Arthur J. Gallagher & Co. · NYSE:AJG

Arthur J. Gallagher & — Merger or Acquisition (December 2024)

35 slides from Arthur J. Gallagher &'s merger presentation, Dec 9, 2024

  1. Slide 1: AJG To Acquire AssuredPartners

    Arthur J. Gallagher & Co. Investor Presentation AJG To Acquire AssuredPartners Presenters: J. Patrick Gallagher, Chairman & CEO Douglas K. Howell, Chief Financial Officer December 9, 2024 ©2023 ARTHUR J. GALLAGHER & CO.

  2. Slide 2: Contents

    CONTENTS Transaction Overview Key Transaction Terms Overview of AssuredPartners Operations Combined Revenue Snapshot Strategic Rationale AssuredPartners Operations Continued Exhibit 1: Additional Transaction Information Exhibit 2: About Gallagher & Historical Financial Performance 2 ©2023 ARTHUR J.

  3. Slide 3: Information Regarding Forward-Looking Statements

    INFORMATION REGARDING FORWARD- LOOKING STATEMENTS This presentation contains certain statements related to future results, or states our intentions, beliefs and expectations or predictions for the future of Arthur J. Gallagher & Co. and its subsidiaries, collectively referred to herein as we, our, u

  4. Slide 4: Important Disclosures

    IMPORTANT DISCLOSURES The information contained in this presentation about AssuredPartners is based on information furnished to Gallagher by AssuredPartners. Estimated synergies are not a guarantee of future performance and involve significant assumptions, risks and uncertainties that may not materi

  5. Slide 5: Information Regarding Non-GAAP Measures

    INFORMATION REGARDING NON-GAAP MEASURES In addition to reporting financial results in accordance with GAAP, this presentation provides information regarding EBITDAC, EBITDAC margin, adjusted EBITDAC, adjusted EBITDAC margin, diluted net earnings per share, as adjusted (adjusted EPS), adjusted revenu

  6. Slide 6: Transaction Overview

    TRANSACTION OVERVIEW ©2023 ARTHUR J. GALLAGHER & CO.

  7. Slide 7: Key Transaction Terms

    KEY TRANSACTION TERMS Gallagher to acquire AssuredPartners $2.9 billion of TTM 9/30/2024 pro forma revenue* Transaction Structure $938 million of TTM 9/30/2024 pro forma EBITDAC and $1.1 billion of pro forma EBITDAC after synergies* (Gallagher trailing twelve month adjusted revenue was $11.1 billion

  8. Slide 8: AssuredPartners Operations Overview

    ASSUREDPARTNERS OPERATIONS OVERVIEW TTM 9/30/2024 TTM 9/30/2024 $2.9 B Pro forma Revenues $938 M Pro forma Adjusted EBITDAC ~10,900 Employees  Founded in 2011, AssuredPartners has grown to the 11th largest US insurance broker AssuredPartners Revenue Mix according to Business Insurance Retail Benefi

  9. Slide 9: Combined TTM 9/30/2024 Revenue Snapshot

    COMBINED TTM 9/30/2024 REVENUE SNAPSHOT Segment Business Mix AJG – CURRENT + ACQUIRED OPERATIONS AJG – PRO FORMA $11.1B $2.9B $14.0B Risk Brokerage Risk Brokerage Management 90% Management 87% 13% Brokerage Risk 10% 100%Brokerage Management Risk Management 100% 0% 0% Geographic Mix AJG – CURRENT + A

  10. Slide 10: Strategic Rationale

    STRATEGIC RATIONALE Size, Scale & Capabilities ▪ Further expanding Gallagher’s U.S. retail middle-market property/casualty and employee benefits focus ▪ Building on new business opportunities by leveraging Gallagher’s expertise, data and analytics and expansive product offerings ▪ Deepening Gallaghe

  11. Slide 11: AssuredPartners Operations Overview: Strong Track Record of Growth & Profitability

    ASSUREDPARTNERS OPERATIONS OVERVIEW: STRONG TRACK RECORD OF GROWTH & PROFITABILITY  3 Year Revenue CAGR of 19%  3 Year Average Organic of approximately 6%  Adjusted EBITDAC Margin of 30% or greater each of the past 3 years* Revenue ($M) $2,800 $2,400 $2,000 $1,600 $1,200 $800 $400 $0 2011 2012 20

  12. Slide 12: AssuredPartners Operations Overview: Disciplined M&A Strategy with Minimal Overlap

    ASSUREDPARTNERS OPERATIONS OVERVIEW: DISCIPLINED M&A STRATEGY WITH MINIMAL OVERLAP AJG had the 10x - 11x Acquisitions 214 Completed Since 2020 ~6% Opportunity to Pursue Average multiple of EBITDAC  Gallagher only had the opportunity to pursue 6% of the 214 acquisitions completed since 2020  Discip

  13. Slide 13: AssuredPartners Operations Overview: Geographically Diverse

    ASSUREDPARTNERS OPERATIONS OVERVIEW: GEOGRAPHICALLY DIVERSE US Revenue Base 22% 30% 21% 6% 21% Revenues by US region based on AssuredPartners estimated full year 2024 revenue 13 ©2023 ARTHUR J. GALLAGHER & CO.

