J. Patrick Gallagher Jr.
Chairman, President and Chief Executive Officer at Arthur J. Gallagher & Co.
Thank you, operator, and good afternoon, everyone, and thank you for joining us for our third quarter 2022 earnings call. On the call for today is Doug Howell, our CFO, as well as the heads of our operating divisions.
Before I get to my comments about our financial results, I'd like to acknowledge the damage and devastation caused by Hurricane Ian. Our professionals are working diligently to help our clients sort through their coverages, file claims and ultimately get losses paid. At the same time, many of our own colleagues are doing the same for themselves. Our hearts -- hearts go out to all of those impacted by the storm. In the aftermath of events such as Ian, the insurance industry's role and response is paramount to help families, businesses and communities restore their lives. I'm really honored to be part of an industry with such important responsibility.
Okay, and to my comments regarding our third quarter financial performance. For our combined brokerage and risk management segments, we posted 15% growth in revenue, 8.4% organic growth, net earnings growth of 12%, adjusted EBITDAC growth of 15% and we completed or signed seven mergers in the quarter totaling about $60 million of annualized revenues. Another fantastic quarter by our team.
Let me give you some more detail on our third quarter performance starting with our brokerage segment. During the quarter, reported revenue growth was 16%, of that 7.8% was organic. That's right in line with our September IR Day expectations when we preview -- previewed, there would be about a full point of headwind related to timing from a tough 2021 comparison within our benefits business. Acquisition rollover revenues were a $162 million. Net earnings growth was a 11%. And we posted adjusted EBITDAC margins of 32.3%, a bit better than our IR Day guidance. Another excellent quarter for our brokerage team.
Focusing on brokerage segment organic, it continues to be broad based by both business and geography. Let me walk you around the world and provide some more detailed commentary. Starting with our PC operations. Our US retail business posted 9% organic, with strong new business and solid client retention, both consistent with last year's third quarter. Risk Placement Services, our US wholesale operations also posted organic of 9%. This includes more than 20% organic in open brokerage and about 5% organic in our MGA programs and binding businesses. New business was strong at more than 27% of prior-year revenue and retention was consistent with last year's third quarter.
Shifting outside the US. Our UK businesses posted organic of 15% with excellent new business production and retention. Australia and New Zealand combined, organic was 9%. New business production remained very strong and retention improved relative to last year's third quarter. Canada was up 13% organically and continues to benefit from renewal premium increases, robust new business and consistent retention.
Moving to our Employee Benefit Brokerage and Consulting business. As I mentioned earlier, as we signaled last quarter and again at our September IR Day, our benefits business faced a tough organic comparison this quarter. Recall that due to last year's upward development in covered lives as employers resumed hiring coming out of the depths of the pandemic. Leveling for that, our benefits business organic was about 3%. That's consistent with our IR Day expectations and includes strong growth within our HR benefits consulting units and solid growth in our international businesses.
And before I conclude my organic comments, let me give you a quick update on our December 21 reinsurance acquisition. Third quarter revenues were right in line with our expectations, and while not included in our brokerage segment organic yet, after controlling for great breakage -- breakage prior to closing, organic was around 8%, that's just outstanding. With expected revenues and EBITDAC for full-year unchanged, reinsurance continues to be a fantastic story. So headline brokerage segment all-in organic of 7.8% and around 9% after controlling for the benefits comparison, either way, an outstanding organic quarter.
Next, let me give you some thoughts on our current PC market environment. Starting in the primary insurance market. Overall, global third quarter renewal premiums that's both rate and exposure combined were up 10.5%, that's a bit higher than the renewal premium change in the first half of 2022. As for a rate, most lines of business and geographies saw increases in the third quarter similar to the first half, with only one exception being D&O, where rates are now closer to flat, but our customers are buying more limits. Additionally, our customers' third quarter business activity was not reflective of any economic slowdown. In fact, revenue related to the third quarter midterm policy endorsements, audits and cancellations combined were above the third quarter 2021 levels.
Looking ahead, thus far in October, midterm policy endorsements and audit adjustments remain higher than last year's level, and renewal premium increases are also consistent with the third quarter. But remember, our job is to help our clients mitigate that overall 10% increase in premiums by developing creative risk management solutions that fit with their budgets.
