost us about a penny of adjusted EPS. That's simply because we updated opening balance sheet numbers related to our recent acquisition. Douglas K. HowellCFO at Arthur J. Gallagher00:15:31Finally, this page, please look at the FX disclosures for the brokerage and risk management segments as we refine your models. Turning now to page four and the corporate segment outlook for the '25. There's not much change here from what we provided eight weeks ago. So you can flip to page five to our tax credit carryovers. As of June 30, about $685,000,000, which we get over the next few years. Douglas K. HowellCFO at Arthur J. Gallagher00:15:57And recall that those that that benefit flows through our cash flow statement, not through the p and l. Also, no change to the value of these credits from the recent US o b three tax bill, so that's good news. And while I'm at it, there isn't anything concerning to us in the other provisions of the new bill either, so that's good news too. Turning to page six, the investment income table. We've updated our forecast to reflect current FX rates and changes in fiduciary cash balances. Douglas K. HowellCFO at Arthur J. Gallagher00:16:25These numbers assume two future 25 basis point rate cuts, one in September and one in December. You also see, that the interest income associated with Assured Partners financing runs through the third quarter in this table. If we close before that, obviously, that number would come down. Shifting down the page is the rollover revenue table. Only a small change from our June CFO commentary, and that was due to a refinement in the seasonality of revenues from our second quarter twenty five acquisitions, which are more heavily weighted towards first quarter versus second, third, and fourth. Douglas K. HowellCFO at Arthur J. Gallagher00:17:02And then looking forward, you'll see in the pinkish columns to the right, they include an estimated revenues for brokerage and m brokerage m and a closed through yesterday. So there's a our standard reminder, you'll need to make a pick for future m and a. And, also, you'll need to make a pick, for when AP might close. The purple section on that page should help with that. Alright. Douglas K. HowellCFO at Arthur J. Gallagher00:17:22Moving to cash, capital management, and m and a funding. Available cash on hand at June 30 was about $14,000,000,000 and no outstanding borrowings on our line of credit. With our strong second half cash flows, we are in great position to fund another $2,000,000,000 of M and A here in '25 and it's looking like we would have about 5,000,000,000 in '26 before using any stock, all while maintaining a solid investment grade debt rate. Think about that for a minute. Another 7,000,000,000 over the next seventeen months. Douglas K. HowellCFO at Arthur J. Gallagher00:17:52That should allow us to add another 6 to $700,000,000 of EBITDA at a really nice arbitrage. And I'm bullish about this because for twenty years, we've invested in building the chassis that can support billions and billions more of revenue, provide world class service, and enable thousands and thousands of talented producers to win at the point of sale. So our m and a strategy has a fantastic outlook. So a great quarter and first half in the books, and we have an exciting future with AP, organic growth, margin expansion, M and A opportunities, all driven by a talented team with a bedrock culture. Those are my comments. Back to you, Pat. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:18:29Thanks, Doug. Daryl, you want to open up for questions, please? Operator00:18:33Sure. You got it. Thank you. The call is now open for questions. If you have a question, please pick up your handset and press star one on your telephone at this time. Operator00:18:41If 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. Additionally, we ask that each participant limit themselves to one question and one follow-up. Again, that's star one for questions. Our first questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions. Elyse GreenspanManaging Director at Wells Fargo00:19:07Hi, thanks. Good evening. My first question, when was the date that you guys sent the information, the HSR information to the DOJ and responded to that request? And did you get a timing agreement there? Or is it just a thirty day clock that starts once you gave them all the information? