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Arthur J. Gallagher (AJG) Q4 Earnings Beat, Increase Y/Y
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Arthur J. Gallagher & Co. (AJG - Free Report) reported fourth-quarter 2022 adjusted net earnings of $1.54 per share, which beat the Zacks Consensus Estimate by 2.7% and our estimate of $1.49. Moreover, the bottom line increased about 18.5% on a year-over-year basis.
The company’s performance was driven by higher adjusted revenues and margin expansion across the Brokerage and the Risk Management segments, offset by higher expenses.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Total revenues were $1.9 billion, up 2.8% year over year, primarily driven by higher commissions, fees and supplemental and contingent revenues. Moreover, the top line beat the Zacks Consensus Estimate by 2.7%.
Arthur J. Gallagher’s total expense increased 2.5% year over year to $1.9 billion, attributed to higher compensation, higher operating cost, higher interest, amortization and change in estimated acquisition earnout payables. The figure is higher than our estimate of $1.5 billion.
Adjusted earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 25.9% from the prior-year quarter to $528.1 million. The figure is lower than our estimate of $576.4 million.
Segment Results
Brokerage: Adjusted revenues of $1.6 billion increased 20.6% year over year on higher commissions, fees and supplemental and contingent revenues. Adjusted EBITDAC climbed 25.4% from the prior-year quarter to $530.9 million while margin expanded 120 basis points (bps) to 31.3%.
Expenses increased 21.9% to $1.5 billion driven by higher compensation, operating, depreciation, amortization and change in estimated acquisition earnout payables.
Risk Management: Adjusted revenues were up 16.2% year over year to $289.7 million on higher fees.
Adjusted EBITDAC increased 21.5% year over year to $55.8 million while margin expanded 90 bps to 19.3%.
Expenses increased 8.6% to $274.2 million because of higher compensation and operating cost.
Corporate: EBITDAC was negative $58.6 million compared with negative $49.8 million in the year-ago quarter.
Financial Update
As of Dec 31, 2022, total assets were $38.9 billion, up 16.7% from the 2021-end level. Cash and cash equivalents at year-end decreased 15% from the 2021 level to $342.3 million.
Shareholders’ equity increased 7.4% from Dec 31, 2021 to $9.2 billion as of Dec 31, 2022.
Acquisition Update
In the quarter, the company closed 17 acquisitions with estimated annualized revenues of $141.3 million.
Full-Year Update
For the year, the company’s total revenues increased 4.2% year over year to $8.4 billion.
In 2022, the company closed a total of 36 buyouts with estimated annualized revenues of $244 million.
Adjusted earnings for the full year were $7.74 per share, up 13.6% year over year.
The Travelers Companies, Inc. (TRV - Free Report) reported fourth-quarter 2022 core income of $3.40 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 35% year over year. Total revenues increased 7.5% from the year-ago quarter to about $9.6 billion, primarily driven by higher premiums and fee income. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 10% year over year to $8.8 billion. The figure was higher than our estimate of $8.6 billion. Catastrophe losses totaled $459 million pre-tax, wider than $36 million pre-tax in the prior-year quarter. Travelers witnessed an underwriting gain of $449 million, down 51.5% year over year. The combined ratio deteriorated 650 bps year over year to 94.5.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2022 earnings per share of $1.50 beat the Zacks Consensus Estimate of $1.49 as well as our estimate of $1.34. The bottom line improved 42.9% year over year.
Net premiums earned grew 11% to $12.9 billion and beat our estimate of $12.3 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 bps from the prior-year quarter’s level to 93.9.
RLI Corp. (RLI - Free Report) reported fourth-quarter 2022 operating earnings of $1.53 per share, beating the Zacks Consensus Estimate by 41.7%. The bottom line improved 26.4% from the prior-year quarter. Operating revenues for the reported quarter were $329.5 million, up 19.4% year over year. The top line beat the Zacks Consensus Estimate by 0.4%.
Gross premiums written increased 14% year over year to $383.8 million. Underwriting income of $54 million increased 8.7%, primarily driven by the higher profitability at its Property segment. The combined ratio deteriorated 140 bps year over year to 82.1.
