Arthur J. Gallagher & Co. · NYSE:AJG

Arthur J. Gallagher & — Investor Presentation (November 2022)

41 slides from Arthur J. Gallagher &'s investor presentation, November 2022

  1. Slide 1: November 2022 Investor Presentation

    November 2022 Investor Presentation ©2021 ARTHUR J. GALLAGHER & CO.

  2. Slide 2: Cautionary Note on Revenue Comparisons and Forward-Looking Statements

    CAUTIONARY NOTE ON REVENUE COMPARISONS PRIOR TO 2017 & INFORMATION ON FORWARD- LOOKING STATEMENTS Revenue Recognition Accounting Standard The financial information in the slides that follow for any period prior to 2017 is presented under “Old GAAP” – i.e., before implementation of the changed revenu

  3. Slide 3: Information Regarding Non-GAAP Measures

    INFORMATION REGARDING NON-GAAP MEASURES This presentation includes references to 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 h

  4. Slide 4: Who We Are

    • Founded in 1927 • Public since 1984 WHO WE ARE • One of the World’s leading insurance brokers* • One of the World’s largest P&C third-party administrators* Key Facts Key Shareholder Data 130 Countries** 42,805 Employees 1.1% Yield*** $ 0.51 2022 Q4 Dividend/Share $ 8.1B Total Adjusted Revenue****

  5. Slide 5: Gallagher Mission Statement

    GALLAGHER MISSION STATEMENT We are an international Sales and Marketing company that plans and administers cost-effective, differentiated property/casualty and human resource risk management programs as brokers, consultants and third-party administrators. Our mission is to: • Provide superior, cost-

  6. Slide 6: Snapshot of Core Operations

    SNAPSHOT OF CORE OPERATIONS • 87% of revenue* • We advise and consult on insurance programs and place insurance forclients • Property/Casualty and employee benefits BROKERAGE • Retail, wholesale and reinsurance SEGMENT • Primarily middle-market commercial clients and individuals • 78% of C&F revenue

  7. Slide 7: Diverse Revenue Base

    DIVERSE REVENUE BASE Brokerage RETAIL BENEFITS INTERNATIONAL RETAIL P/C 21% 37% 52% WHOLESALE 15% DOMESTIC REINSURANCE 63% 12% Risk Management WORKERS’ LIABILITY INTERATIONAL COMPENSATION 32% 61% 16% DOMESTIC 84% PROPERTY 7% Brokerage and Risk Management segments for the trailing 12 months ended Sep

  8. Slide 8: Brokerage Segment - TTM

    BROKERAGE SEGMENT - TTM Adjusted Revenues Organic Revenues $8,000 12% $7,200 10% 25% 8% $6,400 6% $5,600 4% $4,800 2% $5,635 $7,054 6.3% 9.6% $4,000 0% Q3 2021 Q3 2022 Q3 2021 Q3 2022 Adjusted EBITDAC Adjusted EBITDAC Margin $2,500 34.4% $2,300 24% 34.2% $2,100 34.0% $1,900 $1,928 $2,398 34.2% 34.0%

  9. Slide 9: Risk Management Segment - TTM

    RISK MANAGEMENT SEGMENT - TTM Adjusted Revenues Organic Revenues $1,100 15% 15% $1,000 10% $900 5% $920 $1,056 8.8% 12.6% $800 0% Q3 2021 Q3 2022 Q3 2021 Q3 2022 Adjusted EBITDAC Adjusted EBITDAC Margin $200 19.5% $190 11% 19.0% $180 $170 18.5% $177 $196 $160 19.2% 18.6% 18.0% Q3 2021 Q3 2022 Q3 202

  10. Slide 10: Adjusted Net Earnings from Clean Energy Investments

    ADJUSTED NET EARNINGS FROM CLEAN ENERGY INVESTMENTS 2019 and 2020 unfavorably $140 impacted by the sunset of the 2009 era plants. 2020 was further impacted by COVID-19. 2021 was favorably impacted by the COVID-19 recovery, offset somewhat by the $120 sunset of the 2011 era plants. $100 $80 $60 $40 $

  11. Slide 11: Tax Credit Carryforwards

    TAX CREDIT CARRYFORWARDS… $1,200 … should reduce our US federal cash taxes $1,000 paid for many years to come. $800 $600 $400 $200 $233 $112 $147 $342 $478 $683 $857 $962 $998 $1,074 $937 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 *2022 *2022 represents the period ended September 30, 2022

