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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.
Revenue by Segment
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.
Revenue & Expenses
Visualization of income flow from segment revenue to net income
Historical Earnings Impact
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Avg. Return Before/After Earnings
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