Re/insurance broker Arthur J. Gallagher & Co. has reported 22% growth in net earnings across its brokerage and risk management operations during the third quarter of 2021, ending the period at $275.6 million.
Revenues similarly increased by 17% over Q3, moving from $1.50 billion last year to $1.75 billion, with 10% organic revenue growth.
J. Patrick Gallagher, Jr., Chairman, President and CEO at Arthur J. Gallagher, also assured that the company’s pending acquisition of Willis Towers Watson’s reinsurance arm, Willis Re, remains “on track” to close in Q4.
Looking at the first nine months of the year, net earnings grew by 20% from $756.1 million to 910.5 million, while revenue was up 15% from $4.54 billion to $5.21 billion.
Arthur J. Gallagher noted that an increase in its business activities in the second and third quarters has led to a considerable increase in costs, as the firm returns to normality after the COVID pandemic.
It reported incremental costs of $15 million and $25 million in its brokerage segment relative to the second and third quarters of 2020, and expects to see higher costs again in Q4, relative to the same quarter in 2020, of approximately $30 million.
If the pace of economic recovery accelerates, it could see expense increases greater than the estimate provided, although this would also likely result in favourable revenue benefits in the brokerage and risk management segments.
“We delivered an excellent third quarter!” said Patrick Gallagher. “Global P/C rates remain firm and improved economic activity is leading to additional insured exposure units, positive policy endorsements, and other favorable mid-term policy adjustments.”
“Overall, the P/C premium increases we saw during the third quarter of 2021 were consistent with the first half of the year, and our benefits and HR consulting business saw higher covered lives and growing demand for special project work resulting from the improving employment situation,” he continued.
“Our clients are healthy and focused on growth. Our team is engaged, energized and well positioned to assist clients and prospects as they navigate their growth challenges during a difficult insurance environment.”