  12. Slide 12: Dividends Per Share

    DIVIDENDS PER SHARE $2.04* $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 1984 2022E *Indicated – On October 26, 2022, Gallagher’s Board of Directors declared a $0.51 per share fourth quarter 2022 dividend. © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 12

  13. Slide 13: 2022 YTD M&A Highlights

    2022 YTD M&A HIGHLIGHTS $105M 20 in estimated annual new merger partners acquired revenues Fair valuations Focus on tuck-in opportunities Brokerage and Risk Management segments for the nine month period ended September 30, 2022 © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 13

  14. Slide 14: Where We Are Going

    WHERE WE ARE GOING • Driving new business production • Continuing tuck-in M&A BROKERAGE • Growing global brand recognition SEGMENT • Leveraging internal resources and processes across divisions • Increasing data utilization to deliver a better client experience • Increasing global presence in claims

  15. Slide 15: US Commercial P/C Pricing & Inflation

    US COMMERCIAL P/C PRICING & INFLATION 180 CPI 170 170 160 150 140 130 Rates 122 120 110 100 90 80 US 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

  16. Slide 16: US Commercial P/C Pricing

    US COMMERCIAL P/C PRICING Commercial Casualty 14% 12% 10% 8% 6% 4% 2% 0% -2% -4% Commercial Property 15% 10% 5% 0% -5% -10% Reflects Counsel of Insurance Agents and Brokers (CIAB) data. Commercial Casualty represents the average of commercial auto, workers comp, general liability, umbrella, cyber an

  17. Slide 17: Sales Culture Performs Through Cycle

    SALES CULTURE PERFORMS THROUGH CYCLE Hard Firm 25.0% Market Soft Market Shallow Market Market 19.8% 19.8% 20.0% 16.0% 15.0% 14.0% 10.0% 9.8% 9.0% 9.3% 10.0% 5.6% 6.0% 5.6% 7.5% 8.1% 5.0% 4.4% 3.8% 4.6% 6.9% 5.0% 2.0% 3.1% 2.0% 4.4% 5.5% 3.8% 3.4% 3.1% -0.8% -1.7% 3.8% 2.0% 1.8% 0.0% -2.4% 0.2% 0.1%

  18. Slide 18: Consistent Growth Strategy

    CONSISTENT GROWTH STRATEGY © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 18

  19. Slide 19: Consistent Growth Strategy: Organic

    CONSISTENT GROWTH STRATEGY: ORGANIC © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 19

  20. Slide 20: Driving Brokerage Organic Growth

    DRIVING BROKERAGE ORGANIC GROWTH © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 20

  21. Slide 21: Niche Expertise Teams - Brokerage

    NICHE EXPERTISE TEAMS - BROKERAGE Affinity Life Sciences Automotive Marine Aviation Nonprofit Construction Personal Energy Private Client Entertainment Public Entity Environmental Real Estate/ Hospitality Equity Advisors Financial Institutions Religious Restaurant Food/Agribusiness Technology Global

  22. Slide 22: Driving Risk Management Organic Growth

    DRIVING RISK MANAGEMENT ORGANIC GROWTH © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 22

  23. Slide 23: Risk Management Growth Focuses on Four Market Segments

    RISK MANAGEMENT GROWTH FOCUSES ON FOUR MARKET SEGMENTS PUBLIC SECTOR ALTERNATIVE ENTITIES MARKET PARTICIPANTS LARGE COMMERCIAL INSURANCE CARRIERS ENTITIES © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 23

  24. Slide 24: Consistent Growth Strategy: M&A

    CONSISTENT GROWTH STRATEGY: M&A © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 24

  25. Slide 25: Acquisition Revenue Growth

    ACQUISITION REVENUE GROWTH $1,100 $1,000 $900 $800 $700 U.S. Property & Casualty Risk Management $500 Employee Benefits Non-U.S. Property & Casualty $400 Reinsurance $300 $200 $100 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 A

  26. Slide 26: M&A Opportunities Continue

    M&A OPPORTUNITIES CONTINUE Vast Pipeline Acquisition Units Limited Strategic Core Competency Consolidators Domestic and international Retail P&C Culture markets highly fragmented Wholesale Proven history 18,000+ agents/ brokers just in the U.S. Benefits Ability to integrate Need Gallagher’s expertis

