Arthur J. Gallagher & Co. Announces Fourth Quarter and Full Year 2024 Financial Results

Summary of Financial Results - Fourth Quarter

Revenues Before

Diluted Net Earnings

 Reimbursements

Net Earnings (Loss)

EBITDAC

(Loss) Per Share

Segment

4th Q 24

4th Q 23

4th Q 24

4th Q 23

4th Q 24

4th Q 23

4th Q 24

4th Q 23

(in millions)

(in millions)

(in millions)

Brokerage, as reported

$  2,296.2

$ 2,051.5

$   317.3

$    24.8

$     660.7

$     539.9

$        1.37

$        0.11

Net (gains) losses on divestitures

0.8

(4.0)

0.6

(3.0)

0.8

(4.0)

-

(0.02)

Acquisition integration

-

-

29.2

50.6

39.2

67.3

0.13

0.23

Workforce and lease termination

-

-

23.0

7.1

30.9

9.3

0.10

0.03

Acquisition related adjustments

-

-

39.6

258.2

28.7

34.4

0.17

1.17

Amortization of intangible assets

-

-

121.6

107.4

-

-

0.53

0.49

Effective income tax rate impact

-

-

-

(1.4)

-

-

-

(0.01)

Levelized foreign currency

   translation

-

(6.1)

-

(4.1)

-

(5.5)

-

(0.02)

Brokerage, as adjusted  *

2,297.0

2,041.4

531.3

439.6

760.3

641.4

2.30

1.98

Risk Management, as reported

369.4

340.4

42.8

42.3

72.5

70.2

0.19

0.19

Net (gains) on divestitures

(0.1)

(0.1)

(0.1)

(0.1)

(0.1)

(0.1)

-

-

Acquisition integration

-

-

0.8

0.2

1.1

0.2

-

-

Workforce and lease termination

-

-

2.5

0.8

2.6

1.0

0.01

-

Acquisition related adjustments

-

-

0.1

0.1

0.1

0.2

-

-

Amortization of intangible assets

-

-

2.7

2.3

-

-

0.01

0.02

Levelized foreign currency

   translation

-

(1.6)

-

(0.5)

-

(0.8)

-

-

Risk Management, as adjusted  *

369.3

338.7

48.8

45.1

76.2

70.7

0.21

0.21

Corporate, as reported

14.4

1.2

(101.9)

(106.7)

(46.5)

(95.8)

(0.44)

(0.45)

Transaction-related costs

-

-

14.7

10.1

17.3

12.4

0.06

0.05

Legal & tax related

-

-

-

3.4

-

22.0

-

0.02

Clean energy-related

(5.3)

-

(1.7)

10.9

(2.3)

12.0

-

0.01

Corporate, as adjusted  *

9.1

1.2

(88.9)

(82.3)

(31.5)

(49.4)

(0.38)

(0.37)

Total Company, as reported

$  2,680.0

$ 2,393.1

$   258.2

$   (39.6)

$     686.7

$     514.3

$        1.12

$       (0.15)

Total Company, as adjusted  *

$  2,675.4

$ 2,381.3

$   491.2

$  402.4

$     805.0

$     662.7

$        2.13

$        1.82

Total Brokerage & Risk 

Management, as reported

$  2,665.6

$ 2,391.9

$   360.1

$    67.1

$     733.2

$     610.1

$        1.56

$        0.30

Total Brokerage & Risk 

Management, as adjusted  *

$  2,666.3

$ 2,380.1

$   580.1

$  484.7

$     836.5

$     712.1

$        2.51

$        2.19

*  

For fourth quarter 2024, the pretax impact of the Brokerage segment adjustments totals $287.3 million, mostly due to non‑cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $73.3 million relating to these items.  For fourth quarter 2024, the pretax impact of the Risk Management segment adjustments totals $8.4 million, with a corresponding adjustment to the provision for income taxes of $2.4 million relating to these items.  For fourth quarter 2024, the pretax impact of the Corporate segment adjustments totals $15.0 million, with a corresponding adjustment to the benefit for income taxes of $2.0 million relating to these items.  A detailed reconciliation of the 2024 and 2023 provision (benefit) for income taxes is shown on pages 14 and 15. 

