Re/insurance broker Arthur J. Gallagher & Co. has reported a 7% increase in net earnings during the first quarter of 2021, which stood at $393.7 million, versus $355.4 million for the same period last year.
The result was lifted by 7% organic growth across the brokerage business, with total organic commissions, fees, supplemental revenues and contingent revenues increasing from $1.450 billion to $1.537 billion year-on-year.
The broker’s management attributed the strong organic growth, and resulting boost to earnings, to the favourable pricing environment that has prevailed in recent months.
“We are off to an excellent start in 2021,” said J. Patrick Gallagher, Jr., Chairman, President and CEO. “We posted strong total revenue growth, including excellent organic revenue growth and continued growth from our tuck-in M&A strategy. Combined with our expense discipline, we once again delivered fantastic growth in net earnings and EBITDAC.”
“We are operating in a firm property casualty environment where rates are up in nearly all lines and geographies around the globe, which is consistent with the past few quarters. At this time, we don’t see conditions that would indicate this rate environment would change anytime soon,” Gallagher explained.
“Exposure units also show signs of continued growth as business activity rebounds and unemployment falls. An increasing rate and exposure unit environment is when our team shines by providing clients with the very best insurance, consulting and risk management advice – and our global team remains energized … I believe we are very well positioned for the remainder of 2021!”
Thus far in the second quarter 2021, Gallagher notes that new property and casualty business, retentions and mid-term policy modifications are trending similar to Q1 and are much improved compared to lows seen in April and May 2020, as customers’ businesses continue to recover and economic activity increases.
“So far during second quarter 2021, we continue to see overall property/casualty premium rates move higher and exposure units also trended higher than first quarter 2021,” the broker stated.