Arthur J. Gallagher & Co. reported $2.41 billion in second-quarter revenue, up 19.8% over the same period last year, as the brokerage continued to acquire rivals and insurance rate hikes accelerated.
On an organic basis, which excludes the effect of acquisitions, currency fluctuations and interest income, the brokerage’s core brokerage and claims management operations reported a 10.8% revenue increase, said J. Patrick Gallagher Jr., chairman, president and CEO of the company on a conference call with analysts Thursday.
Brokerage revenue rose by 20% in the quarter to $2.09 billion, up 9.7% on an organic basis. It’s U.S. property/casualty retail brokerage business recorded 13% organic growth, U.K. property/casualty was up 11%, Canada up 6% and Australia and New Zealand were up more than 10%, Mr. Gallagher said.
Its reinsurance brokerage operations reported 11% organic growth, wholesale up 10% and U.K. specialty was up 19%.
Risk management revenue, which includes its claims management business, rose to $318.6 million, up 19.1%, or 18.1% on an organic basis.
Gallagher’s net earnings for the quarter declined 17.3% to $235.8 million in part due to lower estimated acquisition earnouts payable for the earlier period.
The brokerage closed 15 acquisitions in the quarter with total annualized revenue of $349.1 million, which includes its acquisition of BCHR Holdings LP, which does business as Buck, which closed in April.
Insurance rate increases accelerated during the second quarter, Mr. Gallagher said. Global second-quarter renewal premiums were up 12%, compared with 8%-10% in the first quarter.
By line, property saw the biggest increases at more than 20%, umbrella rates were up 11%, commercial auto up 8.5%, general liability up 8% and workers comp up 3%, Mr. Gallagher said.
“Most lines are trending similar or higher relative to previous quarters with two exceptions; first is public company D&O, where renewal premiums are lower versus last year, and second cyber, which is flat-to-down slightly year over year,” he said.
Underwriters continue to press for rate increases as properties valuations are adjusted and inflation continues to bite, Mr. Gallagher said.
“No one’s walking in saying the gates are wide open, let’s just get volume,” he said.