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The 300 companies on this year’s list brought in over $12.5 trillion in revenue for the latest 12 months, with the median revenue figure at $24 billion.

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Almost $20 trillion in revenue—and a record-breaking $1.87 trillion in profits. Introducing the 2025 Fortune 500, the definitive list of the biggest companies in America.

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The Fortune 500, in its 70th year in 2024, ranks the biggest U.S. companies by revenue.

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One of the largest insurance brokers in the world, the firm offers brokerage and risk management services to various clients.

This year's Fortune 500 marks the 66th running of the list.

F500 2020-429-Arthur J Gallagher

A Rolling Meadows, Ill.-based insurance brokerage, Arthur J. Gallagher has 33,300 employees.

This year's Fortune 500 marks the 65th running of the list.

This year's Fortune 500 marks the 64th running of the list.

This year's Fortune 500 marks the 63rd running of the list.

This year's Fortune 500 marks the 62nd running of the list.

This year's Fortune 500 marks the 61st running of the list. Wal-Mart claims the top spot again. See who made the list.

Wal-Mart stayed on top as its sales crept closer to half-a-trillion dollars. Apple moved into the top five. And UnitedHealth Group continued its steady climb. 

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Arthur J. Gallagher &amp; Co. is a global insurance brokerage, risk management, and consulting firm. The company provides customized property and casualty insurance, risk management, and consulting services to a wide range of clients worldwide. Founded in 1927, the company operates in 130 countries and territories.

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Arthur J. Gallagher (AJG): Company Profile, Stock Price, News, Rankings

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Arthur J. Gallagher

arthur j. gallagher

Good afternoon, and welcome to Arthur J. Gallagher and Company's First Quarter twenty twenty five Earnings Conference Call. Participants have been placed on a listen only mode. Your lines will be open for questions following the presentation. Today's call is being recorded.

If you have any objections, you may disconnect at this time. Some of the comments made during this conference call, including answers given in response to questions, may constitute forward looking statements within the meaning of the securities laws. The company does not assume any obligation to update information or forward looking statements provided on this call. These forward looking statements are subject to risks and uncertainties that can cause actual results to differ materially. Please refer to the information concerning forward looking statements and risk factors sections contained in the company's most recent 10 ks, 10 Q and eight ks filings for more details on such risks and uncertainties.

In addition, for reconciliations of non GAAP measures discussed on this call as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the company's website. It is now my pleasure to introduce J. Patrick Gallagher, Jr, Chairman and CEO of Arthur J. Gallagher and Company. Mr.

Thank you. Good afternoon, and thank you for joining us for our first quarter twenty five earnings call. On the call for me today is Doug Howell, our CFO and other members of our management team. We had a fantastic first quarter. For our combined brokerage and risk management segments, we posted 14% growth in revenue, 9% organic growth, reported net earnings margin of 23%, adjusted EBITDAC margin of 41.1%, up three thirty eight basis points year over year, adjusted EBITDAC growth of 26%, our twentieth consecutive quarter of double digit growth.

GAAP earnings per share of $3.29 and adjusted earnings per share of $4.16 another excellent quarter by the team. Moving to results on a segment basis, starting with the Brokerage segment. Reported revenue growth was 16%. Organic growth was 9.5%, which included about a point of favorable timing. Even without the timing impact, all in organic was right in line with our expectations.

Adjusted EBITDAC margin expanded three fifty nine basis points to 43.4% with underlying margins up a full percentage point. Doug will unpack this in his comments. Let me provide you with some insights behind our brokerage segment organic. Within our retail PC operations, we delivered 5% organic overall. U.

S. Organic was north of 5%, while our international operations primarily in The UK, Canada, Australia and New Zealand were closer to 4%. Our global employee benefit brokerage and consulting business posted organic of more than 7%. Shifting to our Reinsurance, Wholesale and Specialty businesses, in total organic of 13%. This includes 20% organic from Gallagher Reed and 8% organic from our Wholesale and Specialty businesses.

