Concerns about potential long-term cost creep for AI solutions and whether they will truly drive margin improvements.

Doug Howell stated that AI costs would be de minimis compared to savings, as Gallagher has already invested in centralizing data and processes. He believes the company has already spent the foundational money for AI implementation. “I think the cost of AI will be de minimis for the savings that we will be able to realize because we have already put in the cost effort to centralize and standardize our data and our processes.”

Whether M&A seller expectations for exit pricing have adjusted to lower valuations in the sector, and commentary on private equity-sponsored vehicles.

Pat Gallagher confirmed that multiples are coming down, and while there's competition, Gallagher maintains discipline. He noted a slowdown in deal count as sellers react to the reset from previously high multiples. Doug Howell added that Gallagher is still achieving a nice arbitrage, paying around 9x for U.S. retail and benefits. “Multiples are coming down. And we're maintaining our discipline, and we're closing deals. Now also, you see a slowdown in our deal count. It's not as great as it was. And part of that, I believe, is sellers are actually reacting to the reset.”

AJG

Arthur J. Gallagher (AJG) Q2 FY26 earnings call: guidance and Q&A

Q: Clarification on the implied Q4 FY26 brokerage organic growth rate, given the H1 performance and full-year guidance of 5.5%.

Doug Howell confirmed the full-year guidance is a midpoint estimate and implies a step-up in Q4, primarily due to Q2 being seasonally lower due to property renewals, which won't impact Q4 as much. “Yes, it would say that we'd have a little bit of a step-up in the fourth quarter relative to these numbers. Why is that? The second quarter is a little bit low because of the property renewals that we are more impacted by property in the second quarter, that seasonality, and we won't see that as much in the fourth quarter.”

Earnings call· Jun 2026 (Q2 FY26)· Financials· Jul 30, 2026

Source: earnings call transcript

Executive summary

Arthur J. Gallagher & Co. Q2 FY26 — Strong Organic Growth and Margin Expansion

Arthur J. Gallagher & Co. delivered a strong Q2 FY26, driven by robust organic growth and significant margin expansion, despite moderating property pricing. The company continues to execute its dual strategy of organic growth and strategic M&A, leveraging technology and its strong culture to enhance productivity and client value. Management remains confident in its full-year organic growth outlook and substantial capital deployment capacity.

Highlights

Combined Brokerage and Risk Management revenue growth of 24% in Q2 FY26.
Organic growth of 6% for combined segments, reflecting continued strength.
25 consecutive quarters of double-digit adjusted EBITDAC growth.
Risk Management adjusted EBITDAC margin up 140 bps to 22.3%.
Secured $10 billion of capital capacity to deploy over the next 2 years.

Concerns

Property renewal premium changes were down 10% in Q2 FY26.
Comparability noise in Q2 FY26 due to $144 million investment income in Q2 FY25 from AssuredPartners funds.
Reinsurance organic growth outlook rounded down less than 1 point for full year FY26.

Guidance & targets

Category	Target	Timeline	Confidence
Total Company Organic Growth	6% high materiality	Full Year · FY26	High
Brokerage Organic Growth	5.5% high materiality	Full Year · FY26	High
Risk Management Organic Growth	9% high materiality	Full Year · FY26	High
Underlying Margin Expansion	40 to 60 basis points medium materiality	Full Year · FY26	High
Risk Management Adjusted EBITDAC Margin	north of 22% medium materiality	Q3 · FY26	High
Annualized Run Rate Synergies from AssuredPartners	$160 million high materiality	Year-end · FY26	High
Annualized Run Rate Synergies from AssuredPartners	$325 million high materiality	Early · FY28	High
Cash Taxes Paid	about 10% of EBITDAC medium materiality	Ongoing	High

Segment performance

Segment	Revenue	YoY	QoQ	Margin
Brokerage Strong results from AssuredPartners and growth across retail P/C, wholesale, reinsurance and benefits. Underlying margin expansion of 50 basis points in Q2 FY26. Organic growth: 5%	up 26%	26%	—	—
Risk Management (Gallagher Bassett) Driven by excellent new business and strong client retention, leveraging data, AI, and machine learning for improved service and operating efficiencies. Organic growth: 12%Adjusted EBITDAC growth: 22%Adjusted EBITDAC margin change: up 140 bps	up 16%	16%	—	22.3% Adjusted EBITDAC margin

AJG operating KPIs by quarter

AJG operating KPIs stated on its earnings calls, by fiscal quarter
KPI	Dec 2024 Q4 FY24	Mar 2025 Q1 FY25	Jun 2025 Q2 FY25	This call Jun 2026 Q2 FY26	Change vs prior quarter
Employees	56K A huge thank you goes out from this table to our 56,000 colleagues around the globe. Source: earnings call transcript	57K It's important that we think the 57,000 colleagues around the globe for doing the work that creates these results. Source: earnings call transcript	59K Most importantly, I want to thank the 59,000 colleagues that we have for all their hard work. Source: earnings call transcript	73K+ Most importantly, to our more than 73,000 colleagues around the world, thank you. Source: earnings call transcript	—

Operating figures the company stated on at least two of the calls shown, checked against each call's transcript. Click a figure to read the sentence. A dash means it was not stated that quarter.

Deals & partnerships

Multiple 7 tuck-in acquisitions completed in Q2 FY26. $63 million

These acquisitions strengthen Gallagher by adding talent, capabilities, relationships, and new growth opportunities.

