Arthur J. Gallagher & Co

Analysis

Business Description

Arthur J. Gallagher & Co (Gallagher) is an international insurance brokerage and risk management services company. The company provides insurance brokerage and third-party claims settlement and administration services to commercial, industrial, public entity, religious and not-for-profit entities.

The company classifies its operations into three reportable segments: Brokerage, Risk Management and Corporate.

Business Segments
Overview

Consists of retail and wholesale insurance brokerage operations.

Retail brokerage operations offers property and casualty insurance, healthcare exchange solutions, employer-provided health and welfare insurance, and retirement solutions for middle-market industrial, commercial, religious, public entity, and not-for-profit entities.

Offers insurance coverage for dental, fire, products liability, directors’ and officers’ liability, general liability, earthquake, marine, professional liability, aviation, disability, life, property, casualty, wind, commercial auto, medical and workers compensation.

Serves large client base including agribusiness, personal, retirement, health and welfare, marine, religious and not-for-profit, aviation and aerospace, healthcare, healthcare analytics, construction, higher education, private equity, scholastic, energy, hospitality, professional groups, technology and telecom, entertainment, public entity, transportation, and global risks.

Wholesale brokerage operations assist brokers, agents, and other unaffiliated brokers in the placement of insurance programs.

Key Stats

As of December 2020,

operated through a network of about 480 sales and service offices in the US and 170 sales and service offices in 49 countries. Provides client service through a network of correspondent brokers and consultants in over 150 countries globally. Wholesale brokerage business operates through about 170 offices in the US and Bermuda.

Performance

Reported revenue of US$5,167.1 million for FY2020, which grew 5.4% YoY, and reported a CAGR of 10.2% during 2016-20. Accounted for 73.8% of the company's revenue in FY2020. Reported net income of US$861.1 million in FY2020, which grew 23% YoY.

Growth in revenue was due to increase in commission and fees income by 8% and 6% in FY2020, resulting from acquisitions made during the year.

Inventore veritatis
Overview

Provides financial information with respect to its debt, external acquisition-related expenses, clean energy investments, and other corporate costs.

Performance

Reported revenue of US$863.1 million for FY2020, which decreased 34.4% YoY, and reported a negative CAGR of 10.6% during 2016-20. Accounted for 12.3% of the company's revenue in FY2020. Reported net loss of US$109.2 million in FY2020, compared to US$97.5 million in FY2019.

Decline in revenue was due to decrease in production of refined coal in FY2020.

Overview

Offers contract claim settlement and administration services to enterprises, which prefer to self-insure few or all of its property and casualty coverage; and for insurance companies, which prefer to outsource few or all of its property and casualty claims departments.

Serves primarily Fortune 1,000 companies, not-for-profit organizations, larger middle market companies, and public entities through the brokerage operations.

Key Stats

In FY2020, managed third party claims through a network of over 65 offices in the US, the UK, Australia, Canada and New Zealand.

Performance

Reported revenue of US$973.4 million for FY2020, which decreased 0.4% YoY, and reported a CAGR of 4.1% during 2016-20. Accounted for 13.9% of the company's revenue in FY2020. Reported net income of US$66.9 million in FY2020, which grew 1.1% YoY.

Decline in revenue was due to decrease in fee income and investment income, resulting due to COVID-19.

Geographical Segments
Performance

Reported revenue of US$314.5 million for FY2020, which grew 5.3% YoY, and reported a CAGR of 6.7% during 2016-20. Accounted for 4.5% of the company's revenue in FY2020.

Inventore veritatis
Performance

Reported revenue of US$249.1 million for FY2020, which grew 10.2% YoY, and reported a CAGR of 16.2% during 2016-20. Accounted for 3.6% of the company's revenue in FY2020.

Performance

Reported revenue of US$154.4 million for FY2020, which decreased 4% YoY, and reported a CAGR of 5.3% during 2016-20. Accounted for 2.2% of the company's revenue in FY2020.

Performance

Reported revenue of US$202.3 million for FY2020, which grew 21.1% YoY, and reported a CAGR of 19.9% during 2016-20. Accounted for 2.9% of the company's revenue in FY2020.

Performance

Reported revenue of US$1,034.4 million for FY2020, which grew 7.4% YoY, and reported a CAGR of 10.7% during 2016-20. Accounted for 14.8% of the company's revenue in FY2020.

Performance

Reported revenue of US$5,048.9 million for FY2020, which decreased 6.1% YoY, and reported a CAGR of 3.6% during 2016-20. Accounted for 72.1% of the company's revenue in FY2020.