Skip to content
    AJG
    Earnings call· Dec 2025(Q4 FY25)

    Arthur J. Gallagher & Co. AJG

    Jan 29, 2026 Source

    Executive summary

    Arthur J. Gallagher & Co. Q4 FY25 — Strong Organic Growth and M&A Integration Progress

    Arthur J. Gallagher & Co. delivered a strong Q4 FY25, showcasing robust revenue and EBITDAC growth fueled by both organic expansion and strategic M&A, including significant progress on the AssuredPartners integration. Despite softening property insurance rates, the company maintained solid organic growth across segments, driven by strong client activity and effective advisory services. Management remains confident in its M&A pipeline and ability to drive continued margin expansion through synergies and operational efficiencies.

    Highlights

    5

    • Total revenue growth of over 30% in Q4 FY25, driven by organic growth and M&A.

    • Adjusted EBITDAC growth of 30% in Q4 FY25, marking the 23rd consecutive quarter of double-digit growth.

    • Brokerage segment adjusted EBITDAC margin expanded by 50 basis points underlying in Q4 FY25, ahead of expectations.

    • Full-year 2025 adjusted EBITDAC margin increased by 70 basis points on an underlying comparable basis, up over 400 basis points since COVID.

    • Completed 7 new mergers in Q4 FY25, representing $145 million of estimated annualized revenue, bringing full-year acquired revenue to over $3.5 billion.

    Concerns

    3

    • Property lines pricing decreased by 5% in Q4 FY25, partially offset by increases across most casualty classes.

    • Reinsurance property market saw rate decreases in the teens, with overall property reinsurance premiums down mid- to high single digits.

    • Life sales and deferred revenue assumption changes caused a negative 3% impact on Q4 FY25 organic growth (1% from life sales, 2% from deferred revenue assumption changes).

    Guidance & targets

    10
    CategoryTargetConfidence
    Brokerage Segment Organic Growth
    around 5.5%
    high materiality
    High
    Risk Management Segment Organic Growth
    around 7%
    medium materiality
    High
    Risk Management Segment Adjusted EBITDAC Margin
    21% to 22%
    medium materiality
    High
    Brokerage Segment Underlying Margin Expansion
    40 to 60 basis points
    high materiality
    High
    AssuredPartners Annualized Run Rate Synergies
    $160 million
    high materiality
    High
    AssuredPartners Annualized Run Rate Synergies
    $260 million to $280 million
    high materiality
    High
    Future M&A Funding Capacity
    close to $10 billion
    high materiality
    High
    Cash Taxes Paid as % of EBITDAC
    about 10%
    medium materiality
    High
    Casualty Rates Increase
    7% to 8%
    medium materiality
    Medium
    Additional Cost Savings
    $100 million to $120 million
    high materiality
    Medium

    Segment performance

    8
    SegmentRevenueYoYQoQMargin
    Brokerage Segment
    Reported revenue growth was 38%, with organic growth of 5% in line with December commentary. Adjusted EBITDAC margin was 32.2%, ahead of expectation with underlying margin expansion of 50 basis points.
    Organic growth: 5%Underlying margin expansion: 50 basis points
    		38% growth38%—32.2%
    Americas Retail P/C
    Organic growth was up 5%.
    		—5%——
    U.K. and EMEA
    Organic growth was up 7%.
    		—7%——
    APAC
    Organic growth was up 3%.
    		—3%——
    U.S. Wholesale
    Organic growth was up 7%, coming in strong at the end of the year with placements.
    		—7%——
    Reinsurance
    Organic growth was up 8%, slightly below the 10% forecast, but the dollar difference was minimal ($1.5 million).
    		—8%——
    Benefits
    Organic growth was up 1%. Strong demand for services as clients manage rising health insurance costs.
    		—1%——
    Risk Management Segment (Gallagher Bassett)
    Revenue growth was 13%, including organic of 7%. Adjusted EBITDAC margin was 21.6%, a bit better than December expectations.
    Organic growth: 7%Strong new business growthExcellent client retention
    		13% growth13%—21.6%

    Operational metrics

    50
    Total Revenue Growth
    over 30%YoY
    Q4 FY25

    Driven by organic growth and M&A.

    Adjusted EBITDAC Growth
    30%YoY
    Q4 FY25

    Marks the 23rd consecutive quarter of double-digit growth.

    Brokerage Segment Organic Growth
    5%
    Q4 FY25

    In line with December commentary.

    Brokerage Segment Adjusted EBITDAC Margin
    32.2%
    Q4 FY25

    Ahead of expectation.

    Property Lines Renewal Premium Change
    -5%
    Q4 FY25

    Part of overall low single-digit renewal premium change.

    Casualty Lines Renewal Premium Change
    5%
    Q4 FY25

    Overall increase.

    U.S. Casualty Lines Renewal Premium Change
    7%
    Q4 FY25

    Part of overall casualty lines increase.

    Package Lines Renewal Premium Change
    3%
    Q4 FY25

    Part of overall renewal premium change.

    D&O Lines Renewal Premium Change
    -1%
    Q4 FY25

    Part of overall renewal premium change.