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:19:28Well, at least we're we aren't going to give out dates that we did this or did that. We are done responding to their second request and we do continue to engage with them and respond to certain inquiries. And and so the the review is ongoing, so I'm not gonna get into any more real details about timing. But our evaluation of where we stand given the give and take back and forth and given the relationship as it will be in a position to close the transaction during the third quarter. We're very, very excited about it. Elyse GreenspanManaging Director at Wells Fargo00:20:02Thank you. And then my second question, you guys I'm just trying to get a sense with the 5% brokerage outlook for the back half, I guess, you assuming a continuation of just pricing trends that we saw in Q2 and just the slowdown in property in June? And then if I recall from the June IR day, you were talking about some benefits business that was getting pushed to the back half. Is that still the expectation? And then what quarter, are you expecting that might come on? Douglas K. HowellCFO at Arthur J. Gallagher00:20:34Alright. So yeah. So let me just reiterate what I said is that, you know, we we see the next two quarters in the five plus range too, not to be not to quibble over picking at one single number. And, yeah, I think that there's some risk opportunity with the life business. We'll see how that comes out. Douglas K. HowellCFO at Arthur J. Gallagher00:20:50Obviously, sometimes those policies and stuff depending on interest rates with what's what's happening with the Fed holding tight right now, your guess might be as good as mine about whether they accelerate to close or whether they try to wait until a little longer, maybe into next year to to actually accept those policies. So there is some dependency on those large and lumpy life case. Other other things is where those picks are based on what we're seeing in the property environment right now, what we're seeing in the casualty environment right now. And, you know, and again, some of that's influenced a little bit by, you know, the timing that we had, you coming out of the first quarter. Was such a great first quarter. Douglas K. HowellCFO at Arthur J. Gallagher00:21:29There's a little headwind to that in the third and the fourth quarters. Overall, our business, we're excited about it, we think that we could be in that 6.57.5% range for the year. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:21:41And we are heavier in the second quarter on Property than we are the next two. Operator00:21:52Our next questions come from the line of Andrew Kligerman with TD Cowen. Andrew KligermanManaging Director at TD Securities00:21:58Thank you. On the property, Kurt, just heard an an E and S writer say that, you know, we either made the same point as you about June seeing a big drop off, maybe 20 to 30. Is that baked into your guidance for the balance of the year, something along magnitude of 20 to 30% property lines? Or is that just more J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:22:23That's a bad number. That's a bad number. Whoever gave you that number, it's not what we're seeing. Absolutely not even close. So, no, we didn't bake in a 20 or 30% decrease. Andrew KligermanManaging Director at TD Securities00:22:35Great. Douglas K. HowellCFO at Arthur J. Gallagher00:22:35Yeah. We can And property, you know, in that, you know, 7% range, a little bit plus or minus on that in June. You know, probably the pretty heavy quarter during, you know, we think in June. And so I think it's you know, the other thing too is you you gotta understand. Gotta you gotta always remember the difference between our revenues that couldn't include exposure changes also. Douglas K. HowellCFO at Arthur J. Gallagher00:22:59So as property rates might come off, when you talk pure rate, that might be one thing, but our customers are smart. When rates are dropping, they buy more cover. So when we give you a number, when we see property down 7%, that would include rates going down, but exposures are are you know, the the consumption of that of those risks is going up. Andrew KligermanManaging Director at TD Securities00:23:21Got it. And and, you know and and the number I gave you might have been off because it might have been weighted more towards ENS and large large risk. Yep. So then maybe just J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:23:30stop playing on. It's a bad number. It's a bad number. A bad number on large accounts. It's a bad number on middle accounts. It's a bad number on small accounts. Andrew KligermanManaging Director at TD Securities00:23:40Good to hear. And then and then maybe just shifting to your your pipeline. I mean, it sounds really exciting. You've done nine mergers, you know, already. You know, no disruption from Assured Partners. Andrew KligermanManaging Director at TD Securities00:23:54You can just kinda keep going at at your regular pace. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:23:58I tell you what, I I have to agree. If I was an outsider, I'd be pretty impressed. Our machine, and we're in just a great position, is driven by literally hundreds of people in the field around the world talking to folks that they admire and working with people who have been hired by folks to sell their business. And we're on that shortlist of virtually anybody that wants to take a look at possibly selling their enterprise, large or small. Our tuck in acquisition business purchases are not all 50,000,100 million dollars There's lots of twos, fives, tens. