Insurance and reinsurance broker, Arthur J. Gallagher & Co., has reported net earnings of $439 million for the first quarter of 2022, compared with $394 million a year earlier, as revenues before reimbursements increased to $2.4 billion.
Once you include the benefits of acquisition integration, workforce and lease termination, acquisition related adjustments, and the amortization of intangible assets, brokerage net earnings, as adjusted, amounts to $613.3 million, compared with $453.8 million a year earlier.
The brokerage segment recorded commission and fees of almost $2 billion in Q1 2022, as organic base commission and fees spiked by 9.4% to $1.6 billion.
In the broker’s risk management segment, revenues before reimbursements increased from $220 million in Q1 2021 to $259 million in Q1 2022.
The division recorded net earnings of $23.9 million compared with $18 million a year earlier. On an adjusted basis, the risk management unit produced net earnings of $25.6 million in Q1 2022, against $21.4 million in Q1 2021.
In corporate, Gallagher has reported a net loss of $49 million compared with a gain of $11.3 million a year earlier. On an adjusted basis, the corporate arm fell to a net loss of $39.5 million, compared with a gain of $11.3 million a year earlier.
In its Q1 2022 results announcement, the firm has commented on the situation in Ukraine and its potential exposure. Gallagher does not have any offices or direct operations in either Ukraine or Russia. And while the firm had a small number of clients based in or with operations in Russia, those relationships have been suspended and Gallagher is no longer providing services to these clients.
Currently, Gallagher estimates that these actions will adversely impact the full-year 2022 brokerage segment annual revenues by up to $10 million.
J. Patrick Gallagher, Jr., Chairman, President and CEO, commented: “We had a fantastic start to 2022!. Our core brokerage and risk management segments combined to post 30% growth in revenue, including more than 10% organic revenue growth and $380 million of acquired rollover revenues. Our bottom line results were equally as strong with net earnings growth of 28%, adjusted EBITDAC growth of 34% and adjusted EBITDAC margin expansion of 55 basis points.
“During the quarter, we completed 5 new tuck-in mergers with approximately $32 million of annualized revenue, and we were recognized by the Ethisphere Institute as one of the World’s Most Ethical Companies for the 11th year in a row!
“Overall, first quarter rate and exposure increases were broad-based, driven by firm global P/C rates across nearly all geographies and lines of business, and our clients’ continued growth. First quarter 2022 global P/C renewal premium increases of 8% were consistent with fourth quarter levels adjusting for line of coverage seasonality. Additionally, the extremely tight labor market is favorably impacting our benefits and HR consulting business, resulting in more project work and higher covered lives as well as contributing to increased new arising claims for our risk management business.
“Looking ahead, we see robust demand for our services continuing as clients look to manage their risk and human capital challenges. Our team has the expertise, the service capabilities, and the desire to help clients and prospects navigate the current environment!”