Arthur J. Gallagher Targets 6% Q3 Organic Growth as Risk Management Accelerates

Key Points

• Gallagher expects approximately 6% companywide organic growth in Q3, supported by about 5% growth in brokerage and double-digit growth in risk management despite easing property-insurance pricing.
• Property renewal premiums declined 6% overall, while casualty pricing remained firm, with casualty premiums up 5%; management said retention, new business, exposure growth and diversified operations are offsetting softer property rates.
• Risk Management Services raised its Q3 organic-growth outlook to about 10%, while Gallagher continues expanding through acquisitions and expects AssuredPartners synergies to reach approximately $325 million by early 2028.

Arthur J. Gallagher & Co. NYSE: AJG said its diversified brokerage, benefits, reinsurance and claims-management operations continue to support growth despite easing property insurance pricing, with the company projecting approximately 6% organic growth in the third quarter.

Chairman and Chief Executive Officer J. Patrick Gallagher Jr. said pricing remains only one component of the company’s growth model. He pointed to strong retention, new-business activity, client exposure growth and the breadth of Gallagher’s operations as additional drivers.

“Our growth is not tied to one product, one geography, or one market condition,” Gallagher said. He said clients are using savings from lower property premiums to increase coverage limits, buy back coverage and improve program structures.

Property Pricing Eases While Casualty Remains Firm

Gallagher described global property and casualty insurance markets as segmented. Property-market conditions are easing as capacity returns, while casualty pricing remains firmer because of loss-cost pressures and underwriting-margin requirements.

Across the company’s property and casualty brokerage businesses during July and August, property renewal premiums declined 6%, while casualty premiums rose 5%. General liability increased 2%, commercial auto rose 4% and umbrella coverage increased 7%. Professional lines, including directors and officers liability and cyber coverage, increased 2%.

Mike Pesch, CEO of Global Brokerage for the Americas, said U.S. retail property renewal premiums declined about 7% in July and August, compared with a 12% decline in the second quarter. He attributed the improvement primarily to renewal timing and business mix rather than a fundamental shift in the property-rate environment.

Excluding property, U.S. retail renewal premium changes were up approximately 4%, including a 7% increase in casualty. Pesch said carriers remain rational, with better-performing accounts receiving premium relief and accounts with weaker loss experience facing higher increases.

During the question-and-answer session, Chief Financial Officer Doug Howell said property represents about 30% of Gallagher’s commission base. About 40% of property revenue comes from large accounts, 40% from middle-market accounts and 20% from small accounts, excluding AssuredPartners. He noted that many large property schedules are fee-based, limiting the direct relationship between changes in premium rates and Gallagher’s revenue.

Business Leaders Detail Growth Opportunities

The company said its Americas retail and specialty operations produced approximately $3.5 billion of revenue in 2025. Including AssuredPartners and Woodruff Sawyer, pro forma revenue would have exceeded $5 billion, according to Pesch. The Americas specialty operation, including Risk Placement Services, affinity products, risk pools, alternative risk and captive management, has more than $2 billion of annualized run-rate revenue with AssuredPartners.

Patrick Gallagher, the company’s chief operating officer, said international retail operations in the U.K., EMEA, Australia and New Zealand generate about $1.6 billion of annual revenue. London specialty generates more than $700 million of annual revenue and places more than $6 billion in premiums annually.

International retail pricing remained competitive, he said. U.K. and Australian renewal premiums were each up about 1%, while New Zealand renewal premiums were down 4%, led by a 6% decline in property. He said London specialty faces ample capacity and intense competition in several lines, though geopolitical developments have increased marine war-risk pricing and, to a lesser extent, aviation pricing in some areas.

Tom Gallagher, president of the company, said Gallagher Re has grown to become the world’s third-largest reinsurance broker, with more than $1 billion in revenue. The business delivered 14% organic growth in 2025, and momentum has continued in 2026, he said. Gallagher Re is seeing price moderation in property and many specialty markets but continued attention to loss trends and program structure in casualty.

In employee benefits, CEO Bill Ziebell said employers are facing higher medical and pharmacy expenses. Fully insured renewals among Gallagher’s largest carrier relationships are running at increases of 15% to 20%, while stop-loss increases are averaging 20% or more. Underlying medical trends for self-funded plans are increasing 10% to 11%, he said.

Gallagher Benefit Services generated around $2.5 billion of annual revenue at the end of 2025 and has more than $3 billion of annualized run-rate revenue following the AssuredPartners acquisition.

Risk Management Raises Organic Growth Outlook

Scott Hudson, president and CEO of Risk Management Services, said Gallagher Bassett generated approximately $1.6 billion of revenue in 2025 and closed more than 1 million property and casualty claims while paying about $18 billion in losses for clients. The third-party claims administrator does not take underwriting risk.

Gallagher Bassett reported 12% organic growth and a 22.3% EBITDAC margin in the second quarter. Hudson raised the segment’s third-quarter organic growth expectation to approximately 10%, with growth potentially near that level for the full year. The company expects risk management EBITDAC margins of about 22% for both the third quarter and full year 2026.

Hudson said claims-frequency trends have remained consistent, while liability-claim severity continues to face upward pressure. Gallagher Bassett is using artificial intelligence tools for severity prediction, fraud detection, litigation prevention and claims summaries. A fraud-detection model identified more than $100 million in potential savings for one client, he said.

M&A Pipeline, AssuredPartners Integration and AI

Gallagher said it completed 21 mergers so far this year, representing about $225 million of estimated annualized revenue. Its pipeline includes more than 30 signed or pending term sheets representing roughly $400 million of annualized revenue.

Management said the AssuredPartners integration is on plan and that the acquired business is performing better than expected. Howell said Gallagher continues to expect approximately $325 million of annualized run-rate synergies by early 2028, above the $160 million initially estimated when the transaction was announced in December 2024.

Howell said Gallagher has close to $10 billion of capacity for acquisitions over the next two years before issuing stock, including expected free cash flow and potential investment-grade borrowing. The company repurchased about $480 million of shares through the second quarter.

Gallagher is also expanding the use of AI across workflows, including policy checking, quote extraction, submission quality, market matching and claims processing. Howell said the company sees potential savings over several years of about 5% in producer and field-sales costs, 10% to 15% in service-layer costs and 20% to 30% in back-office costs. The company expects to reinvest about one-third of those savings, with margin benefits expected to emerge over the next three to five years.

For the third quarter, Howell said Gallagher expects about 5% organic growth in brokerage and double-digit organic growth in risk management, resulting in companywide organic growth of approximately 6%.

About Arthur J. Gallagher & Co. (NYSE:AJG)

Arthur J. Gallagher & Co is a global insurance brokerage, risk management and consulting company. The company helps businesses, institutions and individuals identify, manage and transfer risk through insurance and related services.

Its operations include retail insurance brokerage, employee benefits consulting, risk management, claims administration, actuarial services, captive insurance and wholesale brokerage. Gallagher arranges commercial property and casualty coverage, personal insurance, specialty insurance and employee benefit programs, while also providing services designed to help clients manage workplace, liability and other operational risks.

Founded in 1927 by Arthur J.

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