Gallagher Q4’22 earnings call

Gallagher hosted its Q4 2022 earnings call on Jan 26, 2023. The highlights:

• Posted 16% growth in revenue, 11.7% organic growth
• For the quarter – completed 17 mergers totaling more than $140 million of estimated annualized revenues in addition to announcing its agreement to acquire Buck
• For the year – completed 36 mergers, representing annualized revenue of about $250 million
• Seeing a change in the competitive environment vis-a-vis mergers and acquisitions in the last 60 days – still competitive but the number of bidders is reduced
• Also seeing a more attentive seller to exactly who the buyer is, what the culture is, the strategic value of that buyer compared to 12 months ago
• Gallagher has nearly 45 term sheets signed or being prepared, representing more than $300 million of annualized revenue – it knows not all of these will close
• US retail business posted 8% organic
• New business was a bit better than last year offset somewhat by less nonrecurring business
• Client retention and the combined impact of rate and exposure were both similar to last year’s fourth quarter
• UK businesses, both retail and specialty combined, posted organic of 17% benefiting from new business production, strong retention and the continued impact of renewal premium increases
• Australia and New Zealand – organic was 12%
• Canada was up nearly 9% organically, reflecting solid new business and retention
• Employee benefit brokerage and consulting business – organic was 3%
• Brokerage segment – full year organic came in at 9.7% – this is Gallagher’s best full year Brokerage segment organic performance in decades 
• D&O continues to be the one area where rates are flat to down slightly – in some cases, customers are using the weaker pricing to purchase more limit
• Casualty – prices were up in the single to low double-digit range for most programs, while terms and conditions were more stable
• Not seeing a slowdown in their clients’ business activity
• On the operating expense ratio – it was up in fourth quarter versus ’21 fourth quarter – due to “mostly travel and entertainment, some consulting use and investments in technology”