Gallagher Net Income Up 27% Despite Market Turn

By Mark E. Ruquet

NU Online News Service, July 28, 4:14 p.m. EDT?Arthur J. Gallagher reported second-quarter net income rose 27 percent to $46 million despite softening market conditions, the broker's chief executive said, crediting improved results to a strong mix of business and desire to grow the company.[@@]

The increase for the quarter, which amounted to slightly less than $10 million, amounted to 49 cents a share, compared with $36 million, or 39 cents a share, for the period last year.

Revenues rose 27 percent, or less than $80 million, going from $299 million to $379 million.

"We know how to grow this business regardless of the business cycle," said J. Patrick Gallagher Jr., the Itasca, Ill.-based broker's president and chief executive officer, crediting growth in the firm's risk management area.

For the first half of the year, net income rose 77 percent, or slightly less than $37 million, going from $48 million, or 52 cents a share, to $85 million, or 90 cents a share. Revenues increased 30 percent, or slightly more than $167 million over the period, going from $553 million to $720 million.

Part of its strength was in risk management, which grew 49 percent, or less than $4 million, going from $8 million to $12 million in the second quarter. Brokerage grew 22 percent, or more than $6 million, from $29 million to $35 million in the same period.

"The property-casualty market is softening," declared Mr. Gallagher, noting that some classes of business remain strong, but overall "the market is heading down."

He noted that property business, generally, is off more than 15 percent, but casualty "is a little firmer and umbrella remains flat."

"Regardless of the class, carriers are making it very clear that when given the last look they will, in fact, match the pricing," he continued. "Underwriting restrictions are loosening, terms are improving for our customers, and new players are entering the market, even in tough lines."

In this new market cycle, which he said came faster than the firm expected, Gallagher would be focusing on expense control, new business sales, and retaining its current business to keep the company strong and growing.

Mr. Gallagher revealed that the firm has made 10 acquisitions so far this year, valued at $30 million in annualized revenue. These acquisitions, he added, would contribute to the firm's growth in the future.

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Gallagher Net Income Up 27% Despite Market Turn

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