Summary
This Form 8-K filing by Arthur J. Gallagher & Co. (AJG) on June 25, 2003, primarily addresses changes in financial reporting and segment disclosures. The company is updating its segment reporting to align with Statement of Financial Accounting Standards No. 131, moving from four segments (Brokerage, Risk Management, Financial Services, and Corporate) to three (Brokerage, Risk Management, and Financial Services). Previously reported corporate expenses and assets are now allocated to these three operating segments. This change aims to enhance comparability with prior periods and industry practices. Additionally, AJG is reclassifying how commissions paid to sub-brokers in its retail property/casualty business are reported. These commissions will now be presented as an offset to gross revenues, a change from being reported as other operating expenses. This adjustment aligns with common industry practices and does not impact previously reported net earnings or stockholders' equity, although it will affect the presentation of total revenues and expenses. The filing also provides historical segment financial data for the three years ending December 31, 2002, on this new basis.
Key Highlights
- 1Arthur J. Gallagher & Co. (AJG) is changing its segment reporting structure to three operating segments: Brokerage, Risk Management, and Financial Services, aligning with SFAS 131.
- 2Previously, the company reported four segments, including a 'Corporate' segment. Corporate expenses and assets are now reallocated to the three main operating segments.
- 3Commissions paid to sub-brokers in the retail property/casualty brokerage business will now be reported as a reduction of gross revenues, instead of as other operating expenses.
- 4This reclassification of sub-broker commissions has no impact on net earnings or stockholders' equity but will alter the presentation of total revenues and expenses.
- 5The filing provides historical segment financial data for the three years ending December 31, 2002, presented under the new reporting basis for improved comparability.
- 6The Brokerage segment remains the largest revenue generator, showing significant growth driven by new business, rate increases, and acquisitions.
- 7The Risk Management segment's revenue growth has slowed, impacted by the post-9/11 economic slowdown and reduced claims activity from affected clients.
- 8The Financial Services segment experienced decreased revenues in 2002 primarily due to impairments in its investment portfolio, including marketable securities and venture capital investments.