Multiple Pipeline of over 30 term sheets signed or being prepared. $500 million

The acquisition strategy continues to be a powerful driver of Gallagher's growth.

Woodruff Sawyer and AssuredPartners Completed 38 acquisitions since last April, including Woodruff Sawyer and AssuredPartners.

Each acquisition strengthens Gallagher by adding talent, capabilities, relationships, and new growth opportunities.

Risks & headwinds

Moderating Property Pricing Q2 FY26

Property renewal premium changes down 10% in Q2 FY26.

Mitigation:Clients are opting in and using savings to buy back coverage, increase limits, or improve structure. Gallagher's advice, advocacy, and market access are crucial in this environment.

Comparability Noise from Prior Year Investment Income Q2 FY26 (comparison to Q2 FY25)

Q2 FY25 revenues and EBITDAC benefited by $144 million ($0.42 per share) from investment income on AP funds.

Mitigation:This comparability issue will be resolved by Q4 FY26 as the prior year's investment income impact cycles out.

Reinsurance Pricing Pressure Mid-year renewals (6/1)

Property cat pricing moved lower again at mid-year renewals.

Mitigation:Demand remained healthy, and many clients used savings to improve structure or buy additional limits. Gallagher Re's growth is diversified across facultative, casualty, and capital advisory, not solely dependent on the pricing cycle.

Medical Cost Inflation Ongoing

Increased medical utilization, advanced treatments, and escalating prescription drug costs.

Mitigation:Employers value Gallagher's advice, advocacy, creative plan design, and cost management strategies, which support demand and retention across the benefits business.

M&A Valuation Reset Current

Multiples are coming down, with Q2 FY26 average at 11.3x (9x for U.S. retail/benefits) compared to higher past multiples.

Mitigation:Gallagher maintains discipline in its pricing, focusing on arbitrage opportunities and believing that good firms will still choose to partner due to the infrastructure and value offered.

What to watch in Q3 FY26

Brokerage Organic Growth

Q3 FY26 and Q4 FY26

Current 4.6% (H1 FY26)

Target Step-up towards 5.5% full-year target

Why it matters

Verifies management's confidence in decoupling organic growth from moderating pricing, especially after Q2's seasonal impact.

Yes, it would say that we'd have a little bit of a step-up in the fourth quarter relative to these numbers. Why is that? The second quarter is a little bit low because of the property renewals that we are more impacted by property in the second quarter, that seasonality, and we won't see that as much in the fourth quarter.

Find out whether AJG delivers this. Inve re-checks your case every morning.

Q&A highlights

Can AJG maintain organic growth stability if pricing continues to moderate into 2027, given its past performance in decoupling from RPC trends?

Pat Gallagher emphasized strong new business, solid retention, and the value of Gallagher's advisory services and tools in a complex market. He noted that unlike past soft markets, the current environment is a property-specific reset, with clients buying back coverage.

“Every other past soft market, the market has dropped like a brick across every line all at once. This is a property reset. That's what this really is.”

asked by Michael Zaremski · answered by J. Gallagher

2 min read 6 chapters

Detailed narrative

Market Dynamics and Pricing Trends

The global P/C market is segmented, with property easing (down 10% in Q2 FY26) and casualty remaining firmer (up 3%). Clients are utilizing property pricing relief to buy back coverage, increase limits, or improve structure. The Excess & Surplus (E&S) market continues to be an important solution for complex risks, including AI-related infrastructure and difficult liabilities, and is not seeing a significant flow back to admitted markets, indicating its enduring role.

Reinsurance Market Conditions

The reinsurance market is well-capitalized with ample capacity, leading to downward pricing pressure, particularly for property cat at mid-year renewals. Despite this, demand remains healthy, with clients leveraging savings to enhance structure or purchase additional limits. Gallagher Re's growth is diversified, driven by strong new business and broad contributions from areas like facultative, casualty, and capital advisory, rather than solely relying on the pricing cycle.

Employee Benefits and Gallagher Bassett Performance

The employee benefits segment is experiencing steady demand as employers focus on talent attraction and retention while managing rising medical utilization and prescription drug costs. Gallagher Bassett (GB) delivered another strong quarter, with 12% organic growth, driven by new business and client retention. GB is enhancing its competitive position by leveraging data, AI, and machine learning to improve service, claims outcomes, and operating efficiencies.

Economic Indicators and Exposure Growth

Proprietary daily revenue indications, derived from audits, endorsements, and cancellations, show solid business activity throughout Q2 FY26. Exposure units such as revenues, payroll, and headcount remain in positive territory, indicating continued growth in clients' underlying businesses. This positive client activity contributes significantly to Gallagher's organic growth prospects.

M&A Strategy and Pipeline

Gallagher completed 7 tuck-in acquisitions in Q2 FY26, adding $63 million in annualized revenue, and has over 30 term sheets signed or prepared, representing $500 million in annualized revenues. While M&A multiples are moderating, the company maintains its disciplined approach, acquiring U.S. retail and benefits businesses around 9x EBITDAC. The strong pipeline and strategic integrations, like AssuredPartners, continue to be powerful growth drivers.

Productivity and Technology Integration

The company is continuously improving productivity and quality by standardizing workflows, building centers of excellence, and integrating data globally. AI, digitization, and automation are being deployed to enhance professional efficiency and client service, rather than replacing human judgment. These investments are expected to yield significant long-term margin expansion, with an estimated 400 basis points potential over 3-5 years.

Summary of the company's earnings call; see how call summaries are prepared. Not investment advice.