Arthur J. Gallagher (AJG) Q2 2024 earnings summary

Executive summary

• Q2 2024 delivered 14% total revenue growth to $2,775.4M, with 7.7% organic growth and net earnings attributable to controlling interests up 21% to $283.4M.

• GAAP EPS rose 15% to $1.27; adjusted EPS up 20% to $2.68, with adjusted EBITDAC margin expanding over 100 bps to 31.4%.

• Completed 12 mergers in Q2 totaling $72M in annualized revenue; 24 acquisitions in H1 2024 added $141.2M, with M&A pipeline exceeding $500M.

• Net new business spread expanded by a full point year-to-date, reflecting strong new wins and retention.

• Declared quarterly dividend of $0.60 per share, a 9% increase over the prior year.

Financial highlights

• Brokerage segment Q2 revenues grew 14% to $2,376.3M with 7.7% organic growth; adjusted EBITDAC margin up 98 bps to 33.1%.

• Risk management segment Q2 revenues rose 13% to $358.6M, organic growth 7.7%, and margin at 20.6%, up 120+ bps.

• Six-month 2024 revenues reached $6,032.1M, up 17% year-over-year; net earnings attributable to controlling interests were $891.8M, up 24%.

• Adjusted EBITDAC for Q2 2024: $784.8M for brokerage (up 18%), $73.9M for risk management (up 20%).

• Compensation expense ratio for brokerage was 58% in Q2; risk management was 61%.

Outlook and guidance

• Brokerage organic growth expected in the 7%-9% range for full year 2024; similar outlook for 2025.

• Risk management segment organic growth forecasted at 9% for 2024 with margins around 20.5%.

• Margin expansion of 90-100 bps expected in H2 2024 for Brokerage; 60 bps for full year (80 bps excluding Buck acquisition).

• Management expects continued property/casualty rate increases for the remainder of 2024, supporting further organic growth.

• Effective tax rate guidance: 24.5–26.5% for brokerage, 25.0–27.0% for risk management.