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Arthur J. Gallagher (AJG) Q2 Earnings Beat, Revenues Miss
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Arthur J. Gallagher & Co. (AJG - Free Report) reported second-quarter 2022 adjusted net earnings of $1.70, which beat the Zacks Consensus Estimate by 1.2%. The bottom line increased 45.3% on a year-over-year basis.
Arthur J. Gallagher’s performance was driven by lower expenses and higher revenues across the Brokerage and Risk Management segments.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Total revenues of $2 billion missed the Zacks Consensus Estimate by 1%. The top line however improved 5.8% year over year.
Arthur J. Gallagher’s total expenses decreased 1.2% year over year to $1.7 billion in the reported quarter due to lower operating cost, reimbursements, amortization, cost of revenues from clean coal activities and change in estimated acquisition earnout payables. The figure, was higher than our estimate of $1,662.3 million.
Adjusted earnings before interest, tax, depreciation and amortization and change (EBITDAC) in estimated acquisition earnout payables increased 19.6% from the prior-year quarter to $523.4 million. The figure however, was lower than our estimate of $610.1 million
Segmental Results
Brokerage: Revenues of $1.7 billion increased 28.9% year over year on higher commissions, fees and supplemental revenues. The figure missed the Zacks Consensus Estimate of 1,822.9 million
Expenses jumped 21.9% from the year-ago quarter to $1.3 billion due to higher compensation, operating and depreciation.
Adjusted EBITDAC climbed 25.1% from the year-ago level to $555.5 million and the margin contracted 90 basis points (bps) to 32%.
Risk Management: Revenues were up 10.9% year over year to $267.4 million, mainly owing to higher fees.
Expenses rose 6% from the prior-year period to $263.2 million on higher compensation and operating expenses.
Adjusted EBITDAC improved 6.9% year over year to $50.6 million and margin contracted 70 bps to 18.9%.
Corporate: Total revenues of $0.3 million were down 99.8% year over year due to lower royalty income from clean coal licenses.
EBITDAC was a negative $26.3 million compared with a negative $39.9 million in the year-ago quarter.
Financial Update
As of Jun 30, 2022, total assets were $39.9 billion, up 20% from the 2021-end level.
At the end of the quarter, cash and cash equivalents of $523.6 million increased 30% from the 2021-end level.
As of Jun 30, 2022, shareholders’ equity increased 3.5% to $8.8 billion from the level on Dec 31, 2021.
Dividend Update
The board of directors approved a quarterly cash dividend of 51 cents per share. The dividend will be paid out on Sep 16, 2022 to shareholders of record as of Sep 2.
Acquisition Update
In the quarter, Arthur J. Gallagher closed eight acquisitions with estimated annualized revenues of about $50.1 million.
Of the insurance industry players that have reported second-quarter results so far, Willis Towers Watson Public Limited Company (WTW - Free Report) , AXIS Capital Holdings Limited (AXS - Free Report) and Chubb Limited (CB - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Willis Towers Watson delivered second-quarter 2022 adjusted earnings of $2.32 per share, which beat the Zacks Consensus Estimate by 0.4%. The bottom line improved 9% year over year.
Willis Towers Watson posted adjusted consolidated revenues of $2.03 billion, down 3% year over year on a reported basis. Revenues increased 3% on an organic basis. The top line however missed the Zacks Consensus Estimate by 2.3%. Adjusted operating income was $314 million, down 1% year over year. Margin expanded 30 bps to 15.5%.
AXIS Capital Holdings posted second-quarter 2022 operating income of $1.74 per share, beating the Zacks Consensus Estimate by about 13%. However, the bottom line decreased 13% year over year. Total operating revenues of $1.4 billion beat the Zacks Consensus Estimate by 5.5%. The top line rose 7.8% year over year on higher net premiums earned.
Net investment income decreased 20.2% year over year to $92.2 million, primarily attributable to lower gains from other investments. AXIS Capital’s underwriting income of about $117 million decreased 21.3% year over year. The combined ratio deteriorated 280 bps to 93.4.
Chubb reported second-quarter 2022 core operating income of $2.40 per share, which outpaced the Zacks Consensus Estimate by about 17%. The bottom line also improved 16% from the year-ago quarter. Net premiums written improved 7.9% year over year to $10.3 billion in the quarter. Net premiums earned rose 8.4% to $9.6 billion. Adjusted net investment income was a record $950 million, up 0.5%.
Property and casualty underwriting income was a record $1.4 billion, up 21.1% from the year-ago quarter. Chubb incurred an after-tax catastrophe loss of $241 million, 6.6% wider year over year. The combined ratio improved 150 bps on a year-over-year basis to a record 84% in the quarter under review.