So we continue to report strong growth across retail PC, wholesale, reinsurance and benefits. Next, let me provide some thoughts on the PC insurance pricing environment, starting with the primary insurance market. Overall, the global PC insurance market continues to behave rationally with carriers looking to grow in lines and geographies where there's an acceptable return and seeking rate increases where it's needed to generate an appropriate underwriting profit. Breaking down first quarter global renewal premium changes by product line, we saw the following property down 2%, D and O down 3%, workers' comp up 5%, personal lines up 8%, casualty lines up 8% overall, including general liability up 5%, commercial auto up 6% and umbrella up 11%. Breaking down renewal premiums by client size, we continue to see a divergence between small to midsize accounts and large accounts.

For small to mid sized accounts, which we define as accounts generating less than $100,000 of revenue, renewal premiums were up 5%. For large accounts or clients generating more than 100,000 of revenue, renewal premiums were up 1%. All that said, pricing is ultimately driven by client loss experience. Good accounts are getting some premium relief in certain lines. However, accounts with poor experience are seeing greater increases.

Having a trusted adviser like Gallagher can help businesses navigate a complex insurance and economic backdrop by finding the best coverage for our clients while mitigating price increases. Today's environment is the ideal market for us to show our expertise, product knowledge and our data driven capabilities. Let me move to the reinsurance market. First quarter dynamics, which is mostly influenced by January first renewals, reflected an environment that generally favored reinsurance buyers. Overall, reinsurers were able to meet increased client demand with sufficient capacity, while remaining disciplined on terms.

The Gallagher REIT team shined with excellent retention and some fantastic new business wins. April renewals experienced similar trading conditions as earlier in the year and as expected some bit more downward pricing pressure. The January wildfire losses and continued casualty reserve increases remain a focus for the industry, but neither caused much upward movement in pricing given the large proportion of Japanese buyers in April. With that said, U. S.

Severe convective storm season is here, which then leads us to U. S. Wind season. Time will tell how the year plays out. Regardless, Gallagher Re should continue to excel in this environment.

Moving to some comments on our customers' business activity. During the first quarter, our daily revenue indications from audits, endorsements and cancellations continued to be a net positive. While the upward revenue adjustments are not quite as high as last year, we continue to see solid client business activity and no signs of meaningful global economic slowdown. Our daily revenue indications through the April are not showing any significant changes in our customers' business activity from the prospect of tariffs. Our daily indications have historically given us some early insights into our clients' business activity, so we will continue to watch these very carefully.

We're also closely watching The U. S. Labor market, and there continues to be a strong demand for new workers. The number of open jobs in The U. S.

Stood at more than 7,000,000, still at a level that is well above the number of unemployed people looking for work. We've also seen recent health insurance carrier results show continued increases in the utilization and cost of healthcare. With these two trends as the backdrop, we are seeing more and more employers looking for ways to grow their workforce and control their benefit costs. Our experts can provide creative solutions to solve these challenges. Regardless of market and economic conditions, I believe we are well positioned to compete and to win.

From our niche expertise, outstanding service or extensive data and analytics offerings, we have the resources and know how to service any account of any size of any complexity anywhere around the globe. So with a fantastic first quarter behind us, we continue to see full year 2025 brokerage segment organic in the 6% to 8% range. Moving on to our risk management segment, Gallagher Bassett. First quarter revenue growth was 6% including organic of about 4%. We continue to see excellent client retention and strong new business production.

However, sold new business within the Risk Management segment typically takes longer to materialize into revenue. As these new client contracts incept and begin to generate revenue in the coming months, we are confident we will see stronger revenue growth in the second half of the year. Adjusted EBITDAC margin was 20.5%, in line with our March expectations. Looking ahead, we still see full year 2025 organic in that 6% to 8% range and margins around 20.5%. Shifting to mergers and acquisitions.

