ROLLING MEADOWS, Ill., April 25, 2024 /PRNewswire/ -- Arthur J. Gallagher & Co. (NYSE:AJG) today reported its financial results for the quarter ended March 31, 2024.  Management will host a webcast conference call to discuss these results on Thursday, April 25, 2024 at 5:15 p.m. ET/4:15 p.m. CT.  To listen to the call, and for printer-friendly formats of this release and the "CFO Commentary" and "Supplemental Quarterly Data," which may also be referenced during the call, please visit ajg.com/IR.  These documents contain both GAAP and non-GAAP measures.  Investors and other users of this information should read carefully the section entitled "Information Regarding Non-GAAP Measures" beginning on page 8.  Summary of Financial Results - First Quarter Revenues Before Diluted Net Earnings  Reimbursements Net Earnings (Loss) EBITDAC (Loss) Per Share Segment 1st Q 24 1st Q 23 1st Q 24 1st Q 23 1st Q 24 1st Q 23 1st Q 24 1st Q 23 (in millions) (in millions) (in millions) Brokerage, as reported $  2,864.9 $ 2,375.2 $   652.6 $  515.3 $ 1,048.7 $     880.6 $        2.92 $        2.37 Net (gains) on divestitures (0.5) (0.2) (0.4) (0.2) (0.5) (0.2) - - Acquisition integration - - 36.4 39.7 48.7 51.2 0.16 0.18 Workforce and lease termination - - 8.7 11.8 11.6 15.4 0.04 0.06 Acquisition related adjustments (26.0) - (8.3) 25.6 23.8 11.4 (0.02) 0.12 Amortization of intangible assets - - 116.7 89.1 - - 0.53 0.41 Effective income tax rate impact - - - (2.5) - - - (0.01) Levelized foreign currency    translation - 5.2 - (0.9) - (0.9) - - Brokerage, as adjusted  * 2,838.4 2,380.2 805.7 677.9 1,132.3 957.5 3.63 3.13 Risk Management, as reported 352.8 297.6 39.3 33.5 70.5 55.9 0.18 0.15 Net (gains) losses on divestitures 0.2 (0.1) 0.1 (0.1) 0.2 (0.1) - - Acquisition integration - - 0.5 0.4 0.7 0.6 - - Workforce and lease termination - - 0.9 0.5 1.2 0.6 - - Acquisition related adjustments - - 0.1 0.1 0.1 0.1 - - Amortization of intangible assets - - 4.5 1.1 - - 0.02 0.01 Levelized foreign currency    translation - (1.1) - (0.1) - (0.2) - - Risk Management, as adjusted  * 353.0 296.4 45.4 35.4 72.7 56.9 0.20 0.16 Corporate, as reported 0.4 0.1 (79.2) (62.2) (62.7) (61.6) (0.36) (0.28) Transaction-related costs  - - 2.7 3.3 3.2 4.4 0.02 0.01 Corporate, as adjusted  * 0.4 0.1 (76.5) (58.9) (59.5) (57.2) (0.34) (0.27) Total Company, as reported $  3,218.1 $ 2,672.9 $   612.7 $  486.6 $ 1,056.5 $     874.9 $        2.74 $        2.24 Total Company, as adjusted  * $  3,191.8 $ 2,676.7 $   774.6 $  654.4 $ 1,145.5 $     957.2 $        3.49 $        3.02 Total Brokerage & Risk  Management, as reported $  3,217.7 $ 2,672.8 $   691.9 $  548.8 $ 1,119.2 $     936.5 $        3.10 $        2.52 Total Brokerage & Risk  Management, as adjusted  * $  3,191.4 $ 2,676.6 $   851.1 $  713.3 $ 1,205.0 $ 1,014.4 $        3.83 $        3.29 *  For first quarter 2024, the pretax impact of the Brokerage segment adjustments totals $204.7 million, mostly due to non‑cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $51.6 million relating to these items.  For first quarter 2024, the pretax impact of the Risk Management segment adjustments totals $8.5 million, with a corresponding adjustment to the provision for income taxes of $2.4 million relating to these items.  For first quarter 2024, the pretax impact of the Corporate segment adjustments totals $3.2 million, with a corresponding adjustment to the benefit for income taxes of $0.5 million relating to these items.  A detailed reconciliation of the 2024 and 2023 provision (benefit) for income taxes is shown on pages 12 and 13.  (1 of 13) "We had a great first quarter to begin 2024" said J. Patrick Gallagher, Jr., Chairman and CEO.  "Our core brokerage and risk management segments combined to post 20% revenue growth, including 9.4% organic revenue growth.  