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AJG Q2 Earnings Meet Estimates, Revenues Miss on Higher Expenses
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Key Takeaways
Arthur J. Gallagher matched Q2 earnings estimates as acquisitions and solid organic growth lifted revenues.
AJG's Brokerage and Risk Management segments delivered strong organic growth.
AJG repurchased shares, raised its dividend and cited strong client retention and new business momentum.
Arthur J. Gallagher & Co. (AJG - Free Report) reported second-quarter 2026 adjusted earnings of $2.84 per share, in line with the Zacks Consensus Estimate. The bottom line increased 23.5% year over year.
Revenues before reimbursements of $3.95 billion missed the consensus estimate by 2%. Still, the top line rose 24.4% year over year, supported by acquired revenues and solid organic growth. Combined Brokerage and Risk Management organic revenues increased 6%.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Commissions climbed 35.1% year over year to $2.44 billion, while fees advanced 23% to $1.18 billion. Supplemental revenues increased 36.9% to $141 million, and contingent revenues improved 24.7% to $91 million.
These gains were partly offset by a 57.9% decline in interest income, premium finance revenues and other income to $98 million. The prior-year quarter benefited from interest earned on cash raised for the AssuredPartners acquisition.
Gallagher's Brokerage Results Stay Strong
Brokerage revenues rose 25.7% year over year to $3.50 billion. Organic commissions, fees, supplemental revenues and contingent revenues increased 5%, reflecting 4% growth in organic base commissions and fees and a 20% increase in organic supplemental revenues.
Organic contingent revenues declined 8%. During the quarter, the segment completed six acquisitions with estimated annualized revenues of $58 million compared with nine acquisitions and $291 million of annualized revenues acquired a year earlier.
Adjusted Brokerage EBITDAC increased 15.7% to $1.16 billion. EBITDAC represents earnings before interest, taxes, depreciation, amortization and changes in estimated acquisition earnout payables.
The adjusted EBITDAC margin contracted 280 basis points to 33.3%. The comparison was pressured by lower interest income, AssuredPartners seasonality and the inclusion of acquired businesses.
AJG's Risk Management Gains Momentum
Risk Management revenues before reimbursements increased 15.6% year over year to $453 million. Reported fees rose to $445 million from $383 million, while organic fees advanced 12%.
The segment completed one acquisition with estimated annualized revenues of $5 million. In the year-ago period, Risk Management did not close an acquisition.
Adjusted EBITDAC improved 21.7% to $101 million. The adjusted margin expanded 140 basis points to 22.3%, benefiting from stronger fee growth and lower compensation and operating expense ratios.
The adjusted compensation expense ratio declined 160 basis points to 59.6%, helped by headcount controls. The adjusted operating expense ratio edged down 10 basis points to 18.1%, aided by savings in client-related expenses.
Gallagher's Cost Pressure Reported Profit
Total expenses increased 30.6% year over year to $3.59 billion. Compensation expenses rose 29.2% to $2.33 billion, while operating expenses increased 30.8% to $679 million.
Amortization surged 67.2% to $301 million, reflecting the impact of acquired intangible assets. Interest expense increased 6.3% to $168 million.
Reported net earnings fell 12% to $324 million, while diluted GAAP earnings declined to $1.25 per share from $1.40. Total-company EBITDAC nevertheless increased 10.5% to $946 million.
The effective tax rate declined to 21.7% from 22.3%. Corporate EBITDAC improved to a negative $98 million from a negative $111 million in the prior-year quarter.
AJG's Balance Sheet Supports Capital Returns
Arthur J. Gallagher ended the quarter with total assets of $81.81 billion, up 15.8% from year-end 2025. Cash and cash equivalents were $1.39 billion, while total stockholders’ equity increased 1.7% to $23.75 billion.
Corporate-related borrowings totaled $13.48 billion, including $1.52 billion classified as current. Gallagher also had $134 million of premium financing debt.