Summary of Financial Results - Year ended December 31,

Revenues Before

Diluted Net Earnings

 Reimbursements

Net Earnings (Loss)

EBITDAC

(Loss) Per Share

Segment

Year 24

Year 23

Year 24

Year 23

Year 24

Year 23

Year 24

Year 23

(in millions)

(in millions)

(in millions)

Brokerage, as reported

$     9,933.8

$  8,637.2

$  1,685.7

$  1,169.4

$3,069.0

$2,595.8

$      7.46

$      5.30

Net (gains) on divestitures

(24.2)

(9.6)

(18.0)

(7.2)

(24.2)

(9.6)

(0.08)

(0.03)

Acquisition integration

-

-

141.9

184.5

190.2

243.7

0.63

0.84

Workforce and lease termination

-

-

88.6

48.0

118.9

63.4

0.39

0.22

Acquisition related adjustments

(26.0)

-

63.9

278.8

121.2

69.3

0.28

1.27

Amortization of intangible assets

-

-

485.8

392.3

-

-

2.16

1.79

Effective income tax rate impact

-

-

-

(4.9)

-

-

-

(0.02)

Levelized foreign currency

   translation

-

3.5

-

(8.3)

-

(9.8)

-

(0.04)

Brokerage, as adjusted  *

9,883.6

8,631.1

2,447.9

2,052.6

3,475.1

2,952.8

10.84

9.33

Risk Management, as reported

1,450.5

1,287.6

174.5

154.0

289.4

253.4

0.78

0.70

Net (gains) on divestitures

(0.1)

(0.4)

(0.1)

(0.3)

(0.1)

(0.4)

-

-

Acquisition integration

-

-

2.1

0.7

2.9

1.0

0.01

-

Workforce and lease termination

-

-

5.9

2.5

7.2

3.4

0.03

0.01

Acquisition related adjustments

-

-

0.2

0.4

0.3

0.5

-

-

Amortization of intangible assets

-

-

9.9

5.6

-

-

0.04

0.03

Levelized foreign currency

   translation

-

(1.0)

-

(0.2)

-

(0.5)

-

-

Risk Management, as adjusted  *

1,450.4

1,286.2

192.5

162.7

299.7

257.4

0.86

0.74

Corporate, as reported

16.3

1.7

(389.8)

(357.4)

(234.0)

(293.6)

(1.74)

(1.58)

Transaction-related costs

-

-

26.3

17.7

32.2

22.6

0.12

0.08

Legal & tax related

-

-

3.5

26.2

-

48.0

0.02

0.12

Clean energy-related

(5.3)

-

(1.7)

10.9

(2.3)

12.0

(0.01)

0.01

Corporate, as adjusted  *

11.0

1.7

(361.7)

(302.6)

(204.1)

(211.0)

(1.61)

(1.37)

Total Company, as reported

$  11,400.6

$  9,926.5

$  1,470.4

$     966.0

$3,124.4

$2,555.6

$      6.50

$      4.42

Total Company, as adjusted  *

$  11,345.0

$  9,919.0

$  2,278.7

$  1,912.7

$3,570.7

$2,999.2

$    10.09

$      8.70

Total Brokerage & Risk 

Management, as reported

$  11,384.3

$  9,924.8

$  1,860.2

$  1,323.4

$3,358.4

$2,849.2

$      8.24

$      6.00

Total Brokerage & Risk 

Management, as adjusted  *

$  11,334.0

$  9,917.3

$  2,640.4

$  2,215.3

$3,774.8

$3,210.2

$    11.70

$    10.07

*  

For the year ended December 31, 2024, the pretax impact of the Brokerage segment adjustments totals $1,021.4 million, mostly due to non‑cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $259.2 million relating to these items.  For the year ended December 31, 2024, the pretax impact of the Risk Management segment adjustments totals $25.0 million, with a corresponding adjustment to the provision for income taxes of $7.0 million relating to these items.  For the year ended December 31, 2024, the pretax impact of the Corporate segment adjustments totals $29.9 million, with a corresponding adjustment to the benefit for income taxes of $1.8 million relating to these items.  A detailed reconciliation of the 2024 and 2023 provision (benefit) for income taxes is shown on pages 14 and 15. 

