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Jun 30, 2020
Arthur J. Gallagher Q2 2020 Earnings Report
Arthur J. Gallagher reported excellent second-quarter financial results despite the economic downturn caused by COVID-19.
Key Takeaways
Arthur J. Gallagher & Co. reported its financial results for the quarter ended June 30, 2020. The company's combined brokerage and risk management revenues grew organically and through M&A, and expense control actions delivered growth in EBITDAC and net earnings.
New business generation remained at pre-pandemic levels.
Retention and non-recurring business were lower than pre-pandemic levels.
Renewal customer exposure units showed some decline, but premium rates increased.
Expense control efforts can offset a lull in organic growth.
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
Looking forward, the company feels highly confident their expense control efforts can offset a lull in organic growth and they see their M&A program returning to more historical levels by the end of the year.
Positive Outlook
- Expense control efforts can offset a lull in organic growth
- M&A program returning to more historical levels by the end of the year
- Property/casualty premium rates move higher overall which may partially, or fully, offset future declines in exposure units, if any.
- Estimated savings of approximately $74 million pretax compared to second quarter 2019
- approximately $1.3 billion of available liquidity.
Challenges Ahead
- Decline in covered lives could persist over the next few quarters, and deteriorate further, if the economy is slow to recover.
- A slower recovery in the number of workers employed could cause fewer claims arising in future quarters.
- expect a reduced level of production for the remainder of 2020.
- Future net savings may be lower if the economy recovers faster than our forecasts or our costs to implement changes exceed our estimates.
- A prolonged economic downturn may cause a deterioration of future cash collections
Revenue & Expenses
Visualization of income flow from segment revenue to net income