During the first quarter, we completed 11 new tuck in mergers, representing around $100,000,000 of estimated annualized revenue. We also announced the acquisition of Woodruff Sawyer during the quarter and completed that in early April. That means through today, we already are at $400,000,000 of acquired revenue. For those new partners joining us, I'd like to extend a very warm welcome to the Gallagher family of professionals. As for the pending Assured Partners acquisition, not much to update relative to our March IR day comments.

We are working to respond to the second request and we still expect to close in the second half of twenty twenty five. Looking at our pipeline, we have more than 40 term sheets signed or being prepared representing north of $450,000,000 of annualized revenue. Good firms always have a choice, and it would be terrific if they chose to partner with Gallagher. I'll conclude with some comments about our Bedrock Gallagher culture. During our global sales award meeting in early March, our unique Gallagher culture was on full display.

It was inspiring to watch the interactions among thousands of our colleagues across geographies, business units and product lines. I came away even more convinced that our greatest asset is our people and our biggest differentiator is our culture, and that is the Gallagher Way. Okay, I'll stop now and turn it over to Doug. Doug?

Thanks, Pat, and hello, everyone. Today, I'll walk you through our earnings release, starting with some comments on first quarter organic growth and margins by segment, including how we are seeing these shape up for the full year 2025. Next, I'll move to the CFO commentary document that we post on our IR website and walk you through our typical modeling helpers. And then I'll conclude my prepared remarks with my usual comments on cash, M and A and capital management. Okay.

Let's flip to Page two of the earnings release. Headline Brokerage segment organic growth of 9.5% was a great quarter and it bolster our view that full year organic will be in that 6% to 8% range. And that range is in line with what we've been saying all year. As Pat mentioned, first quarter did have some favorable timing of about a point. So looking forward, we see some favorable timing again in the second quarter, but not to the same magnitude.

And then all of the first half timing will reverse itself in the third and fourth quarters with no impact on full year 2025. So as we look through to the rest of the year, second quarter might be more like 6% to 7%. Then we will see the timing flip in the third and fourth quarters, might mean third and fourth quarter organic of about 5% each, causes a little noise across the quarters. But with a nine point five percent first quarter, the math gets us back to a full year 25% organic in that six to 8% range. That would be a terrific year.

So flipping now to Page four of the earnings release to the brokerage segment adjusted EBITDAC table. First quarter adjusted EBITDAC margin was 43.4%, up three fifty nine basis points year over year and above our March IR day expectations. So let me walk you through a bridge from last year as we typically do. First, if you pull out last year's twenty twenty four first quarter earnings release, you'd see we reported back then adjusted EBITDAC margin of 39.9%. But now using current period FX rates, that would have been 39.8%.

Then organic growth of 9.5% gave us about 120 basis points of expansion this quarter. The roll in impact of M and A and lower interest rates each used about 10 basis points of margin this quarter. Finally, as the footnote at the bottom of that table notes, the impact of interest income from the cash that we're holding for the Assured Partners acquisition added about two sixty basis points of margin this quarter. Follow that bridge and it will get you to first quarter twenty twenty five margin of 43.4%. That is really, really great work by the team.

As for second quarter headline margin expansion, it's still looking like we will be pushing around 300 basis points, again driven by strong underlying margin expansion of approximately 60 basis to 80 basis points, assuming organic in that 6% to 7% range and also interest income related to the cash we're holding for AP, plus a small offset by the rolling of M and A and lower interest rates. Looking out towards the third quarter, we would still expect underlying margin expansion and then we'll also have the impact of investment income on the funds we're holding for AP. So in total, we're thinking expansion could be two fifty to two eighty basis points. This, of course, would change if we get AP closed before September 30. As for fourth quarter, we would hope we'd have AP close, so we would have underlying margin expansion still, but lose the extra investment income, yet have AP's fourth quarter results in our books.