Organic Revenues (Non-GAAP)

4th Q 2024

4th Q 2023

Year 2024

Year 2023

Base Commissions and Fees

Commissions and fees, as reported

$       2,023.7

$       1,796.8

$       8,886.4

$       7,750.0

Less commissions and fees from acquisitions 

(110.0)

-

(618.2)

-

Less divested operations 

-

(17.4)

-

(57.9)

Levelized foreign currency translation

-

(3.7)

-

5.2

Organic base commissions and fees

$       1,913.7

$       1,775.7

$       8,268.2

$       7,697.3

Organic change in base commissions and fees 

7.8 %

7.4 %

Supplemental Revenues

Supplemental revenues, as reported

$             97.7

$             90.6

$           359.4

$           314.2

Less supplemental revenues from acquisitions

(2.7)

-

(9.4)

-

Levelized foreign currency translation

-

0.1

-

1.1

Organic supplemental revenues

$             95.0

$             90.7

$           350.0

$           315.3

Organic change in supplemental revenues

4.7 %

11.0 %

Contingent Revenues

Contingent revenues, as reported

$             52.5

$             55.4

$           267.6

$           235.3

Less contingent revenues from acquisitions

(3.4)

-

(25.2)

-

Less divested operations

-

-

-

(3.0)

Levelized foreign currency translation

-

(0.3)

-

(0.2)

Organic contingent revenues  

$             49.1

$             55.1

$           242.4

$           232.1

Organic change in contingent revenues

-10.9 %

4.4 %

Total reported commissions, fees, supplemental

revenues and contingent revenues

$       2,173.9

$       1,942.8

$       9,513.4

$       8,299.5

Less commissions, fees, supplemental revenues

and contingent revenues from acquisitions 

(116.1)

-

(652.8)

-

Less divested operations

-

(17.4)

-

(60.9)

Levelized foreign currency translation

-

(3.9)

-

6.1

Total organic commissions, fees, supplemental

revenues and contingent revenues  

$       2,057.8

$       1,921.5

$       8,860.6

$       8,244.7

Total organic change 

7.1 %

7.5 %

Acquisition Activity

4th Q 2024

4th Q 2023

Year 2024

Year 2023

Number of acquisitions closed  

19

13

46

50

Estimated annualized revenues acquired (in millions)

$       188.7

$       350.7

$       362.6

$       826.0

Compensation Expense and Ratios

4th Q 2024

4th Q 2023

Year 2024

Year 2023

Compensation expense, as reported

$       1,291.4

$       1,176.9

$       5,501.4

$       4,769.1

Acquisition integration 

(24.5)

(41.4)

(106.4)

(146.6)

Workforce and lease termination related charges

(26.6)

(7.7)

(108.1)

(56.0)

Acquisition related adjustments

(28.7)

(34.4)

(147.2)

(69.3)

Levelized foreign currency translation

-

1.1

-

11.9

Compensation expense, as adjusted

$       1,211.6

$       1,094.5

$       5,139.7

$       4,509.1

Reported compensation expense ratios using reported 

revenues on pages 1 and 2

*

56.2 %

57.4 %

55.4 %

55.2 %

Adjusted compensation expense ratios using adjusted 

revenues on pages 1 and 2 

**

52.8 %

53.6 %

52.0 %

52.2 %

*   

Reported fourth quarter 2024 compensation expense ratio was 1.2 pts lower than fourth quarter 2023.  This ratio was primarily impacted by savings related to headcount controls, lower integration costs and acquisition related adjustments, as well as the benefit of higher interest income revenues earned on proceeds associated with the AssuredPartners Financing.  These benefits were partially offset by higher workforce and lease termination costs and increased employee benefit costs.  

** 

Adjusted fourth quarter 2024 compensation expense ratio was 0.8 pts lower compared to fourth quarter 2023.  This ratio was primarily impacted by savings related to headcount controls and the benefit of higher interest income revenues earned on proceeds associated with the AssuredPartners Financing, partially offset by increased employee benefit costs.

Operating Expense and Ratios

4th Q 2024

4th Q 2023

Year 2024

Year 2023

Operating expense, as reported 

$           344.1

$           334.7

$       1,363.4

$       1,272.3

Acquisition integration 

(14.7)

(25.9)

(83.8)

(97.1)

Workforce and lease termination related charges

(4.3)

(1.6)

(10.8)

(7.4)

Levelized foreign currency translation

-

(1.7)

-

1.4

Operating expense, as adjusted

$           325.1

$           305.5

$       1,268.8

$       1,169.2

Reported operating expense ratios using reported 

revenues on pages 1 and 2 

*

15.0 %

16.3 %

13.7 %

14.7 %

Adjusted operating expense ratios using adjusted 

revenues on pages 1 and 2 

**

14.2 %

15.0 %

12.8 %

13.6 %

*   

Reported fourth quarter 2024 operating expense ratio was 1.3 pts lower than fourth quarter 2023.  This ratio was primarily impacted by lower integration costs, professional fees, marketing expenses, and travel and entertainment related costs, as well as savings in real estate expenses related to office consolidations.  This ratio was also benefited by higher interest income revenues earned on proceeds associated with the AssuredPartners Financing.

