Arthur J. Gallagher Q1 Earnings Surpass Estimates on Higher Revenues

Arthur J. Gallagher & Co. AJG reported first-quarter 2025 adjusted net earnings of $3.67 per share, which beat the Zacks Consensus Estimate by 2.8%. Moreover, the bottom line increased 6.3% on a year-over-year basis.

Total revenues were $3.7 billion, up 16% year over year, primarily driven by higher commissions, supplemental revenues, contingent revenues and interest income, premium finance revenues and other income. However, the top line missed the Zacks Consensus Estimate by 1.7%. (Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

The quarter’s results overall benefited from higher commissions, fees, and improved adjusted EBITDAC across both segments, partially offset by higher expenses.

Operational Update of AJG

Arthur J. Gallagher’s total expense increased 15% year over year to $2.8 billion, attributed to higher compensation, operating, reimbursements, interest and amortization. 

Adjusted EBITDAC grew 24.3% from the prior-year quarter to $1.4 billion.

Segment Results

Brokerage: Adjusted revenues of $3.3 billion increased 17.3% year over year on higher commissions, fees, supplemental revenues, contingent revenues and interest income, premium finance revenues and other income. This metric missed the Zacks Consensus Estimate by 2%.

Adjusted EBITDAC climbed 27.8% from the prior-year quarter to $1.4 billion while the margin expanded 360 basis points (bps) to 43.4%.
Adjusted EBITDAC for the quarter missed the Zacks Consensus Estimate by 0.5%.

Expenses increased 11.4% to $2.2 billion, driven by higher compensation, operating, depreciation and amortization.

Risk Management: Adjusted revenues were up 6.1% year over year to $373.2 million on higher fees and interest income, and other income. However, the metric missed the Zacks Consensus Estimate by 2.3%.

Adjusted EBITDAC increased 5.2% year over year to $76.5 million, while the margin contracted 20 bps to 20.5%. Adjusted EBITDAC for the quarter missed the Zacks Consensus Estimate by 1.2%.

Expenses increased 5.4% to $356.5 million because of higher compensation, operating cost and reimbursements.

Corporate: Adjusted EBITDAC was negative $99.1 million compared with negative $59.5 million in the year-ago quarter.

Financial Update

As of March 31, 2024, total assets were $74.1 billion, which increased 15.3% from 2024-end.

As of March 31, 2025, cash and cash equivalents increased 11.4% to $16.7 billion from 2024-end.

Shareholders’ equity increased 10.8% to $22.3 billion as of March 31, 2025, from Dec. 31, 2024.

Acquisition Update

In the reported quarter, the company closed 10 acquisitions with estimated annualized revenues of $62.7 million.

AJG’s Zacks Rank

Currently, Arthur J. Gallagher carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Insurance-Brokerage Players

Willis Towers Watson Public Limited Company WTW delivered first-quarter 2025 adjusted earnings of $3.13 per share, which missed the Zacks Consensus Estimate by 2.1%. The bottom line remained flat year over year. Willis Towers posted adjusted consolidated revenues of $2.2 billion, down 5% year over year on a reported basis, due to the sale of TRANZACT. Revenues increased 5% on an organic basis and decreased 4% on a constant currency basis. The top line missed the Zacks Consensus Estimate by 3.9%.

The total costs of providing services decreased 13% year over year to $1.8 billion. The figure was lower than our estimate of $2 billion.  Adjusted operating income was $480 million, down 1% year over year. Adjusted operating margin expanded 100 bps to 21.6%. Adjusted EBITDA was $532 million, down 3% year over year. Adjusted EBITDA margin was 23.9%, which expanded 60 bps.

Marsh & McLennan Companies, Inc. MMC reported first-quarter 2025 adjusted earnings per share of $3.06, which surpassed the Zacks Consensus Estimate by 1.3%. The bottom line advanced 5% year over year.  Consolidated revenues of $7.1 billion improved 9% year over year. The figure rose 4% on an underlying basis. However, the top line missed the consensus mark by 0.1%. Total operating expenses escalated 11.2% year over year to $5.1 billion, higher than our model estimate of $4.8 billion. 

Expenses of the Risk and Insurance Services segment escalated 16.3% year over year, while the Consulting segment’s expenses increased 4.3% year over year.  Marsh & McLennan’s adjusted operating income improved 8% year over year to $2.2 billion but fell slightly short of our estimate of $2.3 billion. 

Brown & Brown, Inc.’s BRO first-quarter 2025 adjusted earnings of $1.29 per share missed the Zacks Consensus Estimate by 0.7%. The bottom line, however, increased 13.2% year over year. Total revenues of $1.4 billion beat the Zacks Consensus Estimate by 0.1%. The top line improved 11.6% year over year. The upside can be primarily attributed to commission and fees, which grew 12% year over year to $1.3 million. The figure matched the Zacks Consensus Estimate.

Organic revenues improved 6.5% to $1.2 billion in the quarter under review. Investment and other income decreased 9.5% year over year to $19 million. Adjusted EBITDAC was $535 million, up 14.8% year over year. EBITDAC margin increased to 38.1% year over year from 37%.

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