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1. Company Snapshot

1.a. Company Description

Arthur J.Gallagher & Co., together with its subsidiaries, provides insurance brokerage, consulting, third-party claims settlement, and administration services in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand, India, and the United Kingdom.It operates through Brokerage and Risk Management segments.


The Brokerage segment consists of retail and wholesale insurance brokerage operations; assists retail brokers and other non-affiliated brokers in the placement of specialized and hard-to-place insurance; acts as a brokerage wholesaler, managing general agent, and managing general underwriter for distributing specialized insurance coverage's to underwriting enterprises.This segment also performs activities, including marketing, underwriting, issuing policies, collecting premiums, appointing and supervising other agents, paying claims, and negotiating reinsurance; and offers brokerage and consulting services to businesses and organizations, including commercial, not-for-profit, and public entities, as well as individuals in the areas of insurance placement, risk of loss management, and management of employer sponsored benefit programs.The Risk Management segment provides contract claim settlement and administration services to enterprises and public entities; and claims management, loss control consulting, and insurance property appraisal services.


The company offers its services through a network of correspondent insurance brokers and consultants.It serves commercial, industrial, public, religious, and not-for-profit entities.The company was incorporated in 1927 and is headquartered in Rolling Meadows, Illinois.

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1.b. Last Insights on AJG

Arthur J. Gallagher & Co.'s recent performance was negatively impacted by downbeat Q3 results, with earnings of $2.32 per share missing the Zacks Consensus Estimate of $2.51 per share. Weaker-than-expected earnings and revenues were reported, despite double-digit revenue growth for the 19th straight quarter. Rising costs and debt weigh on margins and returns, while analysts have slashed their forecasts following the Q3 results. The company's Q3 earnings call highlighted these challenges. (Source: Zacks Consensus Estimate)

1.c. Company Highlights

2. Strong Q4 Earnings: Gallagher's Revenue Growth and Margin Expansion

Arthur J. Gallagher & Co.'s fourth-quarter 2025 earnings report was impressive, with revenue growth of more than 30% driven by a two-pronged strategy of organic and M&A growth. Organic growth was 5%, while adjusted EBITDA growth was 30%, marking the company's twenty-third consecutive quarter of double-digit growth. The brokerage segment reported revenue growth of 38%, with organic growth of 5%, and adjusted EBITDAC margin was 32.2%, ahead of expectations. Earnings per share (EPS) came in at $2.38, beating estimates of $2.35.

Publication Date: Feb -02

📋 Highlights
  • Revenue Growth:: Q4 revenue surged 30% YoY (organic +5%) and 2025 full-year organic growth hit 6%, with $3.5B in acquired revenue from M&A.
  • Adjusted EBITDA Momentum:: Q4 adjusted EBITDA rose 30%, marking 23 consecutive quarters of double-digit growth, while margins expanded 70 bps to 35% in 2025.
  • M&A Pipeline:: 40+ term sheets in 2025 ($350M annualized revenue pipeline) and 71,000+ employees post-Assured Partners acquisition, targeting 75+ annual M&A deals globally.
  • Employee Benefits Outlook:: 4% organic growth expected in 2026, driven by rising healthcare costs (7-8% medical inflation) and increased advisory demand for cost management solutions.
  • Cash Position & Synergies:: $10B in cash reserves for 2025-2026 M&A, plus $73B tax credit carryforwards and $1B in Assured Partners tax benefits to fund future deals.

Segment Performance

The brokerage segment was a key driver of growth, with revenue increasing by 38% and organic growth of 5%. The risk management segment, Gallagher Bassett, also performed well, with revenue growth of 13%, including organic growth of 7%. The employee benefits segment continued to see strong demand, with medical costs expected to rise by high single digits in 2026.

Outlook and Guidance

Gallagher expects another strong year of growth in 2026, with brokerage segment organic growth projected to be around 5.5%. The company also expects margin expansion, with adjusted EBITDAC margin expected to be in the 21-22% range. The company's M&A pipeline remains robust, with over 40 term sheets signed or being prepared, representing around $350 million of annualized revenue.

Valuation and Metrics

With a P/E Ratio of 43.46 and an EV/EBITDA ratio of 17.43, the market appears to be pricing in significant growth expectations. The company's ROE of 6.5% and ROIC of 5.28% indicate a relatively efficient use of capital. Analysts estimate revenue growth of 9.9% for the next year, which is in line with the company's historical performance. As the company continues to execute on its M&A strategy and drive organic growth, investors will be watching to see if the company can meet or exceed these expectations.

M&A Strategy

Gallagher's M&A strategy has been a key driver of growth, with the company completing seven new mergers in Q4, representing around $145 million of estimated annualized revenue. The company's pipeline remains robust, with a focus on acquiring smaller brokers and expanding its global presence. As J. Patrick Gallagher noted, "We have a unique opportunity to acquire smaller brokers... and we have a global practice with a global opportunity."