Let me move to the reinsurance market. Let me provide you with some broad observations regarding the upcoming 2023 reinsurance renewal season. First, there is no question that rates, terms and conditions will vary depending on geography, individual seen loss history, risk characteristics and line of business. Second, pricing on peak zone property catastrophe cover is moving higher, and tightening terms and conditions are highly likely. Third, while we haven't witnessed the impact of Hurricane Ian spillover to non-property lines yet, it is possible that that could happen if there is a broad shift in reinsurance risk appetite and capacity deployment strategies. Fourth and finally, the amount of property reinsurance capacity available remains an open question. Some reinsurance providers had already planned to pull back their cat capacity priority in.
And now it is likely there's significant level of ILS capital will be trapped into 01/01 renewals, further pressuring potential capacity. Ultimately, supply will depend on expected returns from changes in pricing, terms and conditions, and perhaps, expected returns will reach a level that will attract additional reinsurance capital. While we have yet to see any significant third-party capital in -- into the market, given ILS capital to move quickly there is still time before the January renewal season. This will play out over the next two months, but at this point, it seems the stage is set for a hard or even harder reinsurance market as we enter the important 01/01 renewal season. Reinsurance conditions will no doubt influence primary markets in 2023, and carriers were already facing rising loss costs in property and casualty lines. We see a good reason for our carrier partners to continue to underwrite retail and wholesale risks cautiously for the foreseeable future.
Moving to our Employee Benefit Brokerage and Consulting business, US labor market conditions remain tight, but broadly favorable. During August, while US employers reduced job openings by a 1 million positions, there's still more than 10 million job openings according to the most recent data. And the level of open jobs remains well above the nearly 6 million people unemployed and looking for work as of the end of September. So we see tight US labor market conditions lingering for some time and expect strong demand for our HR and benefits consulting services to continue as businesses prioritize attracting, retaining and motivating their workforce.
Let me wrap up my brokerage segment organic comments with three terrific quarters in the books. Year-to-date brokerage organic growth stands at 9.3%. And as I look to the fourth quarter, I see us posting another quarter above 9% that would deliver a fantastic year.
Moving on to mergers and acquisitions. During the third quarter, we completed six new tuck-in brokerage mergers representing about $20 million of estimated annualized revenues. We also signed another merger late in the third quarter representing an additional $40 million of estimated annualized revenues. 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. As I look at our tuck-in merger and acquisition pipeline, we've about 50 term sheets signed or being prepared representing nearly $400 million of annualized revenue. We know that all of these will close. However, we believe we'll get our fair share.
Next, I'd like to move to our Risk Management segment, Gallagher Bassett. Third quarter organic growth was 12.2%, a strong finish to the quarter, pushed organic a bit higher than our IR Day expectations. We also continued to benefit from increases in new arising claims across general liability and core workers' compensation during the quarter. That's both on an organic existing client basis and also due to some recent new client wins, including the significant insurance company client we added to our fast-growing insurance carrier practice. And profitability remains excellent.
Third-quarter adjusted EBITDAC margin was 18.2% in line with our expectations. That would have been closer to 19% without the impact from the new large client ramp-up that we spoke about at our September IR meeting. Looking forward for the fourth quarter, we believe organic revenue growth will be about 10% and adjusted EBITDAC margins between 18.5% and 19%, that would close out a great year for the Gallagher Bassett team.
And, I'll conclude my remarks with some thoughts on our bedrock culture. October 2nd marks Gallagher's 95th Anniversary. I took note on that day that our teams were hard at work helping our clients assess damage, file claims, and ultimately start to repairing and rebuilding process from Ian. And if not directly assisting individuals and communities impacted, many Gallagher colleagues around the world donated their own money to help those impacted by Ian. What a fitting way for us to soundly celebrate this incredible milestone.
My grandfather would be proud of the company he founded. The employees that embody the culture he started in the industry in which we toil. It's our people's actions in challenging times that bring our unique Gallagher culture to the forefront. A culture that we believe will thrive for another 95 years.
Okay, I'll stop now and turn it over to Doug. Doug?
