H1 results: Gallagher broking momentum continues with profit rise

Arthur J Gallagher’s broking division made a profit before tax of $330.2m (£252m) in the first half of 2017, up 19% on the $278.2m it made in last year’s first half.

Earnings before interest, tax, depreciation, amortisation and change in acquisition earn-out payables (EBITDAC) grew 14% to $505.9m (H1 2016: $444.5m).

Gallagher broking revenues in the half were up 6% to $1.88bn (H1 2016: $1.76bn) and organic growth was 3.5%. This puts Gallagher’s organic growth ahead of the big rivals that have reported so far: JLT and Marsh.

Helping the result was a drop in the impact of acquisition integration expenses on net profit to $4.3m from $18.4m.

Second quarter

In the second quarter of 2017 alone, the Gallagher broking profit increased 19% to $212.5m (Q2 2016: $178.2m).

Revenues were up 6% to $998.1m (Q2 2016: $939.1m) and organic growth was 4.2%.

Gallagher chief executive Pat Gallagher (pictured) said: “We delivered another excellent quarter of operating performance and are optimistic about the remainder of the year.

“During the second quarter, we posted outstanding organic revenue growth, completed 9 tuck-in brokerage mergers, expanded margins and grew earnings per share.”

He added: “Our first half renewals, as well as our mid-year internal insurance rate survey, suggest P&C pricing is mostly stable. Almost two thirds of our survey respondents expect no significant change in the 2017 pricing environment. This continues to be an environment in which our talented production team will outperform.”