Arthur J. Gallagher insurance brokerage reported second quarter net income is down 29 percent from the period last year--driven down by the firm's agreement to give up its controversial contingent commissions.
The decline in net income amounted to $15.2 million. Net income dropped from $51.8 million or 54 cents a share, to $36.6 million or 37 cents a share. Revenues were off less than 1 percent, or $500,000, going from $371.1 million to $370.6 million.
In May of last year, the Itasca, Ill.-based insurance broker agreed to a $27 million settlement to end a probe by the Illinois Attorney General Lisa Madigan's office into volume-based contingent commission abuses. As part of the agreement, Gallagher gave up taking all contingent commissions. The broker was accused of steering insurance contracts to carriers paying lucrative volume-based contingents.
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