The punch line here is there's nothing we're seeing that causes to change how we view underlying margin expansion potential. We believe at organic greater than 4%, we should see some underlying margin expansion. At 6% organic, maybe 60 basis points of expansion. And at 8% organic, perhaps around 100 basis points of expansion. So again, there's no new news here.

We still believe we are positioned to expand underlying full year margins by about 60 to 100 basis points. Sticking on Page four, Risk Management segment organic was 3.9. That's a bit below our 5% expectation due to lower new business revenue. As Pat mentioned, we expect this to improve in the second half of the year as we have already sold new contracts, but these have yet to start generating revenue. So we see organic moving back towards 6% to 8% throughout the year.

Adjusted EBITDAC margin of 20.5% was in line with our March IR day expectations. And looking forward, we still see full year margins again around 20.5%. Turning now to Page six of the earnings release and the Corporate segment shortcut table. For the adjusted interest in banking, clean energy and acquisition lines, all were very close to our March expectations. The corporate line was better than our March expectations due to some expense timing, a few favorable tax items, including the tax benefit from stock based compensation, somewhat offset by an unrealized FX remeasurement loss.

So now let's move from the earnings release to the CFO commentary document that we post on our website. First is an overall statement. Please read the headers and footnotes carefully on how these numbers in this document include or exclude the impact of Assured Partners. That said, let's flip to Page three in our modeling helpers. Across the board, first quarter twenty twenty five actual numbers were fairly close to what we provided back in March.

'1 thing to call out in our 2025 outlook are changes from FX for both the brokerage and risk management segments. With the dollar weakening since mid March, we have provided updated estimates for revenue and EPS impacts for the remainder of the year. Just take a look at this disclosure as you refine your models. Turning now to Page four and the corporate segment outlook for '25. Within the corporate line of the corporate segment, like I mentioned earlier, we had some favorable expense timing in the first quarter, so you'll see some of that comes back over the rest of the year.

We've increased after tax expense by about $1,000,000 per quarter for the remainder of $25,000,000 However, the rest of our outlook for the Corporate segment is unchanged from six weeks ago. Flipping to Page five to our tax credit carryovers. A reminder this is a reminder page that as of March 31, we have about $710,000,000 of tax credit. We continue to expect additional cash flow of more than $180,000,000 this year and even more in '26 and later years. And don't forget, this benefit will show up in our cash flow statement rather than our P and L.

So it's still a nice sweetener to fund the future M and A. Turning now to Page six, the investment income table. We've updated our forecast to reflect current FX rates and changes in fiduciary cash balances. And you'll see here that we're still assuming two twenty five basis point rate cuts during 2025. You'll also see that we provided a separate line to show our estimates interest income associated with the funds that we're holding to pay for Assured Partners.

Shifting down on that page to the rollover revenue table, first quarter twenty five column subtotal is around $80,000,000 and $92,000,000 before divestitures. These numbers are consistent with our March IR Day expectations. Looking forward, the pinkish columns to the right include estimated revenues for brokerage M and A closed through yesterday. And just a reminder, you'll make a pick that you'll need to make a pick for future M and A. Then below that table, we have a separate section for Assured Partners.

We show you what we expect for monthly pro form a revenues in purple. And then finally, continuing down on the page, you'll see the risk management segment rollover revenues too. So moving to cash, capital management and M and A funding. We had no outstanding borrowings on our line of credit at March 31. And you might have seen that in early April, we amended our credit agreement.

We extended the maturity date to February and also increased our borrowing capacity from $1,700,000,000 to 2,500,000,000.0 Our current cash position, potential borrowing capacity and strong expected free cash flow position us well for our pipeline of M and A opportunities. So even after the $13,500,000,000 for Assured, paying for Woodruff and paying for the Willis Re earn out and after the 11 other 11 deals we have already done through Q1, we still have over $2,000,000,000 of M and A capacity here in 2025 and another $5,000,000,000 of capacity in '26 before using any stock. So our M and A strategy has a tremendous runway. So another excellent quarter in the books. As we look ahead, we see strong organic growth, a terrific M and A pipeline.