** 

Adjusted fourth quarter 2024 operating expense ratio was 0.8 pts lower than fourth quarter 2023.  This ratio was primarily impacted by lower professional fees, marketing expenses, and travel and entertainment related costs, as well as savings in real estate expenses related to office consolidations.  This ratio was also benefited by higher interest income revenues earned on proceeds associated with the AssuredPartners Financing.

Net Earnings to Adjusted EBITDAC (Non-GAAP) 

4th Q 2024

4th Q 2023 

Year 2024

Year 2023 

 Net earnings, as reported 

$           317.3

$             24.8

$       1,685.7

$       1,169.4

Provision for income taxes

107.7

10.8

573.6

401.6

Depreciation

34.0

33.0

133.1

124.4

Amortization

163.2

142.8

651.0

523.6

Change in estimated acquisition earnout payables

38.5

328.5

25.6

376.8

EBITDAC 

660.7

539.9

3,069.0

2,595.8

Net (gains) losses on divestitures

0.8

(4.0)

(24.2)

(9.6)

Acquisition integration

39.2

67.3

190.2

243.7

Workforce and lease termination related charges

30.9

9.3

118.9

63.4

Acquisition related adjustments

28.7

34.4

121.2

69.3

Levelized foreign currency translation

-

(5.5)

-

(9.8)

EBITDAC, as adjusted  

$           760.3

$           641.4

$       3,475.1

$       2,952.8

Net earnings margin, as reported using reported 

revenues on pages 1 and 2

*

13.8 %

1.2 %

17.0 %

13.5 %

EBITDAC margin, as adjusted using adjusted 

revenues on pages 1 and 2

*

33.1 %

31.4 %

35.2 %

34.2 %

*   

Fourth quarter 2024 adjusted EBITDAC margin would be 32.5% excluding approximately $20 million of interest income revenues earned on the proceeds received in December 2024 related to the AssuredPartners Financing.  

Organic Revenues (Non-GAAP)

4th Q 2024

4th Q 2023

Year 2024

Year 2023

Fees

$           357.6

$           328.7

$       1,405.6

$       1,246.1

International performance bonus fees 

2.6

2.9

8.4

13.6

Fees as reported

360.2

331.6

1,414.0

1,259.7

Less fees from acquisitions

(12.8)

-

(58.2)

-

Less divested operations

-

(2.2)

-

(4.5)

Levelized foreign currency translation

-

(1.6)

-

(1.0)

Organic fees 

$           347.4

$           327.8

$       1,355.8

$       1,254.2

Organic change in fees

6.0 %

8.1 %

Acquisition Activity

4th Q 2024

4th Q 2023

Year 2024

Year 2023

Number of acquisitions closed  

1

1

2

1

Estimated annualized revenues acquired (in millions)

$           9.9

$         59.1

$         23.9

$         59.1

Compensation Expense and Ratios

4th Q 2024

4th Q 2023

Year 2024

Year 2023

Compensation expense, as reported

$           224.7

$           207.5

$           882.4

$           776.8

Acquisition integration

(0.6)

(0.2)

(1.6)

(1.0)

Workforce and lease termination related charges

(1.6)

(0.6)

(4.4)

(2.0)

Acquisition related adjustments

(0.1)

(0.2)

(0.3)

(0.5)

Levelized foreign currency translation

-

(0.6)

-

(0.4)

Compensation expense, as adjusted

$           222.4

$           205.9

$           876.1

$           772.9

Reported compensation expense ratios using reported 

revenues (before reimbursements) on pages 1 and 2 

*

60.8 %

61.0 %

60.8 %

60.3 %

Adjusted compensation expense ratios using adjusted 

revenues (before reimbursements) on pages 1 and 2

**

60.2 %

60.8 %

60.4 %

60.1 %

*   

Reported fourth quarter 2024 compensation expense ratio was 0.2 pts lower than fourth quarter 2023.  This ratio was primarily impacted by savings related to headcount controls, partially offset by higher employee benefit, integration and workforce and lease termination costs.

** 

Adjusted fourth quarter 2024 compensation expense ratio was 0.6 pts lower than fourth quarter 2023.  This ratio was primarily impacted by savings related to headcount controls, partially offset by higher employee benefit costs.

Operating Expense and Ratios

4th Q 2024

4th Q 2023