NU Online News Service, April 23, 2:33 p.m.EDT

A combination of new business and high retentions contributed toan 11 percent increase in net income for Itasca, Ill.-basedinsurance broker Arthur J. Gallagher.

AJG reported net income rose close to $3 million to $29 millionversus the same period last year. Earnings per share rose 1 cent to28 cents a share. Revenues rose 20 percent, or $81 million, to $482million.

During a conference call with investment analysts, J. PatrickGallagher Jr., chairman, president and chief executive officer,noted that economic conditions remain difficult with property andcasualty rates declining 4-to-6 percent, a soft economy andaggressive competition within the insurance market.

"I'm proud of the fact that this quarter, the Gallagher teamproved ourselves up to these challenges; we grew our company andI'm proud of that," said Mr. Gallagher.

The firm reported organic growth in its brokerage segment stoodat negative 3 percent and negative 5 percent in its risk managementsegment in the quarter.

However, Mr. Gallagher said the company's ability to obtain newbusiness while keeping up its high retention rate of business,which stood at 92 percent in the first quarter, as well as astabilization in insurance rate would reverse the negativetrend.

"Our mantra is new business, new business, new business and keepevery client we got," he remarked.

On the benefits side of the business, he said the increased costand sophistication in that arena is great for the firm because morecustomers are turning to the firm for its expertise.

"Health care reform is certainly controversial, but it is hereand our benefits team has responded extremely well," he said,adding that consultants are engaged in helping clients sort throughthe complexity of the regulations.

The firm, he said, had four acquisitions during the firstquarter amounting to $36 million in revenue for the firm. He saidthe pipeline is very strong, and "I feel good about ouropportunities for 2010."