Broker spent $43.2m on integrating acquisitions

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Arthur J Gallagher’s broking division made a profit before tax of $217.6m in the first half of 2015, up 16.7% on the $186.5m it made in the same period last year.

Earnings before interest, tax, depreciation, amortisation and change in acquisition earn-out payables (EBITDAC) was up 25% to $372.5m (H1 2014: $297.5m).

The broking segment’s total revenues increased by 25.7% to $1.64bn (H1 2014: $1.30bn) and organic growth was 4.2%, putting Gallagher ahead of the large global brokers that have reported results so far.

The acquisitive company also revealed that integrating acquisitions cost it $43.2m in the first half of 2015, almost double the $22.5m cost in the first half of 2015.

In the second quarter alone, Gallagher’s broking division boosted profit before tax by 15% to $156.6m (Q2 2014: $136.2m).

EBITDAC increased 19.4% to $234m (Q2 2014: $195.9m).

Revenue was up 20% to $885.6m (Q2 2014: $737.9m) and organic growth was 4%.

In the second quarter of 2015, Gallagher spent $22.4m on integrating acquisitions, up 40% on the $16m it paid out to integrate acquisitions in the second quarter of 2015. It made 11 new acquisitions during the quarter.

Gallagher chief executive Patrick Gallagher (pictured) said: “Our brokerage segment had an outstanding quarter.”

Commenting on market conditions, he added: “We believe the current rate and exposure environment is rational and still healthy.

“In aggregate across our global book, renewal rates appear to be flat to slightly down in most lines, yet we are seeing modestly increasing exposures.

“This continues to be an environment in which our professionals can demonstrate our expertise and high-quality, value-added service capabilities.”