During the quarter, AJG repurchased shares for around $170 million. The company declared dividends of 70 cents per share, up from 65 cents in the year-ago quarter.
Management highlighted strong client retention, new business generation and continued demand for advice, analytics, specialty expertise and claims advocacy amid a complex risk environment.
Brown & Brown, Inc.’s (BRO - Free Report) second-quarter 2026 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate by 0.9%. The bottom line increased 3.9% year over year. Revenues of $1.67 billion missed the consensus mark by 2.9% but increased 30.4% year over year. Acquisition activity supported the top line, while organic revenues declined 0.7%.
Commissions and fees rose 32.4% to $1.65 billion, while investment and other income declined to $22 million from $36 million. Adjusted EBITDAC margin contracted 100 basis points to 35.7%. Adjusted net income attributable to the company increased 18.4% to $361 million.
Willis Towers Watson Public Limited Company (WTW - Free Report) reported second-quarter 2026 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $3.13 by 7%. Earnings increased 17% year over year. Revenues rose 9% to $2.46 billion and surpassed the consensus estimate of $2.42 billion by 1.7%.
Organic revenues grew 5%. Reported revenues increased from $2.26 billion in the prior-year quarter. Excluding foreign-currency movements, revenues advanced 8%. Acquisitions and divestitures contributed 3 percentage points to the quarterly change. Adjusted EBITDA increased 13% year over year to $529 million. The related margin widened 70 basis points to 21.5%, reflecting improved operating leverage and stronger adjusted profitability.
Aon plc (AON - Free Report) reported second-quarter 2026 adjusted earnings of $3.81 per share, which surpassed the Zacks Consensus Estimate by 1.1%. The bottom line advanced 9% year over year.
Total revenues of $4.2 billion grew 2% year over year. The top line missed the consensus mark by 0.4%. Organic revenue growth was 5%. Total operating expenses inched up 1% year over year to $3.3 billion. Adjusted operating income amounted to $1.2 billion, up 5% year over year and in line with our estimate.
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AJG Q2 Earnings Meet Estimates, Revenues Miss on Higher Expenses
Key Takeaways
Arthur J. Gallagher & Co. (AJG - Free Report) reported second-quarter 2026 adjusted earnings of $2.84 per share, in line with the Zacks Consensus Estimate. The bottom line increased 23.5% year over year.
Revenues before reimbursements of $3.95 billion missed the consensus estimate by 2%. Still, the top line rose 24.4% year over year, supported by acquired revenues and solid organic growth. Combined Brokerage and Risk Management organic revenues increased 6%.
Arthur J. Gallagher & Co. Price, Consensus and EPS Surprise
Arthur J. Gallagher & Co. price-consensus-eps-surprise-chart | Arthur J. Gallagher & Co. Quote
AJG's Revenue Mix Shows Broad Growth
Commissions climbed 35.1% year over year to $2.44 billion, while fees advanced 23% to $1.18 billion. Supplemental revenues increased 36.9% to $141 million, and contingent revenues improved 24.7% to $91 million.
These gains were partly offset by a 57.9% decline in interest income, premium finance revenues and other income to $98 million. The prior-year quarter benefited from interest earned on cash raised for the AssuredPartners acquisition.
Gallagher's Brokerage Results Stay Strong
Brokerage revenues rose 25.7% year over year to $3.50 billion. Organic commissions, fees, supplemental revenues and contingent revenues increased 5%, reflecting 4% growth in organic base commissions and fees and a 20% increase in organic supplemental revenues.
Organic contingent revenues declined 8%. During the quarter, the segment completed six acquisitions with estimated annualized revenues of $58 million compared with nine acquisitions and $291 million of annualized revenues acquired a year earlier.
Adjusted Brokerage EBITDAC increased 15.7% to $1.16 billion. EBITDAC represents earnings before interest, taxes, depreciation, amortization and changes in estimated acquisition earnout payables.
The adjusted EBITDAC margin contracted 280 basis points to 33.3%. The comparison was pressured by lower interest income, AssuredPartners seasonality and the inclusion of acquired businesses.
