10-KPeriod: FY2003

Arthur J. Gallagher & Co. Annual Report, Year Ended Dec 31, 2003

Filed February 9, 2004For Securities:AJG

Summary

Arthur J. Gallagher & Co. (AJG) operates as a global insurance brokerage and risk management services firm, with a growing international presence. The company structures its business into three main segments: Brokerage, Risk Management, and Financial Services. The Brokerage segment, which is the largest revenue generator, focuses on placing commercial property/casualty and employee benefits insurance, earning revenue primarily through commissions and fees. The Risk Management segment offers claims management, loss control, and consulting services, also primarily fee-based. The Financial Services segment manages the company's investment portfolio, which experienced a significant write-down in 2003 due to venture capital investments. AJG has demonstrated consistent revenue growth over the past three years, with total revenues reaching $1.26 billion in 2003. The company actively pursues growth through acquisitions, having completed thirteen insurance brokerage firm and one risk management firm acquisitions in 2003. International operations, while representing a smaller portion of total revenue (10% in 2003), are expanding across the UK, Australia, and Bermuda, indicating a strategic focus on global diversification.

Key Highlights

  • 1AJG reported total revenues of $1.26 billion for the fiscal year ended December 31, 2003, reflecting continued growth from prior years.
  • 2The Brokerage segment is the largest contributor to revenue, accounting for approximately 59% of total revenue through commissions and 11% through fees.
  • 3The company has a robust international presence, with operations in eight countries abroad and a network of correspondent brokers in over 100 countries, contributing 10% of total revenues in 2003.
  • 4AJG actively pursued growth through acquisitions, completing thirteen insurance brokerage firm and one risk management firm acquisitions in 2003.
  • 5The company experienced a $25.7 million pre-tax charge in the first quarter of 2003 related to impairments of venture capital investments within its Financial Services segment.
  • 6AJG is a significant player in the insurance brokerage industry, ranked as the fourth largest worldwide and third largest in the United States by total revenues.
  • 7The company's stock is publicly traded on the New York Stock Exchange under the ticker symbol AJG, with consistent quarterly dividend payments.

Frequently Asked Questions

Arthur J. Gallagher & Co. operates through three main segments: Brokerage, Risk Management, and Financial Services. The primary revenue sources are commissions from insurance placements within the Brokerage segment and fees generated from risk management services and brokerage advisory roles.

The company has shown consistent year-over-year revenue growth. Total revenues increased from $888.0 million in 2001 to $1,060.3 million in 2002, and further to $1,263.8 million in 2003.

Arthur J. Gallagher & Co. focuses on growth through both organic expansion and strategic acquisitions. In 2003, the company acquired thirteen insurance brokerage firms and one risk management firm, indicating an active M&A strategy to expand its services and geographical reach.

Yes, the company experienced a significant $25.7 million pre-tax charge in the first quarter of 2003 due to impairments in its venture capital investments within the Financial Services segment. Additionally, the filing notes potential risks associated with certain limited partnership investments where defaults on debt obligations could materially affect the company's financial position.