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:24:38These are family businesses, and they're not PE roll ups, and 're looking for a home for their people. And I couldn't be proud of the fact that they were still at the high end of that checklist. They wanna know, you know, is Gallagher still the kind of company I'd like to join? And you're exactly right to pick up on the fact that nine closures at the very time that they know we're doing the biggest transaction in our history. So it is a testament to the company. Operator00:25:11Thank you. Our next questions come from the line of Charlie Lederer with BMO Capital Markets. Please proceed with your questions. Charlie LedererVice President - Equity Research at BMO Capital Markets00:25:19Hey, thanks. On the RPC numbers that you gave Pat, would you be able to I I don't think I missed it or I may have missed it, but did did would you be able to give a an all in RPC number? And I guess, what what would that look like with, you know, three q and four q's mix instead of two q? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:25:42Well, the the it'd be about 4%. Douglas K. HowellCFO at Arthur J. Gallagher00:25:45Yeah. I think you're picking up on something, Charles. There seems to be a a a heavy focus on property. You know, property for us in the course of a year might be 35% of our business casually, and we're seeing a steady march of casualty rates going forward. You know, recollection says that casualty is up about 8%, and the mix and the weight of the business. Douglas K. HowellCFO at Arthur J. Gallagher00:26:06So I I think overall, you're seeing a market that's still mid single digits going up in terms of rates. So you're right to sniff out the difference between those two and wonder but the combined number in that, you know, that mid single digits number is still spot for the in your the second part of your question, we see that happening for the rest of the year. We are just in the beginning of wind season. So let's see what happens here. Over the next three months, that could change the market. Douglas K. HowellCFO at Arthur J. Gallagher00:26:35We're at $80,000,000,000 of of cat losses, the biggest first half of the year ever in the history of our business. It's only been five months ago that the tragic California fires were there. I think carriers still have to digest that and how that's impacting their reserves still. There's still development to come out of that. So between the casualty rates still marching higher, property is you're at the plate taking a swing at it. Douglas K. HowellCFO at Arthur J. Gallagher00:27:04We'll see what happens for the rest of the year. Charlie LedererVice President - Equity Research at BMO Capital Markets00:27:08Got it. Thanks. And I guess the 4.7 in base organic, are you expecting acceleration off of that in the back half of the year? Or I guess, are you expecting supplemental and contingents to kinda drive organic a little yeah. Douglas K. HowellCFO at Arthur J. Gallagher00:27:26I I kinda look at base and supplementals together, and that's pushing, like, four, nine, or 5%. So right in there, what we're seeing going forward. The contingents, I think the carriers are doing well. We do well in the environments where carriers do well. So I I think that it's nice to see that base is base and supplemental together still around 5%. Douglas K. HowellCFO at Arthur J. Gallagher00:27:46Supplementals maybe topping that up a little bit. So I I I think you're reading through that right. But, you know, we're holding in there. We're our fee accounts are doing well too. So it wouldn't surprise me that that's the same number the next three quarters or next two quarters also. Operator00:28:08Thank you. Our next questions come from the line of Gregory Peters with Raymond James. Please proceed with your questions. C. Gregory PetersMD - Insurance at Raymond James00:28:15Hey, good afternoon. So I think, Doug, as you're going through in rapid fire formation, your comments, you, alluded to the opportunities that you have to expand margins in all type of organic revenue environments. And I think it's particularly interesting as we think about next year. So could you go back and sort of unpack some of those comments and talk about the drivers, not for this year, but what you're seeing, you know, for '26 and beyond? Douglas K. HowellCFO at Arthur J. Gallagher00:28:51Well, listen. Here's the thing. How about I promise this? I'll give you a little bit more detail in September when we do our IR day on some of those exact points. But in a nutshell, there is a culture of change inside of Gallagher that every day people are waking up and getting after making ourselves better. We know that we've got to get more productive every day. We've got some terrific AI projects that are underway that are starting to show early success. We