Arthur J. Gallagher & Co. · NYSE:AJG
Arthur J. Gallagher & — Gallagher Arthur J & — Shareholder Meeting (May 2017)
53 slides from Arthur J. Gallagher &'s shareholder meeting presentation, May 16, 2017
Slide 1: 2017 Annual Stockholders Meeting
2017 Annual Stockholders Meeting Tuesday, May 16, 2017 Exhibit 99.1
Slide 2: 2017 Annual Meeting Agenda
Stockholders’ Meeting – May 16, 2017 2017 Annual Meeting Chairman’s Remarks 2016 Review Closing Comments Questions & Answers
Slide 3: Please turn off all cell phones
Stockholders’ Meeting – May 16, 2017 Please turn off all cell phones. All audio and video recording is prohibited.
Slide 4: 2017 Board of Directors
2017 Board of Directors Sherry S. Barrat William L. Bax D. John Coldman Frank E. English, Jr. Elbert O. Hand David S. Johnson Kay W. McCurdy Ralph J. Nicoletti Norman L. Rosenthal, Ph.D.
Slide 5: 2017 Annual Meeting
Stockholders’ Meeting – May 16, 2017 2017 Annual Meeting
Slide 6: Chairman's Remarks: 2016 Review
Stockholders’ Meeting – May 16, 2017 2017 Annual Meeting Chairman’s Remarks 2016 Review
Slide 7: Information Regarding Forward-Looking Statements
Information Regarding Forward-Looking Statements This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements in this presentation include, but are not limited to, statements regarding: (i)
Slide 8: Non-GAAP measures information
This presentation includes references to EBITDAC, Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted Revenues, Adjusted Operating Expense Ratio and Organic Revenue Growth, which are measures not in accordance with, or an alternative to, the GAAP information provided herein. Earnings Measures - Gall
Slide 9: Who We Are
Who We Are Key Facts Key Shareholder Data 2.7% $0.39 52-Week Range*** $57.82 Hi $39.67 Lo Outstanding Shares 178.3M $4.2B Acquired Revenues – 2016** $137.9M $10.1B 2016 Total Adjusted Revenue** Dividend Yield*** 2017 Q1 Dividend/Share*** Market Cap*** 33 Employees 24,790 Founded in 1927 Public since
Slide 10: Snapshot of Core Operations
83% of revenue* We sell insurance and consult on insurance programs Property/Casualty and employee benefits Retail and wholesale Primarily middle-market commercial clients and individuals 78% of C&F revenue is commission – 22% is fee-based 17% of revenue* We adjust claims and help companies and carr
Slide 11: Diverse Revenue Base
Diverse Revenue Base Risk Management* Brokerage* * Brokerage and Risk Management adjusted revenue for the year ended December 31, 2016.
Slide 12: Brokerage Segment
Brokerage Segment (in $M) See important disclosures regarding Non-GAAP measures on Page 8.
Slide 13: Risk Management Segment
(in $M) Risk Management Segment 0% See important disclosures regarding Non-GAAP measures on Page 8.
Slide 14: Brokerage & Risk Management
Brokerage & Risk Management (in $M) See important disclosures regarding Non-GAAP measures on Page 8. 7% 9%
Slide 15: Adjusted Net Earnings from Clean Energy Investments
Adjusted Net Earnings from Clean Energy Investments (in $M) The adjustment referred to above excludes a non-cash after tax gain of $14.1m from a re-consolidation accounting gain, related to clean-energy investments, recorded in 2014.
