Arthur J. Gallagher (AJG) investor relations material

Strategic Priorities and Growth Outlook

• Focus remains on organic growth, M&A, productivity/quality improvement, and maintaining a strong culture.

• Recent acquisition of AssuredPartners is expected to deliver more synergies than initially estimated, with integration underway and significant revenue and cost benefits anticipated.

• Organic growth opportunities are robust across global insurance, reinsurance, human capital, and claims management, supported by a large and growing insurance market.

• M&A pipeline is strong, with 35 mergers completed YTD and nearly 40 more in the pipeline, contributing to long-term strategic growth.

• Productivity gains are being driven by standardized processes, data analytics, and increased digitalization, including AI adoption.

Segment Performance and Market Trends

• Americas P&C operations are seeing continued renewal premium increases, with Q3 organic growth expected at high single digits in specialty, ~6% in U.S. retail, and low single digits in Canada.

• International retail and London specialty units are performing well, with Q3 organic growth in the mid-single digits; London specialty continues to invest in talent and technology.

• Reinsurance brokerage is experiencing double-digit organic growth, expanding product offerings, and leveraging cross-divisional opportunities.

• Employee benefits and HR consulting is growing, with Q3 organic in the low single digits, driven by demand for cost mitigation and talent retention solutions.

• Risk management (Gallagher Bassett) expects Q3 organic growth of ~7% and full-year 6–8%, with strong client retention and new business pipeline.

Financial Guidance and Integration Updates

• Full-year 2025 organic growth for the brokerage segment is projected around 6.5%, with underlying margin expansion of ~70 basis points.

• AssuredPartners' annualized revenue now exceeds $3 billion, with run-rate synergies expected to reach $160 million by late 2026 and $260–$280 million by early 2028.

• EPS accretion from the AP acquisition is estimated at 12–14%, with the effective multiple paid improving due to higher EBITDA and synergy realization.

• Integration costs for AP are split roughly evenly between workforce/retention and operational expenses, with a focus on long-term value creation; total integration costs are $575 million over three years.

• M&A remains a key growth lever, with $7 billion in opportunities targeted through 2026, supported by strong cash flow and tax benefits.