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Mar 31, 2020
Arthur J. Gallagher Q1 2020 Earnings Report
Arthur J. Gallagher reported first quarter results, showing resilience despite the economic impact of COVID-19 and strategic expense management.
Key Takeaways
Arthur J. Gallagher & Co. announced its first quarter 2020 financial results, demonstrating a solid financial and operational condition despite the economic challenges posed by COVID-19. The company reported revenue of $1,829.2 million and earnings per share of $1.79.
Brokerage and Risk Management revenues grew both organically and through mergers and acquisitions.
Company optimized its workforce and utilized centers of excellence to improve productivity.
Expense-base adjustments are being implemented to mitigate the impact of deteriorating economic conditions.
Insurance premium rates continue to increase mid-to-high single digits.
Arthur J. Gallagher
Arthur J. Gallagher
Arthur J. Gallagher Revenue by Segment
Revenue by Segment
Brokerage Revenue
CapyFin.comRisk Management Revenue
CapyFin.com Forward Guidance
While the company is encouraged by the business's resilience in April, they are balancing that with the expectation that deteriorating economic conditions will likely impact future financial performance, leading to expense-base adjustments.
Positive Outlook
- Our teams have not missed a step; all the while placing health and safety first.
- We are servicing our clients, we are selling new business, we continue to look at merger and acquisition opportunities
- Our bedrock culture keeps our teams working together in these challenging times.
- We continued our disciplined processes to optimize our workforce and utilize our centers of excellence, and we improved productivity and raised our quality.
- Our first quarter financial results reflect our best estimate of the accounting impact of the COVID-19 crisis, but still show our solid financial and operational condition and we have ample liquidity.
Challenges Ahead
- Deteriorating economic conditions will likely impact our future financial performance.
- We are taking appropriate measures to make expense-base adjustments in a staged, contemplative manner over the coming months.
- Loss conditions could deteriorate over the next year or so leading to a difficult rate and conditions environment in certain lines.
- We do expect to see declining client exposure units (i.e., insured values, payrolls, employees, miles driven, etc.), which will impact our ultimate revenues.
- In our Risk Management operations we have already seen a meaningful decline in new claims arising from retail, hospitality, restaurant and transportation clients during the last two weeks of March, which has persisted into April, and could continue into future quarters.
Revenue & Expenses
Visualization of income flow from segment revenue to net income