J. Patrick Gallagher, Jr.
Chairman and Chief Executive Officer at Arthur J. Gallagher & Co.
Thank you. Good afternoon. Thank you for joining us for our first quarter '24 earnings call.
On the call with me today is Doug Howell, our CFO; and other members of the management team, and the heads of our operating divisions.
We had a great first quarter to begin 2024. For our combined brokerage and risk management segments, we posted 20% growth in revenue, our 13th straight quarter of double-digit growth, 9.4% organic, merger and acquisition rollover revenues of approximately $250 million. We also completed 12 mergers, totaling nearly $70 million of estimated annualized revenue. Reported net earnings margin of 21.5%. Adjusted EBITDAC margin of 37.8%. GAAP earnings per share of $3.10. And adjusted earnings per share of $3.83, up 17% year-over-year. So another terrific quarter by the team.
Moving to results on a segment basis, starting with the brokerage segment. Reported revenue growth of 21%. Organic growth was 8.9%, and about 10% if you include interest income. Adjusted EBITDAC was up 18% year-over-year. And we posted adjusted EBITDAC margin of 39.9%, a bit better than our March IR Day expectations.
Let me give some insights behind our brokerage segment organic. And just to level set, the following figures do not include interest income. Our global retail brokerage operations posted 7% organic. Within our PC operations, we delivered 7% in the United States, 6% in the UK, 2% in Canada, and 8% in Australia and New Zealand. And our global employee benefit brokerage and consulting business posted organic of about 8%, including some large life case sales that were completed in late March.
Shifting to our reinsurance wholesale and specialty businesses, overall organic of 13%. This includes Gallagher Re at 13%, UK Specialty at 10%, and U.S. wholesale at 13%. Fantastic growth, whether retail, wholesale, or reinsurance.
Next, let me provide some thoughts on the PC insurance pricing environment, starting with the primary insurance market. Global first quarter renewal premiums, which include both rate and exposure changes, were up about 7%. Renewal premium increases continue to be broad-based up across all of our major geographies in most product lines. For example, property was up nearly 10%, umbrella up 9%, general liability up 7%, workers comp up 2%, package up 8%, and personal lines up 13%. So many lines are seeing sizable increases.
There are two exceptions within professional lines. First, where renewal premiums are down about 5%; and second, cyber, where renewal premiums are flattish. These two lines appear close to reaching a pricing bottom, but combined represent around 5% of our PC business globally. So overall, our clients continue to see insurance costs increase. But our job as brokers is to mitigate these increases and deliver comprehensive insurance programs that align with their risk appetite and fit their budget.
Moving to the reinsurance market. First quarter dynamics were dominated by the January 1 renewal season where we saw stable pricing and increased demand for property CAD cover. Reinsurers continued to exercise discipline and met the increased client demand with sufficient capacity. Importantly, the team was able to secure many new business wins while retaining most of our existing clients.
During April renewals, reinsurance carriers maintained their discipline, and with increased demand and stable pricing we saw more coverage being purchased. Within property, more capacity was available at the top end of programs, and the quoting renewal process was disciplined and predictable. The casualty treaties market saw stable pricing overall, however, carriers able to differentiate themselves through good management of prior year reserves were able to secure better reinsurance placements.
Specialty class renewals were a bit more complex with some changes in terms and conditions, however, many clients were able to secure modestly lower pricing. With that said, the tragedy in Baltimore may cause reinsurance carriers more pricing resolve throughout the rest of the year. Those interested in a more detailed commentary on January or April renewals, can find our first new market reports on our website.
In our view, insurance and reinsurance carriers continue to behave rationally. Carriers know where they need rate by line, by industry, and by geography. We are seeing this differentiation in our data. Premiums are increasing the most where it's needed to generate an acceptable underwriting profit. A great example of this is primary casualty where we are seeing renewal premiums moving higher. Global first quarter umbrella and general liability renewal premium increases are in the high-single-digits, including 9% increases in U.S. retail.
AM Best recently maintained its negative outlook on the U.S. general liability insurance market due to worsening social inflation, medical expenses and litigation financing. We've been highlighting these dynamics for a while, along with hearing concerns around historical reserves, which leads us to believe further rate increases are to come in casualty.
At the other end of the spectrum we have property, as insurance and reinsurance carriers believe they are getting closer to price and exposure adequacy, we are seeing property renewal premium increases moderating. With that said, first quarter insurance renewal premiums were still pushing double-digits. As we look out for the remainder of the year, increased frequency or severity of catastrophes could again move the market in '24. And while capacity was very challenging to come by during '22 and '23, we're now finding when clients are looking to add coverage or limits carriers are more than willing to provide additional cover.
Notably, we are not seeing a change in the underwriting standards from our carrier partners. While continued premium increases seem rational to our carrier partners, our clients have experienced multiple years of increased cost, having a trusted advisor like Gallagher to help businesses navigate a complex insurance market by finding the best coverage for our clients, while mitigating price increases. That's what we do.
Moving to our customers' business activity. Overall, it continues to be solid. During the first quarter, our daily indications showed positive mid-year policy endorsements and audits ahead of last year's levels across most geographies. So we are not seeing signs of a broad global economic slowdown. Within the U.S., the labor market remains tight. Non-farm payrolls continue to increase and more people are reentering the workforce, yet there continues to be nearly 9 million job openings. Wage increases have persisted, at the same time medical cost trends are rising. With these dynamics, employers are focused on total reward strategy to help them achieve their human capital goals, while reining in costs. That's why, I believe, our benefits businesses will have terrific opportunities in '24.
Overall, we continue to win new brokerage clients while retaining our existing customers. In fact, our new business production has been on an upward trend in recent quarters, and our retention is holding. We believe this is a direct reflection of our client value proposition. Core 360 and Gallagher better works, our niche experts service and our data and analytics. Don't forget, we're competing with someone smaller than us 90% of the time, these local brokers just can't match the value we provide. So putting it all together, we continue to see full-year '24 brokerage organic in the 7% to 9% range, and that would be another outstanding year.
Moving on to our risk management segment, Gallagher Bassett. Revenue growth was 19%, including organic of 13.3% and rollover revenues of $14 million. Adjusted EBITDAC margins were 20.6%, up 140 basis points versus last year, and a bit better than our March IR Day expectations. Our results continued to reflect solid new business and outstanding retention, continued increases in new arising claims across both workers comp and liability, and resilient customer business activity. Looking forward, we continue to see '24 full-year organic in the 9% to 11% range, as our larger '23 new business wins have been onboarded. And we now expect the full-year margin of approximately 20.5%, that would also be another outstanding year.
Shifting to mergers and acquisitions. We had an active first quarter, completing 12 new mergers, representing about $70 million of estimated annualized revenue. I'd like to thank all of our new partners for joining us, and extend a very warm welcome to our growing Gallagher family of professionals. Looking ahead, our pipeline remains strong. We have around 50 term sheets signed or being prepared, representing around $350 million of annualized revenue. Good firms always have a choice, and we'll be very excited if they choose to join Gallagher.
Let me conclude with some comments regarding our bedrock culture. It's a culture that has remained constant through the decades of incredible growth. This is largely due to the 25 tenants of the Gallagher Way, which is entering its fifth decade next month. It is deeply rooted in the values of integrity, ethics and trust which have been guiding us since 1927. Our culture is not just a differentiator, it's a competitive advantage. It attracts the right talent to our organization and the best merger partners, and enables us to build enduring relationships. What makes me particularly proud is that I witness our culture in action every day, as our employees demonstrate their commitment to our clients. And that is the Gallagher way.
Okay, I'll stop now and turn it over to Doug. Doug?
