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Mar 31, 2021
Arthur J. Gallagher Q1 2021 Earnings Report
Arthur J. Gallagher & Co. reported strong revenue growth, excellent organic revenue growth, and continued growth from their tuck-in M&A strategy, delivering fantastic growth in net earnings and EBITDAC.
Key Takeaways
Arthur J. Gallagher & Co. reported a strong start to 2021 with strong total revenue growth, excellent organic revenue growth, and continued growth from their tuck-in M&A strategy. The company delivered fantastic growth in net earnings and EBITDAC, operating in a firm property casualty environment with increasing rates and exposure units.
Strong total revenue growth driven by organic growth and tuck-in M&A strategy.
Net earnings and EBITDAC showed fantastic growth.
Operating in a firm property casualty environment with rising rates across most lines and geographies.
Customer retention and new business generation remained similar to pre-pandemic levels.
Arthur J. Gallagher
Arthur J. Gallagher
Forward Guidance
Company believes favorable trends should continue for the remainder of 2021; however, if the economic recovery slows or reverses course, benefits revenue could soften from current levels. Lower overall demand for energy caused by the pandemic and more supply from renewables may cause lower production by the plants within our portfolio for the remainder of 2021.
Positive Outlook
- Property/casualty new business, retentions and mid-term policy modifications are trending similar to first quarter 2021 and much improved compared to lows seen in April and May 2020, as our customers’ businesses continue to recover and economic activity increases.
- Overall property/casualty premium rates move higher and exposure units also trended higher than first quarter 2021.
- Modest increase in covered lives, consulting engagements and special project work compared to first quarter 2021.
- New claims arising similar to first quarter 2021, which is a substantial increase compared to lows seen in April and May 2020.
- Clean energy investments saw higher electricity production in first quarter 2021 compared to first quarter 2020 due to colder temperatures, rising natural gas prices and more plants within our portfolio being operational during the period.
Challenges Ahead
- Renewal exposure units were lower than pre-pandemic first quarter 2020
- Covered lives on renewal business still lower than pre-pandemic levels.
- New consulting and special project work was also lower than pre-pandemic levels.
- New claims arising were consistent with fourth quarter 2020, but still below pre-pandemic first quarter 2020 levels.
- Lower overall demand for energy caused by the pandemic and more supply from renewables may cause lower production by the plants within our portfolio for the remainder of 2021.