Gallagher broking profit rises 15% in year to date

Arthur J Gallagher’s broking division made a profit before tax of $491.8m (£372m) in the first nine months of 2017, up 15% on the $427.3m it made in the same period last year.

Broking earnings before interest, tax, depreciation, amortisation and change in estimated acquisition earn-out payables (EBITDAC) increased 13% to $762.4m (nine months 2016: $674.4m).

The Gallagher broking profit increase was driven in part by a 7% jump in revenues to $2.83bn from $2.64bn. Organic growth was 3.5%, putting it just ahead of rival Marsh’s nine-month organic growth.

Gallagher’s broking business has also continued to expand through a series of small acquisitions. The acquisitive group bought 27 brokers in the first nine months of 2017 (nine months 2016: 28), which brought in estimated annual revenue of $129.7m (nine months 2016: $97.8m).

The company is also now benefiting from a far smaller acquisition integration bill now that it has absorbed its big purchases, including UK brokers Oval and Giles.

Acquisition integration cost Gallagher’s broking division just $3m in the first nine months of 2017, compared with $21.5m in the same period last year.

Gallagher as a group also performed well in the period. Profit before tax was up 2.7% to $296m from $288.1m, and EBITDAC increased 8% to $705.6m from $652.3m.

Gallagher chief executive Pat Gallagher said: “Regardless of industry conditions, our talented team will help our clients navigate the current insurance market place, and I believe we are well positioned for a strong finish to 2017, and for another excellent year in 2018.”