  27. Slide 27: Platforms in Place for Bolt-On M&A

    PLATFORMS IN PLACE FOR BOLT-ON M&A © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 27

  28. Slide 28: International Correspondent Broker Network

    INTERNATIONAL CORRESPONDENT BROKER NETWORK Client Capabilities in 130 Countries © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 28

  29. Slide 29: Productivity and Quality

    PRODUCTIVITY AND QUALITY © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 29

  30. Slide 30: Optimizing Productivity & Quality

    OPTIMIZING PRODUCTIVITY & QUALITY Utilizing Harmonizing Centers of Agency Excellence Systems Leveraging Investing in Sales Force Business Management Intelligence, Tools CONTINUE TO CONTINUE TO Data & IMPROVE Analytics IMPROVE PRODUCTIVITY & PRODUCTIVITY Utilizing Sourcing & QUALITY QUALITY Standardi

  31. Slide 31: Behind the Scenes Efforts

    BEHIND THE SCENES EFFORTS Centers of Excellence Update Claims support Approximately 8,700 associates Policy checking & issuance • Increase quality • Improve process • Control operating costs Accounting support • Reduce E&O costs Analytics & • Easy for new acquisitions to leverage Robotics Renewal su

  32. Slide 32: Benefits from Centers of Excellence

    BENEFITS FROM CENTERS OF EXCELLENCE Reduce Costs Foster Innovation Increase Speed to Market Focus on Core Improve Quality © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 32

  33. Slide 33: Reduced Adjusted Operating Expense Ratio

    REDUCED ADJUSTED OPERATING EXPENSE RATIO Brokerage Risk Management 21% 29% 20% 27% 19% 18% 25% 17% 23% 16% 21% 15% 14% 19% 13% 17% 12% 20.8% 13.1% 27.0% 21.5% 11% 15% 2008 2022 2008 2022 See Cautionary Note on page 2 regarding the new revenue recognition accounting standard as the trailing 12 month

  34. Slide 34: Brokerage & Risk Management Adjusted EBITDAC Margin

    BROKERAGE & RISK MANAGEMENT ADJUSTED EBITDAC MARGIN 34.0% 32.0% 30.0% 28.0% 26.0% 24.0% 22.0% 20.0% 20.4% 21.2% 22.1% 23.6% 24.5% 25.3% 25.6% 26.0% 26.9% 31.0% 31.6% 32.0% 18.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 TTM 9/30/2022 See Cautionary Note on page 2 regarding the new reven

  35. Slide 35: Relentless Focus on Quality and Customer Service

    Best Place to Work for LGBTQ+ Equality – 2022 HUMAN RIGHTS CAMPAIGN CORPORATE EQUALITY INDEX Relentless America’s Best Employers for Diversity– 2022 FORBES MAGAZINE Focus on Top 100 Internship Program – 2021 Quality and WAYUP Customer Best in Enterprise Resilience – 2021 EVERBRIDGE Service TPA of th

  36. Slide 36: Maintain Unique Culture

    MAINTAIN UNIQUE CULTURE © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 36

  37. Slide 37: Maintain Unique Culture: The Gallagher Way

    MAINTAIN UNIQUE CULTURE The Gallagher Way since 1927 © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 37

  38. Slide 38: One of the World's Most Ethical Companies

    ONE OF THE WORLD’S MOST ETHICAL COMPANIES® Gallagher recognized by Ethisphere® Institute 11 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 ben

  39. Slide 39: Why Invest?

    WHY INVEST? You Believe Our Company Has: • Right management GALLAGHER IS • Unique culture WELL-POSITIONED • Proven growth strategy FOR FUTURE GROWTH • Continuing M&A opportunities • Increasing productivity/quality • Good use of leverage • Strong balance sheet • Excellent return to shareholders © 202

  40. Slide 40: Why Invest? We Are Just Getting Started!

    WHY INVEST? WE ARE JUST GETTING STARTED! 2400% 2,077% AJG 1900% 1400% 900% 400% 276% S&P 500 -100% Source for data: Bloomberg. Total returns from 1/1/2000 – 9/30/2022 include reinvestment of dividends. © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 40

  41. Slide 41: Additional Information

    Additional Information: Ray Iardella Vice President, Investor Relations Ray_Iardella@ajg.com Phone: 630.285.3661 ©2021 ARTHUR J. GALLAGHER & CO.

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