    Workers' Comp Lines Renewal Premium Change
    1%
    Q4 FY25

    Part of overall renewal premium change.

    Personal Lines Renewal Premium Change
    5%
    Q4 FY25

    Part of overall renewal premium change.

    Renewal Premium Change excluding Property
    up about 3%
    Q4 FY25

    Illustrates impact of property decreases.

    Property Reinsurance Rate Decreases
    in the teens
    1/1 Renewal Season

    Lower layers held up better than top end of towers.

    Property Reinsurance Premiums Change
    mid- to high single digitsYoY
    1/1 Renewal Season

    Despite double-digit price declines for property cat globally.

    Medical Costs Increase
    high single digitsYoY
    FY26

    Driven by increased utilization, provider consolidation, and high-cost treatments.

    Risk Management Segment Revenue Growth
    13%YoY
    Q4 FY25

    Includes 7% organic growth.

    Risk Management Segment Organic Growth
    7%
    Q4 FY25

    Reflected strong new business revenues and excellent client retention.

    Risk Management Segment Adjusted EBITDAC Margin
    21.6%
    Q4 FY25

    A bit better than December expectations.

    Acquired Annualized Revenue
    $145 million
    Q4 FY25

    From 7 new mergers completed.

    Acquired Annualized Revenue
    more than $3.5 billion
    FY25

    Total for the full year.

    M&A Pipeline Annualized Revenue
    around $350 million
    Current

    Representing more than 40 term sheets signed or being prepared.

    Total Revenue Growth
    21%YoY
    FY25

    For combined Brokerage and Risk Management segments.

    Organic Growth
    6%YoY
    FY25

    For combined Brokerage and Risk Management segments.

    Adjusted EBITDAC Growth
    26%YoY
    FY25

    For combined Brokerage and Risk Management segments.

    Adjusted EBITDAC Margin
    35%up 70 basis points
    FY25

    Up over 400 basis points since COVID.

    Investment Income on AssuredPartners Funds
    —
    Q4 FY25

    No longer earning investment income on funds held to buy AssuredPartners, causing a comparability issue for headline margin. Footnote indicates ~130 basis points impact.

    Pension Plan Wind-down Expense
    —
    Q4 FY25

    Noncash GAAP expense due to substantial completion of frozen pension plan wind-down and annuitization. Will reverse through OCI. No cash injection needed.

    Assumed Fed Rate Cuts
    2
    FY26

    Reflected in '26 forecast.

    Rollover Revenue from M&A
    $145 million
    Q4 FY25

    Came in close to December estimate.

    AssuredPartners Revenues
    —
    Q4 FY25

    In line with expectations.

    AssuredPartners Expenses
    —
    Q4 FY25

    Came in a little better than expected.

    Tax Credit Carryforwards
    $713 million
    as of 2025-12-31

    Creates cash flow sweetener for future M&A.

    New Production from Vertical Capabilities
    90%
    Current

    Refers to new production around the United States falling into niche vertical capabilities.

    Casualty Renewals
    8.4%
    2022

    Historical data point for casualty pricing.

    Casualty Renewals
    between 8.4% and 8.7%
    2023

    Historical data point for casualty pricing.

    Casualty Renewals
    8.5%
    2024

    Historical data point for casualty pricing.

    Casualty Renewals
    8.1%
    This year (FY25)

    Current casualty pricing trend.

    M&A Divestitures and Other
    $882 millionvs last year
    Q4 FY25

    Shown on Page 3 of the press release, includes life sales, assumption changes.

    EBITDAC
    $4.8 billion
    This year (FY25)

    Context for the $25 million EBITDAC impact from life sales and deferred revenue changes.

    EPS Consensus
    around $2.68 or $0.69
    Q4 FY25

    Analyst consensus.

    Brokerage EPS
    $2.74
    Q4 FY25

    Posted actual.

    Risk Management EPS
    $0.22vs $0.21 consensus
    Q4 FY25

    Posted actual.

    Corporate Segment EPS Midpoint
    $0.56vs $0.55 Street estimate
    Q4 FY25

    Actual was a couple of pennies less than midpoint.

    AssuredPartners Projected Pretax Income
    $194 milliondown from $201 million in Q4 FY25
    Q4 FY26

    From Page 7 of CFO commentary document.

    AssuredPartners Projected Revenue
    $745 million
    Q4 FY26

    Analyst cautioned against adding this as rollover revenue.

    Rollover Revenues
    $880 million
    Q1 FY26

    From AssuredPartners.

    Rollover Revenues
    $755 million
    Q2 FY26

    From AssuredPartners.

    Rollover Revenues
    $509 milliondelta between $815 million and $306 million
    Q3 FY26

    From AssuredPartners.

    Rollover Revenues
    $40 million
    Q4 FY26

    From AssuredPartners.

    Certificates of Insurance Accuracy
    99.9%
    Current

    Achieved within 24 hours due to improved service quality.

    Industry KPIs

    5
    MetricValueDetails
    Net investment income—
    Retention persistencystable
    Life specific when present-1%%
    Renewal rate change pricinglow single digits%
    Broker specific when present6%%

    Deals & partnerships

    3
    Multiple (7 new mergers)Acquisition of brokerage firms.$145 million (estimated annualized revenue)

    Contributed to full year acquired revenue of over $3.5 billion.

