Premiums in Australia and New Zealand may be heading higher, US-based broker Arthur J Gallagher says in its first-quarter earnings report.

Globally, a slight headwind continues in property and casualty, but the rate environment varies by geography, Chairman, President and CEO Patrick Gallagher told a results briefing.

“Pricing remains challenging in our London specialty unit, while UK retail continues to see modest pricing headwinds,” Mr Gallagher said. “On a more favourable note, Australia and New Zealand appear to be turning the corner into positive rate territory.”

In its risk management business, international organic fee growth was hampered by a law change in South Australia that capped the time an injured worker can receive benefits.

“The law change will likely be a headwind for our international business through year-end,” Mr Gallagher said. “However, we did have a number of new business wins in Australia that should allow us to post greater than 3% organic growth for the year.”

Arthur J Gallagher’s overall earnings grew 19.8% to $US55.7 million ($74.5 million) in the quarter, following a stronger result from the major broking division.

The group also completed 12 acquisitions in the period as it benefitted from a carryover of deals from last year and a “very strong” pipeline.

“Coming off a terrific 2016, we delivered solid organic growth, outstanding revenue growth from our tuck-in mergers and acquisitions strategy, and strong margin expansion in the first quarter,” Mr Gallagher said. “We are well positioned for the remainder of this year.”

Revenue grew to $US1.41 billion ($1.89 billion) from $US1.3 billion ($1.7 billion) in the corresponding period last year.

Broking earnings gained 18.6% to $US72.8 million ($97.2 million), while the risk management result eased 4.7% to $US14.3 million ($19.1 million).