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Arthur J. Gallagher (AJG) Q4 Earnings & Revenues Top, Up Y/Y
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Arthur J. Gallagher & Co. (AJG - Free Report) reported fourth-quarter 2023 adjusted net earnings of $1.85 per share, which beat the Zacks Consensus Estimate by 1.09%. The bottom line increased 24% on a year-over-year basis.
Arthur J. Gallagher’s performance was driven by higher adjusted revenues and margin expansion across the Brokerage and Risk Management segments, partially offset by higher expenses.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Total revenues of $2.4 billion beat the Zacks Consensus Estimate by 0.9%. The top line also improved 19.3% year over year.
Arthur J. Gallagher’s total expenses increased 31.9% year over year to $2.5 billion in the reported quarter due to higher compensation, operating, reimbursements, interest, depreciation, amortization and change in estimated acquisition earnout payables.
Earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 13.7% from the prior-year quarter to $514.3 million.
Segmental Results
Brokerage: Revenues of $2 billion increased 19.6% year over year on higher commissions, fees, supplemental revenues, contingent revenues, interest income, premium finance revenues and other income. The figure matched the Zacks Consensus Estimate.
Expenses jumped 33.7% from the year-ago quarter to $2 billion due to higher compensation, operating expenses, amortization and depreciation. Adjusted EBITDAC climbed 21.5% from the year-ago level to $646.9 million. Margin expanded 50 basis points (bps) to 31.6%.
Risk Management: Revenues were up 17.2% year over year to $340.3 million, mainly owing to higher fees and interest income and other costs.
Expenses rose 17.3% from the prior-year period to $321.7 million on higher compensation, operating, reimbursements, depreciation and amortization. Adjusted EBITDAC improved 27.4% year over year to $71.5 million. Margin expanded 170 bps to 21%.
Corporate: EBITDAC was a negative $49.4 million compared with a negative $58.6 million in the year-ago quarter.
Financial Update
As of Dec 31, 2023, total assets were $51.6 billion, up 34.5% from the 2022-end level. At the end of the quarter, cash and cash equivalents of $ 971.5 million increased 31.6% from the 2022-end level. As of Dec 31, 2023, shareholders’ equity rose 17.7% to $10.8 billion from the level on Dec 31, 2022.
Dividend Update
The board of directors approved a quarterly cash dividend of 55 cents per share.
Acquisition Update
In the quarter, Arthur J. Gallagher closed 13 acquisitions with estimated annualized revenues of about $350.7 million.
Full-Year Update
For the year, the company’s total revenues increased 18.4% year over year to $9.9 billion.
In 2023, the company closed a total of 50 buyouts with estimated annualized revenues of $826 million.
Adjusted earnings for the full year were $8.76 per share, up 16% year over year.
Marsh & McLennan Companies, Inc. (MMC - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.68, which beat the Zacks Consensus Estimate by 5%. The bottom line rose 14% year over year. Consolidated revenues improved 11% year over year to $5.6 billion in the quarter under review. The figure increased 7% on an underlying basis. Also, the top line outpaced the consensus mark by a whisker.
Total operating expenses of $4.5 billion increased 2.5% year over year in the fourth quarter and beat our estimate of $4.3 billion. Total expenses in the Risk and Insurance Services segment witnessed a 1.8% year-over-year increase, whereas the Consulting segment’s expenses grew 5.6% year over year. MMC has reported an adjusted operating income of $1.2 billion in the quarter under review, which climbed 16% year over year. The adjusted operating margin of 23.3% improved 130 bps year over year.
Brown & Brown, Inc.’s (BRO - Free Report) fourth-quarter 2023 adjusted earnings of 58 cents per share beat the Zacks Consensus Estimate by 9.4%. The bottom line increased 16% year over year. Total revenues of $1.03 billion beat the Zacks Consensus Estimate by 4.6%. The top line improved 13.8% year over year. The upside can be primarily attributed to commission and fees, which grew 12.4% year over year to $1 billion. Our estimate for commission and fees was $943.6 million. Organic revenues improved 7.7% to $922.9 million in the quarter under review.
Investment income increased year over year to $18.5 million from $4.7 million in the year-ago quarter. The Zacks Consensus Estimate for the metric was pegged at $16.7 million and our estimate was $17.6 million. Adjusted EBITDAC was $317.7 million, up 11.7% year over year. EBITDAC margin, however, contracted 40 bps year over year to 31%. Our estimate for adjusted EBITDAC was $291.4 million. Total expenses decreased 5.1% to $671.1 million. Our estimate was $764.9 million.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Operating revenues came in at $3.2 billion, up 9.3% year over year. The top line beat the consensus estimate by 1.3% Net investment income surged 35.5% to a record $313.3 million, driven by a 52.9% increase in the core portfolio. The figure was higher than our estimate of $276 million. Total expenses increased 7.3% to $2.7 billion. The figure matched our estimate.
The loss ratio improved 60 bps to 60, while the expense ratio deteriorated 60 bps year over year to 28.4. Catastrophe losses of $32 million in the quarter were wider than the $30.8 million incurred in the year-ago quarter. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio (a measure of underwriting profitability) remained flat year over year to 88.4.
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Arthur J. Gallagher (AJG) Q4 Earnings & Revenues Top, Up Y/Y
Arthur J. Gallagher & Co. (AJG - Free Report) reported fourth-quarter 2023 adjusted net earnings of $1.85 per share, which beat the Zacks Consensus Estimate by 1.09%. The bottom line increased 24% on a year-over-year basis.
