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Hardening rates raise Gallagher’s earnings

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Global broker Gallagher has recorded a 36% rise in second quarter net earnings to $US161.8 million ($224 million) from a year earlier, fuelled partially from hardening property and casualty (P&C) rates.

Increases in P&C rates during the June quarter helped cushion declines in renewals caused by the business fallout from the pandemic.

Gallagher says new busines generation for the brokerage operations remain at pre-pandemic levels, and in June and July, renewal customer exposure units have improved from the lows seen in April and May as clients reopened for business.

Adjusted brokerage net earnings climbed higher to $US214.3 million ($297 million) from $US146.7 million ($203 million). Combined with the risk management arm, the business grew its adjusted net earnings by 39% to $US229 million ($317 million).

“We delivered an excellent second quarter,” Chairman, President and CEO Patrick Gallagher said.

“We grew our combined brokerage and risk management revenues in the second quarter, organically and through mergers and acquisitions. In the second quarter, most P&C rates increased mid-to-high single digits, offsetting exposure unit decreases.

“Looking forward, we feel highly confident our expense control efforts can offset a lull in organic growth and we see our [mergers and acquisitions] program returning to more historical levels by the end of the year.”

The business has moved to cut costs by limiting discretionary spending such as advertising, saving about $US74 million ($102 million) pre-tax during the quarter. It says the action will help the business mitigate “a potential extended economic slump”.