Arthur J. Gallagher Profits Up In Quarter
By Mark E. Ruquet
NU Online News Service, July 23, 1:52 p.m. EDT ? Arthur J. Gallagher reported strong growth in its insurance brokerage and risk management business in the second quarter and a small decline in the financial services segment.
For the second quarter ending June 30, the Itasca, Ill., insurance broker reported an increase in overall profit of 5 percent, or $1.7 million, going to $36.2 million from $34.5 million for the second quarter last year. Earnings per share rose two cents to 39 cents a share for the period. Revenue increased 12 percent, or $32.2 million, from $266.8 million to $299 million.
The firm's brokerage segment lead net income improvements, increasing by $8 million, or 39 percent, from $20.6 million for the second quarter of 2002 to $28.6 million. Risk management net income rose 28 percent, or $1.7 million, from $6 million to $7.7 million. Financial services net income reported a loss of $100,000 compared to a gain of $7.9 million in 2002 for the three-month period.
Revenues for the brokerage and risk management segments increased 17 percent, or $40.1 million, going from $241 million in 2002 to $281.1 million this quarter. Financial services declined 31 percent, going from $25.8 million in 2002 to $17.9 million.
AJG said the financial services segment decline was due to a $9.3 million non-recurring investment gain in the second quarter of 2002. Without that gain, the financial service for the second quarter of 2003 would have been up $1.4 million, or 9 percent.
In a conference call today, J. Patrick Gallagher, the firm's president and chief executive officer, said he was very pleased with AJG's results and added that the firm "is well positioned for growth." He said he was "bullish" about the firm's third- and fourth-quarter performance.
He said July renewals were difficult and there were some substantial increases for some clients, but overall "it was a good month."
Mr. Gallagher said the insurance industry is seeing some moderation in rate increases, "but strong underwriting with upward pressures remains the rule."
For the six months ending June 30, AJG reported a 30 percent drop in net profit, or $20.1 million, compared to 2002, going from $68.2 million to $48.1 million. Revenues rose 9 percent for the period, or $47.5 million, going from $505.8 million to $553.3 million.
The firm took a charge of $19.3 million in the first quarter to exit investments in venture capital, development stage enterprises and turnarounds. AJG said it no longer planned to make investments in these enterprises.
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