    MultipleAcquisition of brokerage firms.more than $3.5 billion (annualized acquired revenue)

    Represents the total acquired revenue for FY25.

    AssuredPartnersIntegration of AssuredPartners into Gallagher's operations.$13.5 billion (spent on acquisition)

    Integration is ahead of plan, including back-office systems and rebranding. All U.S. retail operations rebranded Gallagher.

    Risks & headwinds

    4
    Softening Property Insurance MarketQ4 FY25 (current), expected to persist through 2026

    Property lines pricing decreased by 5% in Q4 FY25; property reinsurance rates saw double-digit declines (in the teens); overall property reinsurance premiums down mid- to high single digits.

    Mitigation: Clients are exploring buying additional protection to reduce earnings volatility or support growth; Gallagher's role in mitigating increases for clients.

    Rising Health Insurance CostsFY26

    Medical costs are expected to be up high single digits again in 2026.

    Mitigation: Engaging with employers to implement innovative solutions like telemedicine, wellness initiatives, and tailored benefits packages.

    Quarterly Comparability Noise from Life Sales and Deferred RevenueOngoing quarterly, but minor annually.

    Q4 FY25 organic growth negatively impacted by 1% from life sales and 2% from deferred revenue assumption changes. Total annual EBITDAC impact is small ($25 million on $4.8 billion).

    Mitigation: Management is providing new reporting views to levelize for this noise and encourages looking at annual figures.

    M&A Valuation RealignmentCurrent

    Valuations for larger deals are now in the 12-13x range, down from 16x.

    Mitigation: Gallagher's broad M&A sourcing capabilities (global, local branches) and strong pipeline are expected to overcome this.

    What to watch in Q1 FY26

    5

    Brokerage Segment Organic Growth

    FY26
    Current5% (Q4 FY25)
    Targetaround 5.5% (FY26 target)

    Why it matters

    Core indicator of underlying business health and execution against strategic goals, especially given market dynamics.

    As we sit here today, we continue to see Brokerage segment full year '26 organic growth of around 5.5%.

    Q&A highlights

    7

    How is Gallagher positioned for digital infrastructure growth, and how is the construction practice performing?

    Gallagher's construction practice is its largest and is well-positioned for data center growth, offering an ecosystem of services covering real estate, supply chain, and energy issues. They emphasize vertical capabilities and the need for significant insurance cover for such projects.

    “We have the ecosystem to do the job for clients across the entire span of what needs to go into a data center construction site. You've got real estate issues, you've got supply chain issues, you've got energy issues, et cetera, et cetera.”

    asked by Robert Cox · answered by J. Gallagher

    2 min read6 chapters

    Detailed Narrative

    01

    Economic Indicators and Client Activity

    The company's proprietary data, including audits, endorsements, and cancellations, indicates solid client business activity in Q4 FY25, showing more favorable trends compared to Q4 FY24 and Q3 FY25. These positive trends continued through the first three weeks of January, with management observing no signs of economic weakness, reinforcing confidence in their growth strategy regardless of market conditions.

    02

    Digital Infrastructure and Construction Practice

    Gallagher's construction practice is its largest, leveraging strong vertical capabilities for new production. The company is well-positioned to capitalize on the digital infrastructure build-out, particularly data centers, by providing an ecosystem of services covering real estate, supply chain, and energy issues. This includes expertise in placing large amounts of cover required for such projects.

    03

    Producer Retention and Sales Culture

    Gallagher maintains stable producer retention rates, consistent with historical norms, and actively recruits new talent through acquisitions (over 2,000 in the last year) and its internship program (600 young people annually). The company emphasizes its sales-driven culture, providing extensive tools and capabilities like the "Gallagher Drive" digital experience to empower producers and enhance sales firepower.

    04

    AI and Intermediation

    Management views AI as a tool to improve service efficiency and reduce costs, particularly in back-office functions and claims adjusting within Gallagher Bassett, rather than a replacement for human intermediaries. They argue that the need for trusted advisors, especially for small businesses and complex claims, remains paramount, similar to how the internet did not disintermediate brokers. AI is seen as a terrific tool, not a replacement for production, and will improve service and retention.

    05

    AssuredPartners Integration

    The integration of AssuredPartners is ahead of schedule, with back-office systems (general ledger, HR, payroll, treasury, T&E) already live. The company is leveraging its products, data, and analytics to drive success, with all U.S. retail operations rebranded Gallagher. Management expects annualized run rate synergies of $160 million by end of 2026, potentially reaching $260 million to $280 million by early 2028, with potential for upside.

    06

    M&A Strategy and Pipeline

    Gallagher's M&A strategy focuses on both large and small acquisitions, with a current pipeline of over 40 term sheets representing approximately $350 million in annualized revenue. The company's global presence and network of over 1,000 branches facilitate sourcing deals, particularly smaller brokers lacking succession plans. Valuations for acquisitions are noted to be decreasing, with larger deals now in the 12-13x range, down from 16x.

    AI-generated summary of the company’s earnings call. Not investment advice.