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Arthur J. Gallagher (AJG) Q4 Earnings Beat, Increase Y/Y
Arthur J. Gallagher & Co. (AJG - Free Report) reported fourth-quarter 2022 adjusted net earnings of $1.54 per share, which beat the Zacks Consensus Estimate by 2.7% and our estimate of $1.49. Moreover, the bottom line increased about 18.5% on a year-over-year basis.
The company’s performance was driven by higher adjusted revenues and margin expansion across the Brokerage and the Risk Management segments, offset by higher expenses.
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 were $1.9 billion, up 2.8% year over year, primarily driven by higher commissions, fees and supplemental and contingent revenues. Moreover, the top line beat the Zacks Consensus Estimate by 2.7%.
Arthur J. Gallagher’s total expense increased 2.5% year over year to $1.9 billion, attributed to higher compensation, higher operating cost, higher interest, amortization and change in estimated acquisition earnout payables. The figure is higher than our estimate of $1.5 billion.
Adjusted earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 25.9% from the prior-year quarter to $528.1 million. The figure is lower than our estimate of $576.4 million.
Segment Results
Brokerage: Adjusted revenues of $1.6 billion increased 20.6% year over year on higher commissions, fees and supplemental and contingent revenues.
Adjusted EBITDAC climbed 25.4% from the prior-year quarter to $530.9 million while margin expanded 120 basis points (bps) to 31.3%.
Expenses increased 21.9% to $1.5 billion driven by higher compensation, operating, depreciation, amortization and change in estimated acquisition earnout payables.
Risk Management: Adjusted revenues were up 16.2% year over year to $289.7 million on higher fees.
Adjusted EBITDAC increased 21.5% year over year to $55.8 million while margin expanded 90 bps to 19.3%.
Expenses increased 8.6% to $274.2 million because of higher compensation and operating cost.
Corporate: EBITDAC was negative $58.6 million compared with negative $49.8 million in the year-ago quarter.
Financial Update
As of Dec 31, 2022, total assets were $38.9 billion, up 16.7% from the 2021-end level. Cash and cash equivalents at year-end decreased 15% from the 2021 level to $342.3 million.
Shareholders’ equity increased 7.4% from Dec 31, 2021 to $9.2 billion as of Dec 31, 2022.
Acquisition Update
In the quarter, the company closed 17 acquisitions with estimated annualized revenues of $141.3 million.
Full-Year Update
For the year, the company’s total revenues increased 4.2% year over year to $8.4 billion.
In 2022, the company closed a total of 36 buyouts with estimated annualized revenues of $244 million.
Adjusted earnings for the full year were $7.74 per share, up 13.6% year over year.
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 Insurers
The Travelers Companies, Inc. (TRV - Free Report) reported fourth-quarter 2022 core income of $3.40 per share, which matched the Zacks Consensus Estimate. The bottom line decreased 35% year over year. Total revenues increased 7.5% from the year-ago quarter to about $9.6 billion, primarily driven by higher premiums and fee income. The top-line figure beat the Zacks Consensus Estimate by 0.2%.
Net written premiums increased 10% year over year to $8.8 billion. The figure was higher than our estimate of $8.6 billion. Catastrophe losses totaled $459 million pre-tax, wider than $36 million pre-tax in the prior-year quarter. Travelers witnessed an underwriting gain of $449 million, down 51.5% year over year. The combined ratio deteriorated 650 bps year over year to 94.5.
The Progressive Corporation’s (PGR - Free Report) fourth-quarter 2022 earnings per share of $1.50 beat the Zacks Consensus Estimate of $1.49 as well as our estimate of $1.34. The bottom line improved 42.9% year over year.
Net premiums earned grew 11% to $12.9 billion and beat our estimate of $12.3 billion. The combined ratio — the percentage of premiums paid out as claims and expenses — improved 80 bps from the prior-year quarter’s level to 93.9.
RLI Corp. (RLI - Free Report) reported fourth-quarter 2022 operating earnings of $1.53 per share, beating the Zacks Consensus Estimate by 41.7%. The bottom line improved 26.4% from the prior-year quarter. Operating revenues for the reported quarter were $329.5 million, up 19.4% year over year. The top line beat the Zacks Consensus Estimate by 0.4%.
Gross premiums written increased 14% year over year to $383.8 million. Underwriting income of $54 million increased 8.7%, primarily driven by the higher profitability at its Property segment. The combined ratio deteriorated 140 bps year over year to 82.1.