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Arthur J. Gallagher (AJG) Q2 Earnings Beat, Revenues Miss
Arthur J. Gallagher & Co. (AJG - Free Report) reported second-quarter 2022 adjusted net earnings of $1.70, which beat the Zacks Consensus Estimate by 1.2%. The bottom line increased 45.3% on a year-over-year basis.
Arthur J. Gallagher’s performance was driven by lower expenses and higher revenues across the Brokerage and Risk Management segments.
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 billion missed the Zacks Consensus Estimate by 1%. The top line however improved 5.8% year over year.
Arthur J. Gallagher’s total expenses decreased 1.2% year over year to $1.7 billion in the reported quarter due to lower operating cost, reimbursements, amortization, cost of revenues from clean coal activities and change in estimated acquisition earnout payables. The figure, was higher than our estimate of $1,662.3 million.
Adjusted earnings before interest, tax, depreciation and amortization and change (EBITDAC) in estimated acquisition earnout payables increased 19.6% from the prior-year quarter to $523.4 million. The figure however, was lower than our estimate of $610.1 million
Segmental Results
Brokerage: Revenues of $1.7 billion increased 28.9% year over year on higher commissions, fees and supplemental revenues. The figure missed the Zacks Consensus Estimate of 1,822.9 million
Expenses jumped 21.9% from the year-ago quarter to $1.3 billion due to higher compensation, operating and depreciation.
Adjusted EBITDAC climbed 25.1% from the year-ago level to $555.5 million and the margin contracted 90 basis points (bps) to 32%.
Risk Management: Revenues were up 10.9% year over year to $267.4 million, mainly owing to higher fees.
Expenses rose 6% from the prior-year period to $263.2 million on higher compensation and operating expenses.
Adjusted EBITDAC improved 6.9% year over year to $50.6 million and margin contracted 70 bps to 18.9%.
Corporate: Total revenues of $0.3 million were down 99.8% year over year due to lower royalty income from clean coal licenses.
EBITDAC was a negative $26.3 million compared with a negative $39.9 million in the year-ago quarter.
Financial Update
As of Jun 30, 2022, total assets were $39.9 billion, up 20% from the 2021-end level.
At the end of the quarter, cash and cash equivalents of $523.6 million increased 30% from the 2021-end level.
As of Jun 30, 2022, shareholders’ equity increased 3.5% to $8.8 billion from the level on Dec 31, 2021.
Dividend Update
The board of directors approved a quarterly cash dividend of 51 cents per share. The dividend will be paid out on Sep 16, 2022 to shareholders of record as of Sep 2.
Acquisition Update
In the quarter, Arthur J. Gallagher closed eight acquisitions with estimated annualized revenues of about $50.1 million.
Zacks Rank and Performance of Other Insurers
Currently, Arthur J. Gallagher carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Of the insurance industry players that have reported second-quarter results so far, Willis Towers Watson Public Limited Company (WTW - Free Report) , AXIS Capital Holdings Limited (AXS - Free Report) and Chubb Limited (CB - Free Report) beat the respective Zacks Consensus Estimate for earnings.
Willis Towers Watson delivered second-quarter 2022 adjusted earnings of $2.32 per share, which beat the Zacks Consensus Estimate by 0.4%. The bottom line improved 9% year over year.
Willis Towers Watson posted adjusted consolidated revenues of $2.03 billion, down 3% year over year on a reported basis. Revenues increased 3% on an organic basis. The top line however missed the Zacks Consensus Estimate by 2.3%. Adjusted operating income was $314 million, down 1% year over year. Margin expanded 30 bps to 15.5%.
AXIS Capital Holdings posted second-quarter 2022 operating income of $1.74 per share, beating the Zacks Consensus Estimate by about 13%. However, the bottom line decreased 13% year over year. Total operating revenues of $1.4 billion beat the Zacks Consensus Estimate by 5.5%. The top line rose 7.8% year over year on higher net premiums earned.
Net investment income decreased 20.2% year over year to $92.2 million, primarily attributable to lower gains from other investments. AXIS Capital’s underwriting income of about $117 million decreased 21.3% year over year. The combined ratio deteriorated 280 bps to 93.4.
Chubb reported second-quarter 2022 core operating income of $2.40 per share, which outpaced the Zacks Consensus Estimate by about 17%. The bottom line also improved 16% from the year-ago quarter. Net premiums written improved 7.9% year over year to $10.3 billion in the quarter. Net premiums earned rose 8.4% to $9.6 billion. Adjusted net investment income was a record $950 million, up 0.5%.
Property and casualty underwriting income was a record $1.4 billion, up 21.1% from the year-ago quarter. Chubb incurred an after-tax catastrophe loss of $241 million, 6.6% wider year over year. The combined ratio improved 150 bps on a year-over-year basis to a record 84% in the quarter under review.