Arthur J. Gallagher & Co. (AJG) Q2 2022 Earnings Call Transcript

For the period ending June 30, 2022

July 28, 2022 5:15 p.m. ET

Prepared Remarks

Questions and Answers

Call Participants

Prepared Remarks:

Operator

Good afternoon, and welcome to Arthur J. Gallagher & Company's Second Quarter 2022 Earnings Conference Call. [Operator Instructions] Today's call is being recorded.

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. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the cautionary statements and risk factors contained in the company's 10-K, 10-Q and 8-K filings for more details on its forward-looking statements. In addition, for reconciliations of the 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, Chairman, President and CEO of Arthur J. Gallagher & Co.

Mr. Gallagher, you may begin.

J. Patrick Gallagher - Chairman, President and CEO

Thank you. Good afternoon, everyone. Thank you for joining us for our second quarter 2022 earnings call. On the call with me today is Doug Howell, our CFO; as well as the heads of our operating divisions. We had another excellent quarter of financial performance. For our combined Brokerage and Risk Management segments, we posted 22% growth in revenue, 10.7% organic growth, net earnings growth of 35%, adjusted EBITDAC growth of 23% and adjusted earnings per share growth of 19%.

I'm extremely proud of how our nearly 41,000 colleagues around the globe performed during the quarter in the first half of the year. So let me give you some more detail on our second quarter Brokerage segment performance. During the quarter, reported revenue growth was 25%. Of that, 10.8% was organic. We did have a tailwind of about 1 point from an infrequent large life case that I'll touch on in a minute.

Rollover revenues were about $240 million, consistent with our June IR Day expectations. Net earnings growth was 36%. And as expected, we posted adjusted EBITDAC margins of 32%, an outstanding quarter for the Brokerage team.

Let me walk you around the world and break down our organic, starting with our PC operations. Our U.S. retail business posted 11% organic, with strong new business, retention and continued renewal premium increases. Risk Placement Services, our U.S. wholesale operations, posted organic of 8%. This includes more than 15% organic in open brokerage and 4% organic in our MGA programs and binding businesses.