Arthur J. Gallagher’s performance was driven by higher adjusted revenues and margin expansion across the Brokerage and Risk Management segments, partially 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 of $2.4 billion beat the Zacks Consensus Estimate by 0.9%. The top line also improved 19.3% year over year.
Arthur J. Gallagher’s total expenses increased 31.9% year over year to $2.5 billion in the reported quarter due to higher compensation, operating, reimbursements, interest, depreciation, amortization and change in estimated acquisition earnout payables.
Earnings before interest, tax, depreciation and amortization and change in estimated acquisition earnout payables (EBITDAC) grew 13.7% from the prior-year quarter to $514.3 million.
Segmental Results
Brokerage: Revenues of $2 billion increased 19.6% year over year on higher commissions, fees, supplemental revenues, contingent revenues, interest income, premium finance revenues and other income. The figure matched the Zacks Consensus Estimate.
Expenses jumped 33.7% from the year-ago quarter to $2 billion due to higher compensation, operating expenses, amortization and depreciation.
Adjusted EBITDAC climbed 21.5% from the year-ago level to $646.9 million. Margin expanded 50 basis points (bps) to 31.6%.
Risk Management: Revenues were up 17.2% year over year to $340.3 million, mainly owing to higher fees and interest income and other costs.
Expenses rose 17.3% from the prior-year period to $321.7 million on higher compensation, operating, reimbursements, depreciation and amortization. Adjusted EBITDAC improved 27.4% year over year to $71.5 million. Margin expanded 170 bps to 21%.
Corporate: EBITDAC was a negative $49.4 million compared with a negative $58.6 million in the year-ago quarter.
Financial Update
As of Dec 31, 2023, total assets were $51.6 billion, up 34.5% from the 2022-end level. At the end of the quarter, cash and cash equivalents of $ 971.5 million increased 31.6% from the 2022-end level. As of Dec 31, 2023, shareholders’ equity rose 17.7% to $10.8 billion from the level on Dec 31, 2022.
Dividend Update
The board of directors approved a quarterly cash dividend of 55 cents per share.
Acquisition Update
In the quarter, Arthur J. Gallagher closed 13 acquisitions with estimated annualized revenues of about $350.7 million.
Full-Year Update
For the year, the company’s total revenues increased 18.4% year over year to $9.9 billion.
In 2023, the company closed a total of 50 buyouts with estimated annualized revenues of $826 million.
Adjusted earnings for the full year were $8.76 per share, up 16% year over year.
Zacks Rank
AJG currently 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 Players
Marsh & McLennan Companies, Inc. (MMC - Free Report) has reported fourth-quarter 2023 adjusted earnings per share of $1.68, which beat the Zacks Consensus Estimate by 5%. The bottom line rose 14% year over year. Consolidated revenues improved 11% year over year to $5.6 billion in the quarter under review. The figure increased 7% on an underlying basis. Also, the top line outpaced the consensus mark by a whisker.
Total operating expenses of $4.5 billion increased 2.5% year over year in the fourth quarter and beat our estimate of $4.3 billion. Total expenses in the Risk and Insurance Services segment witnessed a 1.8% year-over-year increase, whereas the Consulting segment’s expenses grew 5.6% year over year.
MMC has reported an adjusted operating income of $1.2 billion in the quarter under review, which climbed 16% year over year. The adjusted operating margin of 23.3% improved 130 bps year over year.
Brown & Brown, Inc.’s (BRO - Free Report) fourth-quarter 2023 adjusted earnings of 58 cents per share beat the Zacks Consensus Estimate by 9.4%. The bottom line increased 16% year over year. Total revenues of $1.03 billion beat the Zacks Consensus Estimate by 4.6%. The top line improved 13.8% year over year.
The upside can be primarily attributed to commission and fees, which grew 12.4% year over year to $1 billion. Our estimate for commission and fees was $943.6 million. Organic revenues improved 7.7% to $922.9 million in the quarter under review.
Investment income increased year over year to $18.5 million from $4.7 million in the year-ago quarter. The Zacks Consensus Estimate for the metric was pegged at $16.7 million and our estimate was $17.6 million. Adjusted EBITDAC was $317.7 million, up 11.7% year over year. EBITDAC margin, however, contracted 40 bps year over year to 31%. Our estimate for adjusted EBITDAC was $291.4 million. Total expenses decreased 5.1% to $671.1 million. Our estimate was $764.9 million.
W.R. Berkley Corporation’s (WRB - Free Report) fourth-quarter 2023 operating income of $1.45 per share beat the Zacks Consensus Estimate of $1.35 by 7.4%. The bottom line improved 25% year over year. W.R. Berkley’s net premiums written were $2.7 billion, up 12% year over year. The figure was lower than our estimate of $2.8 billion. Operating revenues came in at $3.2 billion, up 9.3% year over year. The top line beat the consensus estimate by 1.3%
Net investment income surged 35.5% to a record $313.3 million, driven by a 52.9% increase in the core portfolio. The figure was higher than our estimate of $276 million. Total expenses increased 7.3% to $2.7 billion. The figure matched our estimate.
The loss ratio improved 60 bps to 60, while the expense ratio deteriorated 60 bps year over year to 28.4. Catastrophe losses of $32 million in the quarter were wider than the $30.8 million incurred in the year-ago quarter. Pre-tax underwriting income increased 8.2% to $315.9 million. The consolidated combined ratio (a measure of underwriting profitability) remained flat year over year to 88.4.