now have 15,000 associates that that we can use that are in our our centers of excellence that that provide good value to us. Douglas K. HowellCFO at Arthur J. Gallagher00:29:29You know, they are they are the the early founders of of of standardization, centralization that allows us to deploy AI into that information. The technologies we're developing now have kinda toggled from hardening our environment against cyber and against just just uptime and and run times. They're now really enabling the business that that the present lay presentation layers that we're providing our producers that show customers like you bought this and and being on the adviser. Because it's a it's a list of of that keeps going on and on and on. And every time you think the list is gonna get smaller of of opportunities to to get better, it just grows. Douglas K. HowellCFO at Arthur J. Gallagher00:30:11And so we've got a runway for years of how we can make ourselves better. And, you know, the acquisition pipeline feeds that because we're putting more revenue over a cost structure that doesn't change dramatically. C. Gregory PetersMD - Insurance at Raymond James00:30:27Alright. I'll wait till September for more detail. Douglas K. HowellCFO at Arthur J. Gallagher00:30:30I'll do my best. C. Gregory PetersMD - Insurance at Raymond James00:30:31I C. Gregory PetersMD - Insurance at Raymond James00:30:32I guess, I wanna go back to the Assured Partners transaction. I think the last time we were talking about it or you were talking about it, I should say, you you mentioned or highlighted that you had to suspend, I think, 11 of the 13 work streams on the integration process. And with the timing with a little bit more visibility on the timing, have you kick started those sub work streams, or processes for integration back up? I guess, ultimately, what I'm getting here is, you know, we we previously mapped out, you know, some revenue and margin assumptions, for the acquisition. And just wondering if because of this delay, it's called just it's gonna cause a delay in the recognition of some of the the benefits as we start to integrate that operation at the end of this year or next year. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:31:29I think, Greg, it is fair to say we had to suspend some actual work streams that were things like what producers would work with what other producers on accounts, what branches would be sharing what here or there. But we've had, you know, we've had a lot of time, and we have been allowed at the at the senior levels to continue to have dialogue, to work on the plan here. And so it's been we we follow the rules very closely. We've had a longer period of time to review this, and we've been allowed to do more integration planning, just not getting into some of the details of some of these work streams. So I'd say that we're really ready to hit the ground running. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:32:07I think that if you recall when we announced this acquisition, we're very proud of the fact that we said it in its first year would be accretive. We still maintain that. I think we're gonna see a bump in opportunities to sell stuff in geographies and places that we have not been represented. Remember, only '94 with 94% of these acquisitions done by AP, we didn't have a chance at. So these are fresh new bodies that are are, you know, coming on our team. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:32:37Seems like they're very excited, and we're we're looking forward to getting going. Douglas K. HowellCFO at Arthur J. Gallagher00:32:42Yeah. And, Greg, just to clarify, I think you had your numbers backwards. I mean, there were 12 or 13 work streams, and we really had to spend two of them or three of them or something like that. So you're you're you I think if you spoke backwards on that. But I gotta say, like Pat said, is that that we've used this time to get ready when things happen. Douglas K. HowellCFO at Arthur J. Gallagher00:33:01If we're delayed seven months in closing, eight months in closing, maybe we lost two or three months in that journey, to be honest. So we didn't lose the entire time. So we're still bullish on the opportunity to put two great companies together and and and and get a J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:33:15lot of benefit out of it. C. Gregory PetersMD - Insurance at Raymond James00:33:18Got it. Thanks for the clarification on that too, Doug. Douglas K. HowellCFO at Arthur J. Gallagher00:33:20Sorry. Bye. Operator00:33:25Thank you. Our next questions come from the line of Jing Li with KBW. Please proceed with your questions. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:33:32Hi. Good evening. Thank you for taking my question. My first question is on pricing. You mentioned that casualty, some lines bottoming out and some lines getting higher. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:33:47Just curious any specific lines that you wanna pull out. Just kinda wanna know the mix that drives it. Casually, line pricing is, 8% in two q, which is lying with one q, look pretty steady. Do you expect casualty rates going to be flat or bumpy when when it increases from here? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:34:11Alright. Let let me try to answer a little bit of that right off of my script, Chang. I I think we're seeing property down seven, casualty overall up eight, but we did unpack that. General liability is up about four. Commercial auto continues to be up seven and umbrella up 11. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:34:29That tells you a lot about what's going on in the underlying business of underwriters. Package, which is packaged together with other property type covers, is up five, but d and o, interestingly enough, is down three. Workers' comp is up about a point and overall personal lines are up seven. I think that's about as unpacked as we could get for you by line today, and I think that's pretty good data. What I'm seeing in the casualty market is a continuing caution as talked about under our reinsurance report. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:35:03Carriers from a reinsurance perspective are still concerned about prior years. And when they look at that and look forward, they're not willing to throw the to to throw the numbers out to some additional credits that have caused that problem from the past to get bigger. And I think if you add that to Doug's comments, I mean, we're one storm away from the market turning in property. I mean, that so you're in a really interesting time in the market. These carriers are very good at knowing where they are, aren't making money, and they're very determined to try to keep their their revenue coming in above loss cost. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:35:41So it's a good time for us to be talking to clients about all this because they're confused, to be honest with you. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:35:51Got it. Thank you. My second question is on the ES market. One of your competitors kind of mentioned seeing some early signs of business coming back on ES to the the middle market. Are you seeing any similar trend, or or why you're expecting from here? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:36:11Yeah. I would I would tell you this. First of all, every retail broker in the world has game plan number one in a market like this, and that's to reinstitute a direct play to take the wholesale commission away from the wholesaler. Now that's that's a bold statement. There are wholesalers that have helped you write accounts. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:36:31You're gonna work together. So it's not you can't say every single account. But that is clearly a strategy that a retailer will use to not have to split commissions. Douglas K. HowellCFO at Arthur J. Gallagher00:36:41And we're actually seeing in our submissions. Our submission count is actually up. So so when it comes to to opportunities, we're still we're still having a lot of opportunities to to to process in our, obviously, in our wholesale and e and s market. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:36:54Now, also, there's a differentiation between programs and MGA type lines of coverage where you've got something that's in a in an underwriting environment that's excess and surplus. Those are growing nicely right now. They're continuing to grow. So it is a mixed bag. But as you saw in our results, our excess surplus in specialty business was up 7% at a very strong quarter. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:37:19So this is not like all the businesses returning to the primaries. It's a it's a logical balance. Jing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)00:37:29Got it. Thank you so much. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:37:32Thank you. Operator00:37:34Thank you. Our next questions come from the line of David Botemaden with Evercore ISI. Please proceed with your questions. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:37:42Hey, good evening. I just wanted to confirm that in the outlook for 5% plus organic growth in brokerage in the back half of the year that you guys are assuming a continued 7% decline in property RPC? And then maybe if you could help us think through some of the sensitivity around that, if pricing came in maybe a little bit better or if it came in maybe a little bit worse, what sort of impact that might have to organic in the second half? Douglas K. HowellCFO at Arthur J. Gallagher00:38:16Right. So yes, on the first part of the question, we're assuming property pricing that happened in June continuing through the year. But again, we're not as heavily weighted to property in the second half of the year. Second thing, think the sensitivity in it is I think that we lose 40 basis points of organic every time there's a 2% drop in in, rates, without, without any changes in ex including increases in exposure that would come along with that. So it may be down a little bit more because of of the changes in rates, but then because of of increased consumption and people opting back in. Douglas K. HowellCFO at Arthur J. Gallagher00:38:50I think the net impact is is about 40 basis points to for 2% of drop on on net net property. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:39:00Got it. Great. That's that's helpful. And then maybe just following up on that, I think you said in June, is is that different than the down seven or is that more than the down seven? Because I think you said five in April and May and then it was it sounds like June was definitely worse than seven. Yeah. Maybe June being seven for the quarter. Douglas K. HowellCFO at Arthur J. Gallagher00:39:20Yeah. Maybe June was eight or nine, something like that by the time it averages. But July is is we're not seeing that in July. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:39:28Got it. Okay. But you're assuming, like, the the eight, nine in in the outlook going forward? Douglas K. HowellCFO at Arthur J. Gallagher00:39:34You know, I think there's some moderation as you get halfway. Binding property business in in in the middle of the storm season can have so is not gonna get quite the cut that you get it in in earlier. So let's let's see what happens during storm season here. But I think that I think that the carriers have you know, they've got they've got a target of what they wanna write and, you know, I think they may have you know they're gonna hit that harder in the May and June time frame because you get a you get seven months of the unearned premium. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:40:02Right. Nope. That's fair. Thank you. And then for my my second question, and I know it's early, but just wondering, just given all the dynamics within the different lines, I think you had said up 4% to 6% ex property and then obviously everything that's going on in property. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:40:24Any sort of early thoughts in terms of how you're thinking about organic and brokerage in 2026? Douglas K. HowellCFO at Arthur J. Gallagher00:40:30Yes. We're working through that right now. I think that our reinsurance business is still killing it. I think opportunities there. Our benefit business in the first quarter was very good. Douglas K. HowellCFO at Arthur J. Gallagher00:40:42So on a overall year in and year out basis, maybe where we close this year, you know, I I think we got a shot at that next year. You know, wherever we end up this year, we probably could repeat that next year. David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISI00:40:57Got it. Thank you. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:40:59Thanks, David. Operator00:41:01Thank you. Our next questions come from the line of Mark Hughes with Truist Securities. Please proceed with your questions. Mark HughesAnalyst at Truist Securities00:41:08Yeah. Thank you. Good afternoon. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:41:10Hey, Mark. Mark HughesAnalyst at Truist Securities00:41:11Pat, if I heard you properly, think you said workers' comp was up one. Yep. And and if I am looking at it right, it was up five last quarter. I know you said the job growth may not be as robust and maybe there's a little less wage inflation, but anything else impacting that number? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:41:31I'm not seeing it, Mark. I I think comp is surprising to me. The last ten years has been pretty flattish. So I wouldn't read too much into that. We we can unpack it every single quarter, but it's in a pretty tight range of not much movement. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:41:47This is just not an indication of it falling through the floor, and the second in the previous quarter was not an indication of a start to run up. Mark HughesAnalyst at Truist Securities00:41:56The benefits organic, I think you said it was maybe a little bit faster than the overall US retail. Is that right? Do have a specific number on that? Douglas K. HowellCFO at Arthur J. Gallagher00:42:08We didn't provide that, but it might be two points better, maybe a point point and a half better. Mark HughesAnalyst at Truist Securities00:42:16Okay. Very good. Thank you. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:42:18Thanks, Mark. Operator00:42:21Thank you. Our next questions come from the line of Andrew Anderson with Jefferies. Please proceed with your questions. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:42:27Hey, good afternoon. I think I heard you say a 5% organic in Reinsurance, and that's relative to some really strong quarters in recent history. Can you maybe break down just any impact on pricing on that organic number? And would also be interested in hearing maybe any benefit you saw from ILS activity? Douglas K. HowellCFO at Arthur J. Gallagher00:42:46In the second quarter, not much benefit from ILS. We've had a relatively speaking, it's not a big quarter on reinsurance. And just ask your question about the reinsurance 5% again. Maybe I didn't hear you right. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:43:00Just any impact from pricing that was a headwind to that 5%? Douglas K. HowellCFO at Arthur J. Gallagher00:43:05Maybe a little bit, but we're we're seeing some some the carriers are realizing there's some opportunities here that can increase their their purchase of reinsurance, so that that more than offset that. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:43:20Great. And then I think in the the script, you mentioned some early AI successes. Could you maybe elaborate a bit on those? Douglas K. HowellCFO at Arthur J. Gallagher00:43:27Well, listen. I told Greg I wasn't gonna talk about it till September, so that wouldn't be very fair of me to go ahead and answer. Listen. We're we're doing some really Gallagher Bassett is really having some terrific results in their claim submissions. We're starting to do really well with policy review. Douglas K. HowellCFO at Arthur J. Gallagher00:43:42You know, on the back office side, we're starting to get some momentum on on kind of what I call near AI, on bank reconciliations, etcetera, which still you know, we still have a lot of those going on. And so there's a smattering of of of business. But the big things that stand out right now are are claim summarization and policy review. Andrew AndersenVP - Equity Research at Jefferies Financial Group00:44:04Thank you. Operator00:44:08Our final questions will come from the line of Katie Sakis with Autonomous Research. Katie SakysSenior Research Associate at Autonomous Research00:44:13I think I heard you guys mention 7% growth on E and S business in the quarter. Would you be able to break that down a little bit further thinking about the difference between open brokerage and MGAs? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:44:32Yeah. I think the faster grower of the two MGAs programs and open market is clearly MGA business. I don't have a stat really off the top of my head. Let me just look down the table here. Douglas K. HowellCFO at Arthur J. Gallagher00:44:46Yeah. Listen. I can I can tell you this is that the the binding and is up towards double digit? And the the issue you've gotta look at in open brokerage is the submissions are up, but because some of the renewal premiums are flat, it's primarily a property quarter. You know, for me to say that it was flat, that might be a little unfair without context that we're still getting tons of submissions going into the into the open brokerage spot. Katie SakysSenior Research Associate at Autonomous Research00:45:15Thank you. I I appreciate the additional context. And then, just on on thinking about the the closure of the Assured Partners acquisition. I can appreciate that you don't have a whole lot of additional detail for us. But is there any changing in your thinking about the need to potentially divest some parts of that business or offer other remedies in order to get the deal over the finish line? J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:45:40Absolutely not. Katie SakysSenior Research Associate at Autonomous Research00:45:43Excellent to hear. Thank you. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:45:46Thanks, Katie. Okay. I think that's our last question. I've got just a quick thank you for everybody for joining us. I know it's late this afternoon. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:45:53Appreciate it. We feel we had a great 2025. Most importantly, I wanna thank the 59,000 colleagues that we have for all their hard work. Thank you. And to all our clients around the globe, we're proud to be your trusted advisers. J. Patrick GallagherCEO & Chairman of The Board at Arthur J. Gallagher00:46:09Thank you, and thank all of you for joining us. Have a great evening. Operator00:46:14Thank you. That does conclude today's teleconference. We appreciate your participation. You may disconnect your lines at this time. Enjoy the rest of your day.Read moreParticipantsAnalystsJ. Patrick GallagherCEO & Chairman of The Board at Arthur J. GallagherDouglas K. HowellCFO at Arthur J. GallagherElyse GreenspanManaging Director at Wells FargoAndrew KligermanManaging Director at TD SecuritiesCharlie LedererVice President - Equity Research at BMO Capital MarketsC. Gregory PetersMD - Insurance at Raymond JamesJing LiAVP - Equity Research at Keefe, Bruyette & Woods (KBW)David MotemadenMD & Senior Equity Research Analyst - Insurance & Business Services at Evercore ISIMark HughesAnalyst at Truist SecuritiesAndrew AndersenVP - Equity Research at Jefferies Financial GroupKatie SakysSenior Research Associate at Autonomous ResearchPowered by