Giles integration cost Gallagher £1.6m in Q4
Broking group Arthur J Gallagher cut management and support staff in the fourth quarter of 2013 despite boosting annual profits by 38%.
The US broking group also revealed that integrating last year’s Giles acquisition cost it £1.6m in the quarter.
Gallagher said the cuts, which it did not quantify, were the result of its acquisition programme and subsequent centralisation efforts.
They will fall mainly on its international division.
The cuts resulted in a $6.6m expense in its brokerage segment results and a $1.5m charge in its risk management segment.
The broker added that it expects the job cuts to result in $9m of annual savings for the brokerage segment and $2.3m of savings for the risk management segment.
Gallagher made a profit of $268.6m for the full year of 2013, up 38% on the $195m it made in 2012.
Total group revenues increased 26% to $3.2bn from $2.5bn.
The group’s core broking segment made a profit of $204.8m in 2013, up 31% on 2012’s $155.8m.
Organic growth of base commissions and fees for 2013 was 5.6%, up from 4.4% in 2012.
Fourth quarter performance
In the fourth quarter of 2013 alone, Gallagher made a group profit of $60m, up 79% on the $33.5m it made in 2012’s fourth quarter.
Revenues were up 32.2% to $890.2m from $673.2m.
Fourth quarter brokerage segment profit increased 60% to $50.5m from $31.5m.
Organic growth was 5.8%, compared with 5.2% in the fourth quarter of 2012.
Gallagher chief executive Patrick Gallagher said: “We had an excellent quarter to finish an outstanding year, and we are well positioned for 2014.”
Gallagher spent $6.8m in total on acquisition integration in the fourth quarter of 2013. $4.1m of the expense related to its acquisition of New Jersey-based broker Bollinger.
The results also revealed an acquisition slowdown. Gallagher completed 30 deals in 2013, compared with 58 in 2012.
However, the value of the deals was higher in 2013. Acquisitions netted Gallagher $369.9m of annualised revenue in 2013, up from $231.3m in 2012.
Gallagher is in exclusive talks to buy Oval, and has been tipped as being interested in buying Heritage Insurance Brokers.