  14. Slide 14: AssuredPartners Operations Overview: Retail

    ASSUREDPARTNERS OPERATIONS OVERVIEW: RETAIL TTM 9/30/2024 $2.4 B Pro forma Revenues ~300 Offices 12 Industry / Product Niches  Provides commercial P/C, employee benefits and personal lines coverage Retail Revenue Mix  Offers full range of commercial P/C lines products Retail Benefits 29%  Employe

  15. Slide 15: AssuredPartners Operations Overview: Wholesale/Specialty

    ASSUREDPARTNERS OPERATIONS OVERVIEW: WHOLESALE/SPECIALTY TTM 9/30/2024 $0.5 B Pro forma Revenues ~100 Offices 50 Unique MGA / MGU / Programs Platforms  Provides wholesale and specialty insurance solutions to retail agents and brokers Wholesale/Specialty Revenue Mix  Focuses on Risk Pool Administra

  16. Slide 16: Combined Brokerage TTM 9/30/2024 Revenue Snapshot

    COMBINED BROKERAGE TTM 9/30/2024 REVENUE SNAPSHOT Business Mix AJG – CURRENT + ACQUIRED OPERATIONS AJG – PRO FORMA $9.7B $2.9B $12.6B Reinsurance Retail Benefits Reinsurance Retail Benefits 13% 23% Retail Benefits 10% 23% 24% Retail P/C 59% Wholesale Wholesale 14% 15% Wholesale/Specialty Retail P/C

  17. Slide 17: Gallagher Sales Tools

    GALLAGHER SALES TOOLS AssuredPartners Producers Get Market Leading Sales Tools & Techniques CORE360℗ is Gallagher’s unique comprehensive approach of evaluating our clients’ risk management program that leverages our analytical tools and diverse resources for customized, maximum impact on six cost dr

  18. Slide 18: In Conclusion – Why Gallagher?

    IN CONCLUSION – WHY GALLAGHER? ✓ Global, diversified insurance broker with long track record of industry leading growth ✓ Proven disciplined acquirer and integrator of business across geographies, product specialty and size spectrum ✓ Strategic transaction that adds scale and accelerates future grow

  19. Slide 19: Exhibit 1: Additional Transaction Information

    EXHIBIT 1: ADDITIONAL TRANSACTION INFORMATION ©2023 ARTHUR J. GALLAGHER & CO.

  20. Slide 20: AssuredPartners TTM Financials as of 9/30/2024

    ASSUREDPARTNERS TTM FINANCIALS AS OF 9/30/2024 M&A Adj AJG AssuredPartners TTM Run-Rate AJG Pro Forma Estimated Pro Forma w/ ($ millions) Sep '24 Adj Adj's TTM Sep '24 Synergies Synergies Commission and Fees 2,621 (17) 2,604 44 2,648 Contingent Revenue 228 0 228 10 238 Investment Revenue 29 (22) 7 6

  21. Slide 21: Synergies & Integration Costs

    SYNERGIES & INTEGRATION COSTS Initial Estimated Synergies Gallagher has initially estimated EBITDAC synergies of approximately $160 million comprised of: Modest revenue synergies of approximately $60 million related to commission rate adequacy, premium finance/fiduciary interest income and the utili

  22. Slide 22: AJG: Financial Flexibility & Liquidity Profile

    AJG: FINANCIAL FLEXIBILITY & LIQUIDITY PROFILE Financial Flexibility Liquidity and Debt Profile  Maintaining investment grade ratings is a priority  $2.0B of cash & cash equivalents as of 9/30/2024  History of low leverage through robust cash  $1.7B capacity on the revolving credit facility as o

  23. Slide 23: Exhibit 2: About Gallagher & Historical Financial Performance

    EXHIBIT 2: ABOUT GALLAGHER & HISTORICAL FINANCIAL PERFORMANCE ©2023 ARTHUR J. GALLAGHER & CO.

