No 5 global broker Arthur J Gallagher has increased annual net profit 66% to $US128.6 million ($145.9 million), using a series of cost-cutting measures to offset the soft market.

The US-based company earned $US1.73 billion ($1.96 billion) in revenues last year, a 5% increase on the previous year. Fourth-quarter net profit contributed $16.8 million ($19 million) to the bottom line, up from $4.7 million ($5.3 million).

CEO Patrick Gallagher Jr says the result comes during “an environment of continued premium rate cuts”.

The company has retrenched 4% of its US workforce in recent months following an earlier 4% reduction last year. Operating costs have also been trimmed.

Mr Gallagher expects further impetus from its return to the collection of contingent commissions – a practice forecast to earn $US10 million a year.

The company began accepting volume-based commission in October despite the opposition of industry advocates such as the Risk and Insurance Management Society, which argues the practice risks potential conflicts of interest.