NU Online News Service, Feb. 2, 12:24 p.m. EST
Insurance broker Arthur J. Gallagher reported 2010 fourth-quarter net income more than doubled over 2009 despite the soft insurance market and lingering effects of the economic downturn.
The company reported fourth-quarter net income increased $38 million to $55 million as earnings per share rose from 16 cents a share to 51 cents. Revenues rose 5.5 percent, or $24 million, to $459 million.
During a conference call with financial analysts today, J. Patrick Gallagher Jr., chairman, president and chief executive officer for the Itasca, Ill.-based firm, said the company ended 2010 on a strong note despite the challenges it faced.
"It is tough, tough work getting buyers to buy [insurance] when they are not buying," said Mr. Gallagher.
For the year, AJG's net income rose 35 percent over 2009, or $45.5 million, to $174 million. Earning per share rose from $1.28 to $1.66 a share. Revenues increased 8 percent, or $135 million, to $1.86 billion.
Mr. Gallagher said rates continue to decline, noting that the firm's experience mirrored the fourth-quarter commercial property and casualty survey produced by the Council of Insurance Agents & Brokers. That survey said average market rates showed a decline of more than 5 percent.
Despite that, Mr. Gallagher said there were some signs of improvement in the economy that would only help the firm grow business. While clients are not doing a lot of new hiring, he said there is a feeling that things are at the least "at the bottom" and sounded a note of optimism that there are growing signs of stabilization in the economy.
"We hope there will be some upturn here," he said.
Other signs of stabilization occurred in the firm's organic growth in the brokerage segment, which stood at zero for the quarter and was down 2 percent overall for the year, consistent with the previous year.
However, organic growth improved in the risk management segment, Gallagher Basset subsidiary, rising from negative 4 percent for the fourth quarter of 2009 to zero in 2010. For the year, risk management organic growth stood at negative 3 percent compared to negative 1 percent for 2009.
The company reported a total of 19 acquisitions for all of 2010, amounting to annualized revenue of $145 million.
Among some of the areas where the company is seeing growth, according to Mr. Gallagher, is in benefits and international business. He described these as strong growth areas for the firm.
AJG also profited from its investment in clean-coal plants with expected reductions in emissions and earned $7.5 million for the year.
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