Arthur J. Gallagher (AJG) investor relations material

Strategic Overview and Growth Drivers

• Four core strategies—organic growth, M&A, productivity/quality, and culture—drive long-term performance across diverse insurance markets and economic cycles.

• Organic growth is supported by strong retention, new business wins, and exposure growth, with multiple drivers beyond pricing, including client activity and breadth across product lines and geographies.

• M&A remains a key growth lever, with 21 mergers completed YTD and a robust pipeline; integration of AssuredPartners is ahead of plan, delivering synergies and strengthening capabilities.

• Investments in AI, data, and technology are enhancing productivity, client service, and operational efficiency, with significant margin expansion potential over the next 3–5 years.

• Culture and standardized processes enable successful integration of acquisitions and support scalable, client-focused growth.

Segment Performance and Market Conditions

• Americas retail and specialty operations generated over $5 billion pro forma revenue, with middle-market clients as the core focus; property renewal premiums are down, but casualty and other lines show positive trends.

• International retail and London specialty businesses leverage global expertise, digital tools, and AI to drive growth, with strong retention and new business offsetting competitive pricing, especially in property.

• Gallagher Re delivered 14% organic growth in 2025, with broad-based contributions and continued momentum; market is well-capitalized, with price moderation in property and nuanced trends in casualty.

• Gallagher Benefit Services is seeing increased demand as employers face accelerating healthcare costs, driving opportunities in consulting, analytics, and integrated workforce solutions.

• Gallagher Bassett (risk management) posted 12% organic growth in Q2, with strong retention and new business; AI and data analytics are improving claims outcomes and operational efficiency.

Financial Outlook and Capital Allocation

• Third quarter organic growth is expected at ~6% overall, with brokerage at ~5% and risk management in double digits; full-year guidance now includes AssuredPartners.

• Margin expansion is anticipated from organic growth, M&A scale, centers of excellence, and AI-driven productivity, with 600 basis points of potential improvement over 3–5 years, one-third to be reinvested.

• $10 billion of M&A capacity is available over the next two years, funded by free cash flow and borrowings; tuck-in acquisitions remain the preferred strategy, but larger deals are considered if culturally aligned.

• Integration of AssuredPartners is exceeding expectations, with annualized run-rate synergies now estimated at $325 million by early 2028, more than double initial estimates.

• AI investments are funded within the normal technology budget, with token costs immaterial relative to expected savings.