3. NewsRoom

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Arthur J. Gallagher & Co. Acquires Hunt Financial Group

Feb -02

Source: prnewswire.com

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Arthur J. Gallagher & Co. Q4 Earnings Call Highlights

Jan -31

Source: defenseworld.net

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Arthur J. Gallagher Q4 Earnings & Revenues Beat, Dividend Raised

Jan -30

Source: zacks.com

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Arthur J. Gallagher & Co (AJG) Q4 2025 Earnings Call Highlights: Robust Revenue Growth and Strategic M&A Activity

Jan -30

Source: gurufocus.com

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Arthur J. Gallagher & Co. (AJG) Q4 2025 Earnings Call Transcript

Jan -30

Source: seekingalpha.com

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Arthur J. Gallagher (AJG) Q4 Earnings: Taking a Look at Key Metrics Versus Estimates

Jan -30

Source: zacks.com

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Arthur J. Gallagher (AJG) Q4 Earnings and Revenues Beat Estimates

Jan -29

Source: zacks.com

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Arthur J Gallagher's quarterly profit rises on fees, commission growth

Jan -29

Source: reuters.com

4. Business Breakdown

4.a. Revenues by Country

4.b. Revenues by Segment

5. Expected revenues mid-term growth (5.59%)

6. Segments

Brokerage

Expected Growth: 5.6%

Arthur J. Gallagher & Co.'s insurance brokerage services are expected to grow due to increasing demand for risk management and consulting services, expansion into new markets, and strategic acquisitions.

Risk Management

Expected Growth: 5.5%

Arthur J. Gallagher & Co.’s risk management services are expected to grow driven by increasing demand for cyber insurance, rise in mergers and acquisitions, and expansion into emerging markets.

7. Detailed Products

Risk Management

Arthur J. Gallagher & Co. provides risk management services to help clients identify, assess, and mitigate risks to their business.

Insurance Brokerage

Gallagher offers insurance brokerage services, providing clients with access to a wide range of insurance products and carriers.

Consulting

Gallagher's consulting services provide clients with expert advice on benefits, compensation, and human resources management.

Claims Advocacy

Gallagher's claims advocacy services help clients navigate the claims process, ensuring fair and timely resolution of claims.

Human Capital Consulting

Gallagher's human capital consulting services provide clients with strategic guidance on talent management, organizational design, and leadership development.

Benefits and HR Consulting

Gallagher's benefits and HR consulting services provide clients with expert guidance on employee benefits, compensation, and human resources management.

8. Arthur J. Gallagher & Co.'s Porter Forces

Forces Ranking

Threat Of Substitutes

The threat of substitutes for Arthur J. Gallagher & Co. is medium due to the presence of alternative insurance brokers and agents. However, the company's strong brand reputation and diversified product offerings mitigate this threat to some extent.

Bargaining Power Of Customers

The bargaining power of customers is low for Arthur J. Gallagher & Co. due to the company's large customer base and diversified revenue streams. Additionally, the company's strong relationships with its clients and its ability to provide customized insurance solutions reduce the bargaining power of customers.

Bargaining Power Of Suppliers

The bargaining power of suppliers is medium for Arthur J. Gallagher & Co. due to the company's dependence on a few large insurance carriers. However, the company's strong relationships with its suppliers and its ability to negotiate favorable terms mitigate this threat to some extent.

Threat Of New Entrants

The threat of new entrants is low for Arthur J. Gallagher & Co. due to the high barriers to entry in the insurance brokerage industry. The company's strong brand reputation, large customer base, and diversified product offerings make it difficult for new entrants to gain a foothold in the market.

Intensity Of Rivalry

The intensity of rivalry is high for Arthur J. Gallagher & Co. due to the highly competitive nature of the insurance brokerage industry. The company faces intense competition from other large insurance brokers and agents, which can lead to pricing pressure and reduced profit margins.

9. SWOT Analysis

Strength

Weaknesses

Opportunities

Threats

10. Capital Structure

10.a. Balance Sheet

10.b. Weighted Average Cost of capital

Value
Debt Weight 43.56%
Debt Cost 4.38%
Equity Weight 56.44%
Equity Cost 7.42%
WACC 6.09%
Leverage 77.19%

11. Quality Control: Arthur J. Gallagher & Co. passed 4 out of 9 key points

12.a Historical Valuation

12.b Price/Earnings Ratio

12.c Margin Valuation

12.d Peers Valuation

Peers Group Analysis

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Value: 7.1

Growth: 4.7

Quality: 5.6

Yield: 6.0

Momentum: 4.0

Volatility: 8.7

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A-Score: 5.5/10

Value: 4.1

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Quality: 6.4

Yield: 3.0

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A-Score: 5.2/10

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Growth: 7.4

Quality: 8.2

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A-Score: 4.6/10

Value: 1.9

Growth: 6.7

Quality: 5.8

Yield: 2.0

Momentum: 2.5

Volatility: 9.0

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Peers Metrics

12.e Scoring Insights

12.f DCF BETA

Parameters

Short Term Growth

Short term Time

Long-Term Growth

WACC

Target Price

245.27$

Current Price

245.27$

Potential

-0.00%

Expected Cash-Flows