Slide 16: Dividends Per Share
Dividends Per Share *Indicated – On January 25, 2017, Gallagher’s Board of Directors declared a $0.39 per share first-quarter 2017 dividend. 1984 2017E $1.56*
Slide 17: 2016 Business Highlights
2016 Business Highlights See important disclosures regarding Non-GAAP measures on Page 8 and Page 53. 7% adjusted revenue growth 3.1% total organic growth 9% adjusted EBITDAC growth 49 bps margin improvement Brokerage & Risk Management Combined
Slide 18: 2016 Business Highlights: Mergers & Acquisitions
2016 Business Highlights See important disclosures regarding Non-GAAP measures on Page 8. $137.9m in acquired revenues +37 additional – average $3.7m in revenue ~7.0x EBITDAC Fair valuations Mergers & Acquisitions tuck-in opportunities Focus on
Slide 19: 2016 Business Highlights: Clean Energy
2016 Business Highlights $114.4m of net earnings 13% increase in net earnings over 2015 Clean Energy
Slide 20: 2016 Business Highlights: Global M&A Integration
2016 Business Highlights See important disclosures regarding Non-GAAP measures on Page 8. Global M&A integration Completed Australia/New Zealand & Canada All while accomplishing… U.K. retail largely complete 2016 integration costs less than half of 2015 costs
Slide 21: Where We're Going
Improving new business production Continuing tuck-in M&A Increasing global brand recognition Implement client-service model consistently throughout global platform To be premier provider of claims management services with superior outcomes Increasing global presence in claims space U.S. clients with
Slide 22: Commercial P&C Pricing Shows Shallow Cycle
CPI 140 Rates 92 Commercial P&C Pricing Shows Shallow Cycle Commercial Rate Index reflects the cost of P&C premiums relative to the year 2000. Constructed using Counsel of Insurance Agents and Brokers (CIAB) data. CPI index uses data from the Bureau of Labor Statistics.
Slide 23: Shallow Pricing Cycle
G> Arthur}. Gallagher & Co. Shows Shallow Pricing Cycle ’ 6.0% 508% 4MbA 3th, 2% 4.0% - —= 27% 2.0% osm 0.0% tt i} H 4! dg 2 Ah Ah Ah Ah 1 1 1 9 4 WO 1 4G shh AP GY AY AD Wd 1 0 K EEE CCC CE CC SCE CSE CCC CC PPP OP OO OOO OOOO OO" PAP OTP” PAPO" 0.1% 2.0% 2.9% 4.0% 6.0% CIAB - Change in Average Com
Slide 24: Gallagher Sales Culture Performs Through Any Pricing Cycle
Gallagher Sales Culture Performs Through Any Pricing Cycle Hard Market Shallow Market CIAB is the 4 quarter average. Gallagher’s Brokerage Segment Organic Growth excluding Contingent Commissions. See important disclosures regarding Non-GAAP measures on Page 8. CIAB
Slide 25: Shallow Rate Cycle Is Better for Clients, Carriers & Brokers
Shallow Rate Cycle Is Better for: CLIENTS CARRIERS & BROKERS
Slide 26: How We're Getting There - Consistent Growth Strategy
How We’re Getting There-Consistent Growth Strategy
Slide 27: Consistent Growth Strategy – Organic
Consistent Growth Strategy – Organic
Slide 28: Driving Brokerage Organic Growth
Driving Brokerage Organic Growth
Slide 29: Niche Expertise Teams – Brokerage
Niche Expertise Teams – Brokerage Aviation & Aerospace Automotive Affinity Real Estate Manufacturing Global Risks Construction Personal Marine Life Sciences Hospitality Higher Education Healthcare Environmental Entertainment Energy Private Equity Professional Groups Public Entity Religious/Nonprofit
Slide 30: Driving Risk Management Organic Growth
Driving Risk Management Organic Growth
Slide 31: Risk Mgmt Growth Focuses on Four Market Segments
Risk Mgmt Growth Focuses on Four Market Segments Alternative market participants Large commercial entities Public sector Entities Insurance carriers
Slide 32: Consistent Growth Strategy – M&A
Consistent Growth Strategy – M&A
Slide 33: Annualized Revenues Acquired
Annualized Revenues Acquired (in $M’s) Acquisition Revenue Growth
Slide 34: M&A Opportunities Continue
M&A Opportunities Continue Vast Pipeline Domestic and international markets highly fragmented 18,000+ agents/ brokers just in the U.S. Baby boomers looking for exit strategy Need Gallagher’s expertise Acquisition Units Retail P&C Wholesale Benefits International MGA MGU Captive Limited Consolidators
Slide 35: Platforms In Place for Bolt-on M&A
Platforms In Place for Bolt-on M&A
Slide 36: International Correspondent Broker Network
International Correspondent Broker Network Client Capabilities in over 150 Countries
Slide 37: Productivity and Quality Initiatives
Productivity and Quality Initiatives
Slide 38: Focus Continues: Optimizing Productivity & Quality
Building Productivity Tools – DMS and Workflow Optimizing Real Estate Footprint Investing in Business Intelligence Leveraging Sales Force Management Tools Continue to Improve Productivity and Quality Utilizing Centers of Excellence Controlling Headcount Utilizing Sourcing to Manage Expenses Standard
Slide 39: Benefits Continue: From Centers of Excellence
Benefits Continue: From Centers of Excellence
Slide 40: Centers of Excellence Update
Behind the Scenes Efforts Centers of Excellence Update We now have more than 2,500 associates in four locations
Slide 41: Centers of Excellence Update: Processes
Behind the Scenes Efforts Centers of Excellence Update Responsible for processes such as: Policy checking Policy issuance Certificates of insurance Renewal support Accounting support Claims support
Slide 42: Centers of Excellence Update: Results
Behind the Scenes Efforts Centers of Excellence Update Substantially improved quality Reduced both operating and E&O costs Easy for new acquisition partners to leverage
Slide 43: Reduced Adjusted Operating Expense Ratio
Reduced Adjusted Operating Expense Ratio BROKERAGE RISK MANAGEMENT See important disclosures regarding Non-GAAP measures on Page 8.
