Arthur J. Gallagher & Co. AJG reported fourth-quarter 2024 adjusted net earnings of $2.13 per share, which beat the Zacks Consensus Estimate by 5.4%. The bottom line increased 17% on a year-over-year basis.
Arthur J. Gallagher’s performance was driven by margin expansion in the Brokerage segment, higher commissions, fees, supplemental revenues, improved EBITDAC, as well as lower operating costs.
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Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Arthur J. Gallagher & Co. price-consensus-eps-surprise-chart | Arthur J. Gallagher & Co. Quote
Operational Update
Total revenues of $2.7 billion beat the Zacks Consensus Estimate by 0.1%. The top line also improved 12% year over year, driven by higher commissions, fees, supplemental revenues and interest income, premium finance revenues and other income.
Arthur J. Gallagher’s total expenses decreased 5.2% year over year to $2.4 billion in the reported quarter due to lower operating costs, reimbursements and change in estimated acquisition earnout payables.
Earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 33.5% from the prior-year quarter to $686.7 million.
Segmental Results
Brokerage: Revenues of $2.3 billion increased 12.5% year over year on higher commissions, fees, supplemental revenues, interest income, premium finance revenues and other income. The figure matched the Zacks Consensus Estimate.
Expenses decreased 7.1% from the year-ago quarter to $1.8 billion due to lower change in estimated acquisition earnout payables.
Adjusted EBITDAC climbed 18.5% from the year-ago level to $760.3 million. Margin expanded 170 basis points (bps) to 33.1%.
Risk Management: Revenues were up 9% year over year to $369.3 million, owing to higher fees and interest income and other income. The figure missed the Zacks Consensus Estimate by 1.8%.
Expenses rose 7.9% from the prior-year period to $347.1 million on higher compensation, operating, depreciation and amortization. Adjusted EBITDAC improved 7.8% year over year to $76.2 million. Margin contracted 30 bps to 20.6%.
Corporate: EBITDAC was a negative $31.5 million compared with a negative $49.4 million in the year-ago quarter.
Financial Update
As of Dec. 31, 2024, total assets were $64.2 billion, up 24.5% from the 2023-end level. At the end of the quarter, cash and cash equivalents of $14.9 billion surged more than 15-fold from the 2023-end level. As of Dec. 31, 2024, shareholders’ equity rose 86.6% to $20.2 billion from the level on Dec. 31, 2023.
Dividend Update
The board of directors declared a quarterly cash dividend of 65 cents per share, 8.3% higher than the previous dividend of 60 cents. The dividend will be paid out on March 21, 2025, to shareholders of record as of March 7.
Acquisition Update
In the quarter, Arthur J. Gallagher closed 19 acquisitions with estimated annualized revenues of about $188.7 million.
Full-Year Update
For the year, the company’s total revenues increased 14.8% year over year to $11.4 billion. The top line beat the consensus estimate by 0.5%.
In 2024, the company closed a total of 46 buyouts with estimated annualized revenues of $362.6 million.
Adjusted earnings for the full year were $10.09 per share, up 16% year over year. The figure beat the Zacks Consensus Estimate by 0.4%.
Zacks Rank
AJG currently carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Performance of Other Players
Brown & Brown, Inc.’s BRO fourth-quarter 2024 adjusted earnings of 86 cents per share beat the Zacks Consensus Estimate by 14.7%. The bottom line increased 48.3% year over year. Total revenues of $1.2 billion beat the Zacks Consensus Estimate by 6.4%. The top line improved 15.4% year over year. The upside can be primarily attributed to commission and fees, which grew 15.4% year over year to $1.1 billion. Our estimate for commission and fees was $1 billion. The Zacks Consensus Estimate was pegged at $1.1 billion. Organic revenues improved 13.8% to $1.1 billion in the quarter under review.
Investment income increased 22.2% year over year to $22 million. The Zacks Consensus Estimate for the metric was pegged at $20.7 million and our estimate was $31.8 million. Adjusted EBITDAC was $390 million, up 22.6% year over year. EBITDAC margin expanded 190 basis points (bps) year over year to 32.9%. Our estimate for adjusted EBITDAC was $366.3 million.
RLI Corp. RLI reported fourth-quarter 2024 operating earnings of 41 cents per share, which missed the Zacks Consensus Estimate by 14.5%. The bottom line decreased 46.8% from the prior-year quarter. Operating revenues for the reported quarter were $436 million, up 15.3% year over year, driven by higher net premiums earned and net investment income. The top line matched the Zacks Consensus Estimate. Gross premiums written increased 9% year over year to $473.2 million. This uptick can be attributed to the solid performance of the Casualty segment (up 18.3%). Our estimate was $550 million.
Net investment income increased 19% year over year to $38.8 million. The Zacks Consensus Estimate and our estimate for the metric were both pegged at $38.1 million. The investment portfolio’s total return was negative 1.1% in the quarter. Underwriting income of $22.2 million decreased 62.8% year over year. The combined ratio deteriorated 1,170 basis points (bps) year over year to 94.4. The Zacks Consensus Estimate for the metric was pegged at 96, while our estimate was 102.
W.R. Berkley Corporation’s WRB fourth-quarter 2024 operating income of $1.13 per share beat the Zacks Consensus Estimate by 20.2%. The bottom line improved 17.7% year over year.W.R. Berkley’s net premiums written were $2.9 billion, up 8% year over year. The figure was lower than our estimate of $3 billion. Operating revenues came in at $3.5 billion, up 9.2% year over year, on the back of higher net premiums earned as well as improved net investment income, higher insurance service fees and other income. The top line beat the consensus estimate by 4.2%.
Net investment income grew 1.3% to $317.4 million, driven by strong contributions to total return from net unrealized gains on the equity portfolio. The figure was lower than our estimate of $399.5 million. The Zacks Consensus Estimate was pegged at $342 million. Total expenses increased 8% to $2.9 billion due to higher losses and loss expenses. Our estimate was $3 billion. The consolidated combined ratio (a measure of underwriting profitability) deteriorated 180 bps year over year to 90.2. The Zacks Consensus Estimate was 91.
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