We continue to see opportunities to improve our productivity and quality. And as Pat said, we have a winning culture. So it looks like we're well on track for another great year. Back to you, Pat.

Thanks, Doug. Operator, I think we're ready to go to questions and answers.

If you have a question, please pick up your handset and press star one on your telephone at this time. If you are on a speakerphone, please disable that function prior to pressing star one to ensure optimum sound quality. You may remove yourself from the queue at any point by pressing star two. Our first questions come from the line of Elyse Greenspan with Wells Fargo. Please proceed with your questions.

Hi, thanks. Good evening. My first question, I wanted to start with the pretty impressive 20% growth that you guys saw in reinsurance. Can you just try to break that down between what's coming from pricing, retention, new demand? And then it would give us a sense like if it's new new or if it's business that you're taking from peers.

Well, thanks, Lisa. Let me let me try to break down some of the, 20% organic. The first the the reinsurance folks are just on fire. They had a great quarter, and a lot of it, you know, came with the January 1 renewals. So let me break down three pieces.

Our new business spread was responsible for more than half the organic this quarter. In fact, we had about 15 new client wins within more than a million each. These are big chunky deals. This is not, similar to what we do on the retail side. Increased renewal premiums from Care Growth was another 5% or so.

Inflation, people buying more cover. As you see some rates come down, people have some room for additional cover, etcetera. And the remainder was some favorable timing. We have now better insights into it. And as I noted, it'll reverse itself in the in the in the latter half of the year.

But let me be clear. We said from the very beginning that we thought this was a group of folks that when working with our overall company, when the when we integrated them into working with retail and our wholesale and specialty people, that it would be a good match. And that's what we're seeing. These guys and gals are just doing a tremendous job, and the new business was outstanding. Congratulations to them.

That's great. And then, my my second question, So it sounds like you guys are still working, I guess, not allowed to update us. You said like working on a response to the DOJ. So is that something, I guess, you guys would expect to respond? I think there's like a thirty day clock once that happens.

Is that something that based on the timeline of a q four close, Doug, is that would you expect to just respond to comments? I guess that would be something that would happen in in the q two. Is that your expectation?

Alright. So it's how we're gonna do it. We're obviously putting together all the information that's been requested, and we're working hard on it both on our side and then the the AP team is doing the same thing. We'll we'll get that over to them sometime in in mid third quarter, and then it does start a clock ticking. They have the right to ask some questions, but there is a process here.

First, getting that over, certifying to it, and then, and then they'll have, you know, thirty days to to get back to us on that.

Okay. And then and then I just you mentioned that there was, I guess, some timing that impacted the first quarter, some kind of was it a pull forward from other quarters? I think it was 1%, and then there was also gonna be an impact in the q two.

Yeah. Alright. So let's go through that a little bit because I think it's a it's a good question. First, it doesn't do anything to full year. Second, we're just getting some better insights into the the the the development of revenues.

You know, we've implemented our new reinsurance system last fall, so that's up and running. We've got a new benefit system. So those systems help us look into the treaties and then to the expected headcount in our benefits business. So while the timing this quarter was mostly in reinsurance, let's call that about twothree, and the other onethree is across our benefits business and a little bit in the specialty business. But without this timing, the first quarter for reinsurance was still in the upper teens, and it impacted specialty and benefits each about a point.

But we're going to have a little bit of that again in the second quarter, but to a lesser magnitude. And then, again, this this the timing will reverse itself compared to last year in the third and fourth quarters. So no impact for a full year organic, and we would say, you know, that this is this is the result of of just putting in new systems and be able to make better estimates earlier on in the year.

Our next questions come from the line of Greg Peters with Raymond James.

