Arthur J. Gallagher & Co. (NYSE:AJG) reported second-quarter results marked by broad revenue growth, continued acquisition activity and margin expansion, while management maintained its full-year organic growth outlook despite moderating property insurance pricing.
Chairman and CEO J. Patrick Gallagher, Jr. said combined revenue for the company’s Brokerage and Risk Management segments rose 24% in the second quarter, including 6% organic growth. Brokerage revenue increased 26%, with 5% organic growth, while Risk Management unit Gallagher Bassett posted 16% revenue growth and 12% organic growth.
Property pricing moderates, while casualty remains firmer
Management said insurance pricing continued to support growth, though substantially less than in recent years. Gallagher estimated that roughly one percentage point of organic growth was tied to pricing, with new business, client retention, exposure growth and the company’s diversified operations providing larger contributions.
In global retail property and casualty operations, renewal premium changes for the quarter included a 10% decline in property, while casualty lines rose 3%, professional lines rose 1%, workers’ compensation increased 2%, personal lines increased 3%, and package business rose 2%. Excluding property, renewal premium changes rose 3%.
Gallagher said property-market softness was more pronounced during the quarter because of its seasonally heavier property renewal mix. Still, the company said some clients are using lower property pricing to restore coverage, raise limits or improve program structures after prior years of higher premiums and reduced coverage.
In U.S. excess and surplus markets, management described property—particularly catastrophe-exposed property—as highly competitive, while casualty renewal premiums were up in the mid-single digits. The company said submissions and policy counts remained healthy, with complex risks such as data centers, difficult liability exposures and other specialty risks supporting demand for wholesale expertise.
Gallagher Re also reported strong growth across lines and geographies, aided by new business. Management said the reinsurance market remained well-capitalized, creating pricing pressure in property catastrophe coverage, while casualty business remained more disciplined because of loss-cost trends and prior-year development.
Margin outlook and AssuredPartners integration
CFO Doug Howell said that, after adjusting prior-year comparisons for investment income earned on funds held for the AssuredPartners acquisition, adjusted revenue, adjusted EBITAC and adjusted earnings per share for the combined Brokerage and Risk Management segments each rose more than 30%.
Howell said the prior-year figures included $144 million of investment income in the second quarter of 2025 related to funds held for the AssuredPartners transaction, creating comparability issues that will continue into the third quarter.
Risk Management’s adjusted EBITAC margin rose 140 basis points to 22.3%, supported by operational efficiencies. Howell said the company expects third-quarter and full-year 2026 adjusted EBITAC margins for the segment to exceed 22%.
For Brokerage, Howell said the company generated 50 basis points of underlying margin expansion during the quarter and continues to project full-year underlying margin expansion of 40 to 60 basis points. He said AssuredPartners is providing margin lift and that the acquired business generated $222 million of EBITA in the second quarter, in line with the company’s expectations.
Management reiterated expected annualized run-rate synergies from AssuredPartners of $160 million by the end of 2026 and up to $325 million by early 2028. Howell said the company is seeing more revenue synergies than initially anticipated, alongside lower-than-expected incremental costs for technology, real estate and back-office operations as AssuredPartners moves onto Gallagher systems.
Organic growth targets and AI initiatives
Gallagher maintained its full-year 2026 organic growth outlook of 6%, consisting of 5.5% for Brokerage and 9% for Risk Management. The company said AssuredPartners was running at approximately 4% underlying growth, though its contribution is not included in the full-year organic growth outlook because of the timing of the acquisition.
Management attributed Gallagher Bassett’s growth to new business and client retention, while citing investments in data, artificial intelligence and machine learning intended to improve claims outcomes and operating efficiency. Gallagher said the unit has a healthy pipeline and is positioned for another strong year.
Howell said the company expects artificial intelligence to produce incremental savings beyond its normal margin expansion over a three-to-five-year period. He cited potential savings in production, support and back-office costs, while cautioning that some benefits could be offset by other investments. Management does not expect to announce a large standalone transformation program, instead describing AI deployment as part of its ongoing productivity efforts.
M&A pipeline and capital deployment
During the quarter, Gallagher completed seven tuck-in acquisitions representing approximately $63 million in estimated annualized revenue. Its pipeline included more than 30 signed or pending term sheets representing roughly $500 million in annualized revenue.
Since the prior April, the company has completed 38 acquisitions, including Woodruff Sawyer and AssuredPartners. Management said acquisition activity was running at about 80% of its historical average, as sellers adjust to lower valuation expectations. Howell said the company paid about 11.3 times EBITAC for second-quarter acquisitions, or below 10 times when considering identified synergies.
Gallagher repurchased approximately 850,000 shares for about $170 million in the second quarter, bringing repurchases through June 30 to about $480 million. Howell said the company estimates it has nearly $10 billion of capacity to deploy over the next two years through available cash, expected free cash flow and future investment-grade borrowing capacity.
While the company may repurchase shares opportunistically, Howell said management continues to prioritize mergers and acquisitions, citing a strong pipeline and what it views as attractive acquisition multiples.
About Arthur J. Gallagher & Co. (NYSE:AJG)
Arthur J. Gallagher & Co is a global insurance brokerage and risk management firm headquartered in Rolling Meadows, Illinois. Founded in 1927 by Arthur J. Gallagher, the company has grown from a regional broker into an international professional services organization that arranges insurance, provides consulting and designs risk-transfer solutions for commercial, industrial, public sector and individual clients.
The company’s core activities include property and casualty insurance brokerage, employee benefits consulting and administration, and a range of risk management services.