At the same time, we grew net earnings by 26% and adjusted EBITDAC by 19%. "First quarter primary insurance renewal premiums were up 7%.  Property increases were up nearly 10% and casualty increases were approaching 7%, overcoming headwinds from professional lines like D&O and cyber.  Reinsurance carriers are broadly maintaining their discipline on pricing, terms and conditions, while meeting increased client demand with incremental capacity.  Overall, our insurance and reinsurance carrier partners continue to behave rationally, pushing for rate increases where it's needed by line of business, industry and geography. "Customers are buying more insurance.  Our first quarter data is showing solid customer business activity and mid-term policy endorsements, audits and cancellations combined were again ahead of last year's levels.  We are also seeing continued labor market strength and further increases in new claims arising, also pointing to a resilient economic backdrop for our clients. "As I look across our business, we remain well positioned to win new clients and retain our existing customers.  I believe we have the best team in the business, with leading talent and expertise, stellar service, superior analytics, vast amounts of data and a wide global reach.  We are in an enviable industry position and I am excited about the remainder of 2024 and beyond!" Brokerage Segment Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Organic Revenues (Non-GAAP) 1st Q 2024 1st Q 2023 Base Commissions and Fees Commissions and fees, as reported $       2,600.3 $       2,160.1 Less commissions and fees from acquisitions  (244.2) - Levelized foreign currency translation - 6.0 Organic base commissions and fees $       2,356.1 $       2,166.1 Organic change in base commissions and fees  8.8 % Supplemental Revenues Supplemental revenues, as reported $             93.9 $             81.6 Less supplemental revenues from acquisitions (2.3) - Levelized foreign currency translation - 0.4 Organic supplemental revenues $             91.6 $             82.0 Organic change in supplemental revenues 11.7 % Contingent Revenues Contingent revenues, as reported $             86.0 $             71.8 Less contingent revenues from acquisitions (7.2) - Levelized foreign currency translation - 0.2 Organic contingent revenues   $             78.8 $             72.0 Organic change in contingent revenues 9.4 % Total reported commissions, fees, supplemental revenues and contingent revenues $       2,780.2 $       2,313.5 Less commissions, fees, supplemental revenues and contingent revenues from acquisitions  (253.7) - Levelized foreign currency translation - 6.6 Total organic commissions, fees, supplemental revenues and contingent revenues   $       2,526.5 $       2,320.1 Total organic change  8.9 % Acquisition Activity  1st Q 2024  1st Q 2023  Number of acquisitions closed  * 12 10 Estimated annualized revenues acquired (in millions) $         69.2 $         69.0 *  In the first quarter of 2024, Gallagher issued 357,000 shares of its common stock directly to sellers in connection with tax-free exchange acquisitions.  (2 of 13) Brokerage Segment Reported GAAP to Adjusted Non-GAAP Reconciliations (continued) (dollars in millions): Compensation Expense and Ratios 1st Q 2024 1st Q 2023 Compensation expense, as reported $       1,476.8 $       1,206.1 Acquisition integration  (24.5) (34.1) Workforce and lease termination related charges (10.4) (13.4) Acquisition related adjustments (49.8) (11.4) Levelized foreign currency translation - 5.7 Compensation expense, as adjusted $       1,392.1 $       1,152.9 Reported compensation expense ratios using reported  revenues on page 1 * 51.6 % 50.8 % Adjusted compensation expense ratios using adjusted  revenues on page 1  ** 49.0 % 48.4 % *  Reported first quarter 2024 compensation ratio was 0.8 pts higher than first quarter 2023.  