Pat, in your comments, I think it was, yeah, Pat or you, that talked about the bifurcation of renewal pricing in the small to mid account, which was you define as less than $100,000 and then the mid to large account. Just wondering if you could provide some more color because the commentary we're hearing in the marketplace around that seems to suggest that the larger account business might be under a little bit more rate pressure, specifically in the property areas.

Well, that's exactly what I said, Greg. I mean, I think we're seeing in the large account area and it it's it's the typical economics. You got a bigger account, you got more swag. Right? You can you can get a better deal, especially if you've got good results.

And these larger accounts are better managed from a risk management standpoint, and they're seeing the results of that. Our people are are clearly helping with that. You get down into the smaller accounts all the way down to your personal lines, you don't have the negotiating power. And at the same time, they don't have the great results. So it's it's a fluid market, but it makes sense to me that if you're bigger, you get a little bit better deal than if you're smaller.

Yeah. It's pretty linear too, Greg. If you look at it, let's say over a hundred, we said it's, you know, it's up a point or so or something like that. But, know, when you go to, like, 25 to a hundred thousand, you know, maybe it's three and a half, 4%. You get a little lower than that 20 a 10 to $25,000 account.

Maybe you're getting a mid fours, and then we get less than $10,000 as a account side. Now this this is you know, for premiums, you know, you're seeing you're seeing it being up in the in the mid five. So it is it's consistent even within that under a hundred thousand that the smaller it gets, the higher the rate increases. Now you we saw that not going up as fast on the other side too when rates were going up. So I don't know if it's as much that they're just, you know, reversion to the mean.

Also, the the smaller accounts are catching up.

That makes sense. For my second question, my follow-up question, I'm gonna pivot back to the pending acquisition of Assured Partners. Yeah. This has been, you you you've obviously been working very closely with them for the last several months now and trying to get this to the finish line. And I know you were pretty forthcoming with details about how you expected margin improvement to materialize and retention and organic revenue growth to develop.

And I'm just curious, now that, you know, we're here in May, if you have a different perspective for there's any different changes you have on the views on the opportunity to ensure partners, you know, for all of the areas I mentioned.

Well, thank you for the question, Greg. But I'll tell you, it's actually gotten stronger. I mean, we did our board meeting this week, and that was, of course, one of the key questions. Their turnover is actually better than ours, not by a lot, by maybe half a point to a point. So they're they're staying very consistent with what they've had in the in the past, and that's after bonuses have been paid.

So we're not seeing an uptick. I said when we did the deal, I didn't expect any break breakage. We've seen a a producer here or there to part, but, you know, that's common business, across all of our our platforms. In terms of the people, we've had to be careful given the request for another bit of information, but there are certain work streams that have been allowed to continue. And I'll tell you what, just every single day, our people are more affirmed in the fact that they're dealing with folks that they really like.

They understand the business. They love the business, and they can't wait to get the two organizations together. There's no waffling. There's no mama crying. It's people that just wanna go out and sell a lot of insurance.

And we're very, very excite more excited than we were in in January.

Got it. Can you just just a detailed question on that? Is the organic profile at Assured based on what you've seen just similar to what you're seeing inside your retail business?

Yeah. I mean, they account for $6.00 6 differently, but let's just say it is. You can throw a hat over them.

Thank you. Our next questions come from the line of Mike Zaremski with BMO Capital Markets. Please proceed with your questions.

Thanks. Good evening. Doug, the or I think Pat might pull this too. One point of timing benefit in brokerage organic, is that in addition to the 26,000,000 reversal on on page six of the CFO commentary, which I'll admit is kind of over my head? So Alright.

Yeah. I think you're calling out the fact last year, and we we highlighted it last year, there was a gross up of revenues and a gross of gross up of expenses as we implemented our conforming accounting policies on some historical acquisitions that caused a gross up. So we didn't take credit for the 26,000,000 as revenue last year, and and so we shouldn't be measured by that again this year. It's just as you gross up the revenues, you gross up the comp on the revenues, and a lot of those revenues triggered some extra earn outs on it, it all washed to nothing. And we did talk about it last year, but it kinda sticks out a little bit more now.