  24. Slide 24: Who We Are

    WHO WE ARE One of the World’s Leading Insurance Brokers & P/C Third-Party Administrators Key Facts 130 Countries 54,000+ Employees Investment Grade Credit Ratings & Conservative Financial Profile $ 11.1 B Total Adjusted Revenue $ 3.7B Total Adjusted EBITDAC ➢ Public since 1984 Baa2 (Stable) BBB (Sta

  25. Slide 25: Business Overview

    BUSINESS OVERVIEW Gallagher’s core operations are divided into two segments: Brokerage and Risk Management Adjusted Revenue Split Adjusted EBITDAC Split Brokerage & Risk Management Adj. Revenues Brokerage & Risk Management Adj. EBITDAC $3,500 $3,000 $2,500 $2,000 $1,500 $1,525 $1,841 $2,203 $2,692 $

  26. Slide 26: Brokerage Segment Snapshot

    BROKERAGE SEGMENT SNAPSHOT Brokerage Segment Revenue Overview Where We are Going ✓ Global broker, advisor and consultant for both Property/Casualty (P/C) and employee benefits insurance ✓ Driving new business production programs ✓ Continuing tuck-in M&A ✓ Middle-market commercial focus and also serv

  27. Slide 27: Brokerage Segment Financial Highlights

    BROKERAGE SEGMENT FINANCIAL HIGHLIGHTS Adjusted Revenues Organic Growth Adjusted EBITDAC Adjusted EBITDAC Margin (in $M) Revenue and EBITDAC represent the full year ended December 31 in each year as shown. 27 See important disclosures regarding Non-GAAP measures on page 5 ©2023 ARTHUR J. GALLAGHER &

  28. Slide 28: Risk Management Segment Snapshot

    RISK MANAGEMENT SEGMENT SNAPSHOT Risk Management Segment Revenue Domestic 82% International 18% Overview Where We are Going ✓ Global third party claims adjuster, helping clients reduce ✓ Increasing global presence in claims space risk and manage their claims to better outcomes ✓ Building out special

  29. Slide 29: Risk Management Segment Financial Highlights

    RISK MANAGEMENT SEGMENT FINANCIAL HIGHLIGHTS Adjusted Revenues Organic Growth Adjusted EBITDAC Adjusted EBITDAC Margin (in $M) Revenue and EBITDAC represent the full year ended December 31 in each year as shown. 29 See important disclosures regarding Non-GAAP measures on page 5 ©2023 ARTHUR J. GALLA

  30. Slide 30: Clean Energy Investments – Financial Impact

    CLEAN ENERGY INVESTMENTS – FINANCIAL IMPACT During the period from 2009 through 2020, we made investments in clean energy operations capable of producing tax credits under IRC Section 45. Approximately $800 million of tax credits remain on our balance sheet as a deferred tax asset and are available

  31. Slide 31: Non-GAAP Reconciliations – TTM Adjusted EPS as of 9/30/2024

    NON-GAAP RECONCILIATIONS – TTM ADJUSTED EPS AS OF 9/30/2024 Non-GAAP Non-GAAP Non-GAAP Non-GAAP Non-GAAP AJG Consolidated As Filed As Filed As Filed As Filed As Filed adjustments adjustments adjustments adjustments adjustments TTM dollars in $M Q4 2023 Q1 2024 Q2 2024 Q3 2024 09/30/2024 Q4 2023 Q1 2

  32. Slide 32: Non-GAAP Reconciliations – Revenue, as Adjusted

    NON-GAAP RECONCILIATIONS – REVENUE, AS ADJUSTED Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Revenues, as adjusted (Non-GAAP) Brokerage Segment 2019 2020 2021 2022 2023 4Q 2023 1Q 2024 2Q 2024 3Q 2024 TTM 3rd Q 2024 Brokerage revenu

  33. Slide 33: Non-GAAP Reconciliations – Organic

    NON-GAAP RECONCILIATIONS – ORGANIC Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Organic Revenues (Non-GAAP) FY 2019 FY 2020 FY 2021 FY 2022 FY 2023 Brokerage Segment 2018 2019 2019 2020 2020 2021 2021 2022 2022 2023 Total commission

  34. Slide 34: Non-GAAP Reconciliations – EBITDAC & EBITDAC Margin, as Adjusted

    NON-GAAP RECONCILIATIONS – EBITDAC & EBITDAC MARGIN, AS ADJUSTED Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Reported GAAP Net Earnings to EBITDAC, as Adjusted (Non-GAAP) Brokerage Segment 1Q 2023 1Q 2024 2Q 2023 2Q 2024 3Q 2023 3Q

  35. Slide 35: Non-GAAP Reconciliations – EBITDAC & EBITDAC Margin, as Adjusted

    NON-GAAP RECONCILIATIONS – EBITDAC & EBITDAC MARGIN, AS ADJUSTED Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Reported GAAP Net Earnings to EBITDAC, as Adjusted (Non-GAAP) Combined Brokerage and Risk Management Segments 2019 2020 20

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