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Gallagher views M&A a key growth engine despite Aon / WTW deal collapse

30th July 2021 - Author: Charlie Wood

Gallagher’s Chairman, President and Chief Executive Officer J. Patrick Gallagher, Jr. has underlined the broker’s commitment to mergers and acquisitions as a “proven strategic growth engine,” despite the breakdown of its deal with Aon to acquire chunks of rival Willis Towers Watson.

Gallagher BassettHis comments came alongside Gallagher’s quarterly results statement, which notes a 17% growth of core brokerage and risk management revenue, of which 8.6% is organic.

Net earnings margin improved by 106 basis points; and adjusted EBITDAC margins expanded by 30 basis points.

Gallagher also completed 8 new tuck-in mergers with approximately $70 million of annualised revenues.

Concurrently, Gallagher’s board have authorised the repurchase of up to $1.5 billion of common stock under a new share repurchase plan.

RMS

This repurchase plan replaces the company’s prior repurchase program, of which approximately $1 billion remained.

Net earnings margin improved by 106 basis points; and adjusted EBITDAC margins expanded by 30 basis points.

Gallagher also completed 8 new tuck-in mergers with approximately $70 million of annualized revenues.

“Global P/C rates remain firm overall, and the increases we saw during the second quarter of 2021 were similar to the first quarter,” noted Gallagher.

“At the same time, we are seeing increased economic activity across our client base. Customers are adding coverages and exposures to their existing policies, which is an encouraging sign for the underlying financial health of our clients.

“So as clients and prospects pivot away from controlling costs to growing their businesses and attracting, motivating and retaining their workforce, I believe our talented production staff is well positioned to help our clients navigate the current environment.”

In regards to the broker’s current COVID-19 position, it’s stated that, if economic conditions continue to improve, Gallagher could see favourable revenue benefits in its brokerage and risk management segments and clean energy investments in the third and fourth quarters of 2021 relative to the same quarters in 2020.

However, if economic recovery slows, it could see the favourable revenue and investment returns soften from second quarter 2021 levels.

In conjunction with the termination of its agreement with WTW, the company exercised the special optional redemption feature of its $650 million tranche of 10-year senior notes issued in May.

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