AJG's Risk Management Gains Momentum
Risk Management revenues before reimbursements increased 15.6% year over year to $453 million. Reported fees rose to $445 million from $383 million, while organic fees advanced 12%.
The segment completed one acquisition with estimated annualized revenues of $5 million. In the year-ago period, Risk Management did not close an acquisition.
Adjusted EBITDAC improved 21.7% to $101 million. The adjusted margin expanded 140 basis points to 22.3%, benefiting from stronger fee growth and lower compensation and operating expense ratios.
The adjusted compensation expense ratio declined 160 basis points to 59.6%, helped by headcount controls. The adjusted operating expense ratio edged down 10 basis points to 18.1%, aided by savings in client-related expenses.
Gallagher's Cost Pressure Reported Profit
Total expenses increased 30.6% year over year to $3.59 billion. Compensation expenses rose 29.2% to $2.33 billion, while operating expenses increased 30.8% to $679 million.
Amortization surged 67.2% to $301 million, reflecting the impact of acquired intangible assets. Interest expense increased 6.3% to $168 million.
Reported net earnings fell 12% to $324 million, while diluted GAAP earnings declined to $1.25 per share from $1.40. Total-company EBITDAC nevertheless increased 10.5% to $946 million.
The effective tax rate declined to 21.7% from 22.3%. Corporate EBITDAC improved to a negative $98 million from a negative $111 million in the prior-year quarter.
AJG's Balance Sheet Supports Capital Returns
Arthur J. Gallagher ended the quarter with total assets of $81.81 billion, up 15.8% from year-end 2025. Cash and cash equivalents were $1.39 billion, while total stockholders’ equity increased 1.7% to $23.75 billion.
Corporate-related borrowings totaled $13.48 billion, including $1.52 billion classified as current. Gallagher also had $134 million of premium financing debt.
During the quarter, AJG repurchased shares for around $170 million. The company declared dividends of 70 cents per share, up from 65 cents in the year-ago quarter.
Management highlighted strong client retention, new business generation and continued demand for advice, analytics, specialty expertise and claims advocacy amid a complex risk environment.
Zacks Rank
Arthur J. Gallagher 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 Brokerage Insurers
Brown & Brown, Inc.’s (BRO - Free Report) second-quarter 2026 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate by 0.9%. The bottom line increased 3.9% year over year. Revenues of $1.67 billion missed the consensus mark by 2.9% but increased 30.4% year over year. Acquisition activity supported the top line, while organic revenues declined 0.7%.
Commissions and fees rose 32.4% to $1.65 billion, while investment and other income declined to $22 million from $36 million. Adjusted EBITDAC margin contracted 100 basis points to 35.7%. Adjusted net income attributable to the company increased 18.4% to $361 million.
Willis Towers Watson Public Limited Company (WTW - Free Report) reported second-quarter 2026 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $3.13 by 7%. Earnings increased 17% year over year. Revenues rose 9% to $2.46 billion and surpassed the consensus estimate of $2.42 billion by 1.7%.
Organic revenues grew 5%. Reported revenues increased from $2.26 billion in the prior-year quarter. Excluding foreign-currency movements, revenues advanced 8%. Acquisitions and divestitures contributed 3 percentage points to the quarterly change. Adjusted EBITDA increased 13% year over year to $529 million. The related margin widened 70 basis points to 21.5%, reflecting improved operating leverage and stronger adjusted profitability.
Aon plc (AON - Free Report) reported second-quarter 2026 adjusted earnings of $3.81 per share, which surpassed the Zacks Consensus Estimate by 1.1%. The bottom line advanced 9% year over year.
Total revenues of $4.2 billion grew 2% year over year. The top line missed the consensus mark by 0.4%. Organic revenue growth was 5%. Total operating expenses inched up 1% year over year to $3.3 billion. Adjusted operating income amounted to $1.2 billion, up 5% year over year and in line with our estimate.