This ratio was primarily impacted by certain 2023 acquisitions that run a higher compensation ratio, as well as increased acquisition related adjustments, partially offset by lower integration costs.   ** Adjusted first quarter 2024 compensation ratio was 0.6 pts higher than first quarter 2023.  This ratio was primarily impacted by certain 2023 acquisitions that run a higher compensation ratio.   Operating Expense and Ratios 1st Q 2024 1st Q 2023 Operating expense, as reported  $           339.4 $           288.5 Acquisition integration  (24.2) (17.1) Workforce and lease termination related charges (1.2) (2.0) Levelized foreign currency translation - 0.4 Operating expense, as adjusted $           314.0 $           269.8 Reported operating expense ratios using reported  revenues on page 1  * 11.9 % 12.2 % Adjusted operating expense ratios using adjusted  revenues on page 1  ** 11.1 % 11.3 % *  Reported first quarter 2024 operating expense ratio was 0.3 pts lower than first quarter 2023.  This ratio was primarily impacted by savings in real estate expenses related to office consolidations, partially offset by higher integration costs. ** Adjusted first quarter 2024 operating expense ratio was 0.2 pts lower than first quarter 2023.  This ratio was primarily impacted by savings in real estate expenses related to office consolidations. (3 of 13) Brokerage Segment Reported GAAP to Adjusted Non-GAAP Reconciliations (continued) (dollars in millions): Net Earnings to Adjusted EBITDAC (Non-GAAP) 1st Q 2024 1st Q 2023 Net earnings, as reported $           652.6 $           515.3 Provision for income taxes 223.5 175.6 Depreciation 32.8 27.9 Amortization 156.0 120.2 Change in estimated acquisition earnout payables (16.2) 41.6 EBITDAC  1,048.7 880.6 Net (gains) on divestitures (0.5) (0.2) Acquisition integration 48.7 51.2 Workforce and lease termination related charges 11.6 15.4 Acquisition related adjustments 23.8 11.4 Levelized foreign currency translation - (0.9) EBITDAC, as adjusted  $       1,132.3 $           957.5 Net earnings margin, as reported using reported  revenues on page 1 22.8 % 21.7 % EBITDAC margin, as adjusted using adjusted  revenues on page 1 * 39.9 % 40.2 % *  The roll-in of M&A, which naturally runs at lower margins, impacted the year over year change in first quarter EBITDAC margin by approximately 90 basis points.    Risk Management Segment Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Organic Revenues (Non-GAAP) 1st Q 2024 1st Q 2023 Fees $           341.9 $           288.8 International performance bonus fees  2.6 4.2 Fees as reported 344.5 293.0 Less fees from acquisitions (13.7) - Levelized foreign currency translation - (1.1) Organic fees  $           330.8 $           291.9 Organic change in fees 13.3 % (4 of 13) Risk Management Segment Reported GAAP to Adjusted Non-GAAP Reconciliations (continued) (dollars in millions): Compensation Expense and Ratios 1st Q 2024 1st Q 2023 Compensation expense, as reported $           213.9 $           179.8 Acquisition integration (0.6) (0.6) Workforce and lease termination related charges (0.8) (0.4) Acquisition related adjustments (0.1) (0.1) Levelized foreign currency translation - (0.8) Compensation expense, as adjusted $           212.4 $           177.9 Reported compensation expense ratios using reported  revenues (before reimbursements) on page 1  * 60.6 % 60.4 % Adjusted compensation expense ratios using adjusted  revenues (before reimbursements) on page 1 * 60.2 % 60.0 % *  Reported first quarter 2024 compensation ratio was 0.2 pts higher than first quarter 2023.  Adjusted first quarter 2024 compensation ratio was 0.2 pts higher than first quarter 2023.  Both ratios were primarily impacted by increased incentive compensation, partially offset by savings related to headcount controls.   Operating Expense and Ratios