NU Online News Service, April 23, 2:33 p.m. EDT
A combination of new business and high retentions contributed to an 11 percent increase in net income for Itasca, Ill.-based insurance broker Arthur J. Gallagher.
AJG reported net income rose close to $3 million to $29 million versus the same period last year. Earnings per share rose 1 cent to 28 cents a share. Revenues rose 20 percent, or $81 million, to $482 million.
During a conference call with investment analysts, J. Patrick Gallagher Jr., chairman, president and chief executive officer, noted that economic conditions remain difficult with property and casualty rates declining 4-to-6 percent, a soft economy and aggressive competition within the insurance market.
"I'm proud of the fact that this quarter, the Gallagher team proved ourselves up to these challenges; we grew our company and I'm proud of that," said Mr. Gallagher.
The firm reported organic growth in its brokerage segment stood at negative 3 percent and negative 5 percent in its risk management segment in the quarter.
However, Mr. Gallagher said the company's ability to obtain new business while keeping up its high retention rate of business, which stood at 92 percent in the first quarter, as well as a stabilization in insurance rate would reverse the negative trend.
"Our mantra is new business, new business, new business and keep every client we got," he remarked.
On the benefits side of the business, he said the increased cost and sophistication in that arena is great for the firm because more customers are turning to the firm for its expertise.
"Health care reform is certainly controversial, but it is here and our benefits team has responded extremely well," he said, adding that consultants are engaged in helping clients sort through the complexity of the regulations.
The firm, he said, had four acquisitions during the first quarter amounting to $36 million in revenue for the firm. He said the pipeline is very strong, and "I feel good about our opportunities for 2010."
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