You can see that we repeated the note about that on page six. I think it's in the in the third footnote or second or third footnote there. So it's it we're levelizing for a change in purchase accounting, which I think is a % appropriate.

Okay. I I got it. I'll I'll make sure to go through that. Switching gears a bit, a question on also brokerage organic. The RPC stat that you began giving out in recent years, which is helpful, I think it was 4% this past quarter.

And organic, obviously, tremendous, five plus points above that. But if we look kind of going back the few years that you disclosed RPC, the it's much the gap between organic and RPC is much narrower. Curious, should the gap stay wider than historical, kind of implied by your guidance? And maybe part of the reason is reinsurance isn't included in RPC. But any am I am I asking a question you think is is is fair?

Well, it's a fair question, Mike. But here are a couple of things. We're a different company than we were then. And number one, our we've got many more large accounts. Our large account penetration continues to grow every month, and a lot of that business is on fees.

Then also, when you take a look at the business and how we're selling it, I I I think that we're better sellers today. We've got we've got tools that are just unbelievable in terms of helping our producers get out and and drive new business, whether it be, we call Gallagher win, which is Salesforce, and then you've got the data analytics and Gallagher drive, which I think most of you have seen these tools. We presented them to you. And, you know, they're maturing now. They're in the hands of solid producers that have got anytime the market's influx, that's great news for our producers up and down.

And frankly, right now is a great time and it's it's a great message for our client base and our prospect base. Work with Gallagher, we think we've got an opportunity to really do a great job on your pricing as well as your coverage and your terms. So we're a different company, better opportunities, more fee business, larger platform, stronger players.

Okay. That that makes sense. If I could just sneak one last one a follow-up in to you know, you said that you'll respond to the the, I guess, government about the assured data request in a in a number of months. Any any color on, you know, why this data request would take such a a long

I'll give you one bit of color, Mike. We're not talking a lot about this. That's intentional. It's a lot of data from both parties.

Thank you. Our next questions come from the line of Mark Hughes with Truist Securities. Please proceed with your questions.

Pat, if I heard you properly, you said workers' comp up 5% versus, I think it was up 1% last quarter. Yep. Is something going on there? Or

Not really. I mean, we we we did actually plumb for that among Gallagher Gallagher Bassett's biggest line of cover is, of course, is comp. We were asking ourselves, is there is there any systemic change there? We don't see it. You know, most of comp is fee schedule stuff.

So I I think it's underlying comp costs are up with with medical. But I also do think it's it's it's a it's a better economy than I think people are writing about. Our daily our daily check-in on the economy is that our middle market accounts, in particular, are pretty robust.

Yes. We're still seeing good employment growth in those folks. We are I think there is starting to be more chatter around medical inflation. So there could be some proactiveness there by the carriers on that in order to make sure they stay ahead of it. It's not a huge portion of our book really, but it is an interesting uptick.

That is both remember, that's both rate and exposure. So it's moving north and our our our educated guess is is is more exposure and and and higher medical inflation.

And then on the property market, Pat, what's your sense of how this thing plays out? You've obviously, it's sensitive to cat losses, so a lot of it depends. But in your experience where you've had kind of a run up and then you start to see it turn back a little bit, how is this gonna work over the next few quarters, couple of years?

Well, again, Mark, let me go back in my history, which is a long one now. The property markets, I would define it as fragile. Right? When you're when you're minting money, it's a it's a great place to be. And, of course, you're gonna give customers back some of the some of the money you've made.

But, boy, the bill comes hard when it comes, and it's not gradual. And so, you know, it it just seems that we're all concerned. In fact, you might recall a year ago or so, we surveyed over a thousand of our customers, middle market customers. Their number one concern was weather related, climate change, And I think we all see it. We never we never had tornadoes in the fall.

Arthur J. Gallagher (AJG) Q1 2025 Earnings Call Transcript

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