Arthur J. Gallagher & Co. Quarterly Report for Q1 Ended Mar 31, 2012

Summary

Arthur J. Gallagher & Co. reported solid revenue growth for the first quarter of 2012, driven by both organic increases and strategic acquisitions. Total revenues increased by 21% compared to the prior year's first quarter, reaching $546.8 million. This growth was primarily fueled by the brokerage segment, which saw a significant rise in commissions and fees. The company also demonstrated improved profitability, with net earnings more than doubling year-over-year to $28.1 million, translating to a diluted EPS of $0.24, up from $0.14 in the same period last year. Acquisitions continue to be a key driver of expansion, with twelve new firms integrated during the quarter, adding $30.6 million in annualized revenues. The company's strategic focus on both domestic and international markets appears to be paying off, with international operations contributing 19% of revenues. While the company faces ongoing economic headwinds, the firming insurance market and its diversified business segments position it for continued growth.

Key Highlights

• 1Total revenues increased by 21% to $546.8 million for the quarter ended March 31, 2012, compared to $447.4 million in the prior year period.
• 2Net earnings more than doubled to $28.1 million from $15.2 million in the first quarter of 2011.
• 3Diluted earnings per share rose to $0.24 from $0.14 year-over-year.
• 4The company completed twelve acquisitions in the quarter, adding significant annualized revenue and expanding its market presence.
• 5Organic growth in commissions, fees, and supplemental commissions was 3.5% in the brokerage segment and 7.0% in the risk management segment.
• 6The clean energy investments segment contributed $7.2 million to net earnings, highlighting diversification benefits.
• 7Total assets grew to $4.60 billion as of March 31, 2012, from $4.48 billion as of December 31, 2011.

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