Arthur J. Gallagher Posts 2Q Results
Arthur J. Gallagher & Co. has announced its second quarter financial results were strong despite falling prices in the insurance market.
“This was another strong quarter for Gallagher despite softening rates in the insurance marketplace. Our Brokerage and Risk Management segments each posted record second quarter earnings,” said J. Patrick Gallagher, Jr., president and CEO. “On a combined basis our Brokerage and Risk Management segments posted excellent results
for the second quarter:
• 26% growth in earnings per share,
• 13% growth in revenues, of which 8 percent is organic,
• 20% growth in pretax earnings, and
• 18% pretax margin, a 1.1 point improvement over second quarter 2003, despite margin drag of 0.4 percent related to expensing stock-based compensation and 0.3 percent related to foreign currency translation.
“These results demonstrate that Gallagher’s core businesses are performing well in the changing marketplace,” Gallagher said in a statement.
Brokerage Segment Second Quarter Highlights
• 19 percent growth in earnings per share.
• 11 percent growth in revenues, of which 4 percent is organic.
• 14 percent growth in pretax earnings.
• 19 percent pretax margin, a 1 point improvement over second quarter 2003, despite margin drag of 0.5% related to expensing stock-based compensation and 0.4 percent related to foreign currency translation.
• Acquisition pipeline remains strong.
Risk Management Segment Second Quarter Highlights
• 50 percent growth in earnings per share.
• 19 percent growth in revenues; all of which is organic.
• 41percent growth in pretax earnings.
• 16 percent pretax margin, a 3 point improvement over second quarter 2003.
Financial Services Segment Highlights
• Synthetic fuel production was ahead of prior year, resulting in a 20 percent effective tax rate for the company in 2004 versus 25 percent in 2003.
• Adoption of FIN 46 – In the third quarter of 2003, Gallagher adopted a new accounting pronouncement, FASB Interpretation No. 46 (FIN 46) – “Consolidation of Variable Interest Entities,” which required the company to consolidate one investment not previously consolidated because the company does not control the investment through a majority voting interest. Previously reported financial statements were not restated for the adoption of FIN 46.