Slide 44: Brokerage & Risk Mgmt Adjusted EBITDAC Margin
Brokerage & Risk Mgmt Adjusted EBITDAC Margin See important disclosures regarding Non-GAAP measures on Page 8.
Slide 45: Relentless Focus on Quality and Customer Service
Relentless Focus on Quality and Customer Service America’s Best Employers – 2015 Forbes magazine Voted Best UK Broker for Service – 2015 Strategic Risk’s UK FTSE survey Best TPA in Casualty Claims Handling – 2015 ADVISEN Claims Satisfaction Survey UK Employee Benefits Consultancy of the Year – 2015
Slide 46: Maintaining Culture
| ee G> Arthur. Gallagher « Co. Maintaining Culture
Slide 47: Maintain Unique Culture
Maintain Unique Culture THE GALLAGHER WAY CORE VALUES TEAMWORK PERFORMANCE-BASED CULTURE PEOPLE
Slide 48: One of the World's Most Ethical Companies
One of the World’s Most Ethical Companies as Recognized by Ethisphere six years in a row Industry-leading commitment to ethics and dedication to integrity Chosen for: Promoting ethical business standards and practices Exceeding legal compliance standards Innovating to benefit the public Demonstratin
Slide 49: What Happens If We Get Culture Wrong?
What Happens If We Get Culture Wrong? WORLD’S 20 LARGEST BROKERS 1990 Marsh & McLennan Cos. Inc. 1 Alexander & Alexander Services Inc.2 Willis Corroon P.L.C.4 Sedgwick Group P.L.C.3 Frank B. Hall & Co. Inc.6 Johnson & Higgins5 Jardine Insurance Broking Group Ltd.8 Rollins Burdick Hunter Group Inc.7
Slide 50: Why Invest?
Why Invest? You Believe Our Company Has: Right management Unique culture Proven growth strategy Continuing M&A opportunities Increasing productivity/quality Good use of leverage Strong balance sheet Excellent return to shareholders Gallagher is well positioned for future growth
Slide 51: Why Invest? Total Returns vs S&P 500
Source for data: Bloomberg. Total returns from 1/1/2000 – 12/31/2016 include reinvestment of dividends. 493% AJG S&P 500 112% WHY INVEST? WE ARE JUST GETTING STARTED!
Slide 52: For Additional Information / Questions & Answers
For Additional Information: Ray_Iardella@ajg.com Vice President, Investor Relations Ray Iardella Phone: 630-285-3661 Questions & Answers
Slide 53: Appendix: EBITDAC and Organic Growth Reconciliations
Appendix: EBITDAC and Organic Growth Reconciliations Arthur J. Gallagher & Co. Information Regarding Non-GAAP Measures - Year Ended December 31, 2016 and 2015 (Unaudited - in millions except percentage data) Brokerage Segment Risk Management Segment Corporate Segment Total Company Reconciliation of
Gallagher Arthur J & — Shareholder Meeting (May 2017) on 6ix