Arthur J. Gallagher & Co. · NYSE:AJG

Arthur J. Gallagher & — Investor Presentation (November 2021)

41 slides from Arthur J. Gallagher &'s investor presentation, November 2021

  1. Slide 1: November 2021 Investor Presentation

    November 2021 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 new revenue re

  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 WHO WE ARE • Public since 1984 • One of the World’s leading insurance brokers* • One of the World’s largest P&C third-party administrators* Key Facts Key Shareholder Data 57 Countries** 35,911 Employees 1.2% Yield** 0.48 $ 2021 Q4 Dividend/Share $ 6.7B Total Adjusted Revenue*** 290

  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 • 86% of revenue* • We advise and consult on insurance programs and place insurance forclients BROKERAGE • Property/Casualty and employee benefits • Retail and wholesale SEGMENT • Primarily middle-market commercial clients and individuals • 76% of C&F revenue is commissio

  7. Slide 7: Diverse Revenue Base

    DIVERSE REVENUE BASE Brokerage INTERNATIONAL RETAIL RETAIL P/C BENEFITS 36% 58% 24% Wholesale DOMESTIC 18% 64% Risk Management WORKERS’ LIABILITY INTERATIONAL COMPENSATION 63% 29% 17% DOMESTIC 83% PROPERTY 8% Brokerage and Risk Management segments for the trailing 12 months ended September 30, 2021

  8. Slide 8: Brokerage Segment

    BROKERAGE SEGMENT Adjusted Revenues Organic Growth $4,600 8.0% 11% $4,400 6.0% $4,200 4.0% $4,000 $4,034 $4,491 3.2% 7.2% $3,800 2.0% 3Q 2020 3Q 2021 3Q 2020 3Q 2021 Adjusted EBITDAC Adjusted EBITDAC Margin $1,600 36.0% 17% $1,500 34.0% $1,400 32.0% $1,300 $1,353 $1,580 33.6% 35.2% $1,200 30.0% 3Q 2

  9. Slide 9: Risk Management Segment

    RISK MANAGEMENT SEGMENT Adjusted Revenues Organic Growth $720 15.0% $700 $680 10.0% $660 16% 5.0% $640 11.9% $620 0.0% $600 ‐3.7% $617 $713 $580 ‐5.0% 3Q 2020 3Q 2021 3Q 2020 3Q 2021 Adjusted EBITDAC Adjusted EBITDAC Margin $150 20.0% $140 $130 25% 19.0% $120 18.0% $110 $110 $137 17.8% 19.2% $100 17

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

    ADJUSTED NET EARNINGS FROM CLEAN ENERGY INVESTMENTS $130 $120 $110 $100 $90 Sunset of $80 2009 era plants and $70 COVID-19 $60 impact $50 $40 $30 $20 $10 $6.7 $2.2 $31.0 $57.2 $79.9 $95.4 $95.7 $110.3 $118.6 $97.7 $69.8 $0 ‐$10 $(6.1) 2009 2010 2011 2012 2013 2014* 2015 2016 2017 2018 2019 2020 Esti

  11. Slide 11: Tax Credit Carryforwards

    TAX CREDIT CARRYFORWARDS… … should reduce our US federal cash taxes paid for many years to come. $1,200 $1,000 $800 $600 $400 $200 $147 $233 $112 $342 $478 $683 $857 $962 $998 $1,080 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 3Q 2021 The amounts above represent the outstanding deferred tax asse

  12. Slide 12: Dividends Per Share

    DIVIDENDS PER SHARE $1.92* $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 1984 2021E *Indicated – On October 27, 2021, Gallagher’s Board of Directors declared a $0.48 per share fourth quarter 2021 dividend. © 2021 ARTHUR J. GALLAGHER & CO. | AJG.COM 12

  13. Slide 13: 2021 M&A Highlights

    2021 M&A HIGHLIGHTS Year to Date 2021 M&A Highlights $190M 19 in estimated annual new merger partners acquired revenues Fair valuations Focus on tuck-in opportunities *On August 13, 2021 Gallagher announced an agreement to acquire the treaty reinsurance brokerage operations of Willis Towers Watson p

  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

    US COMMERCIAL P&C PRICING 160 CPI 150 157 140 130 120 110 Rates 113 100 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 Statistics. © 2021 A

  16. Slide 16: US Commercial P&C Pricing

    US COMMERCIAL P&C PRICING Commercial Casualty 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 and D&

  17. Slide 17: Sales Culture Performs Through Cycle

    SALES CULTURE PERFORMS THROUGH CYCLE Hard Firm Market Soft Market Shallow Market Market 25.0% 19.8% 19.8% 20.0% 16.0% 15.0% 14.0% 10.6% 10.0% 9.8% 10.0% 5.6% 6.0% 5.5% 6.7% 8.1% 4.4% 4.6% 5.0% 5.0% 2.0% 3.1% 5.6% 2.0% 4.4% 3.8% 3.8% 3.4% 3.1% 2.0% ‐0.8% 3.8% 1.8% 0.0% ‐2.4% 0.2% 0.1% ‐3.5% ‐1.7% ‐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 Not-for-Profit Construction Personal Energy Private Client Entertainment Public Entity Environmental Real Estate/ Hospitality Equity Advisors Financial Institutions Religious Restaurant Food/Agribusiness Technology G

  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 $800 $750 $700 $500 Domestic Property & Casualty Risk Management Employee Benefits Foreign Property & Casualty $400 $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 Annualized Revenues Acquired

  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 150 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 CONTINUE TOTO Data & Analytics IMPROVE IMPROVE Utilizing PRODUCTIVITY PRODUCTIVITY & Sourcing & QUALITY QUALITY Standardiz

  31. Slide 31: Behind the Scenes Efforts

    BEHIND THE SCENES EFFORTS Centers of Excellence Update Claims support Approximately 6,500 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% 25% 18% 17% 23% 16% 21% 15% 14% 19% 13% 17% 12% 20.8% 12.0% 27.0% 20.8% 11% 15% 2008 2021 2008 2021 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 33.0% 31.0% 29.0% 27.0% 25.0% 23.0% 21.0% 19.0% 20.4% 21.2% 22.1% 23.6% 24.5% 25.3% 25.6% 26.0% 26.9% 30.7% 32.0% 17.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2021 Brokerage and Risk Management Adjusted EBITDAC Margin reflects the t

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

    Best in Enterprise Resilience – 2021 EVERBRIDGE America’s Best Employers for Diversity– 2021 FORBES MAGAZINE Relentless Best Place to Work for LGBTQ+ Equality – 2021 Focus on HUMAN RIGHTS CAMPAIGN CORPORATE EQUALITY INDEX Quality and Insurtech Initiative of the Year – 2020 (Gallagher Bassett) 2020 U

  36. Slide 36: Maintain Unique Culture

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

  37. Slide 37: Maintain Unique Culture

    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 10 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! 1,767% AJG 345% S&P 500 Source for data: Bloomberg. Total returns from 1/1/2000 – 9/30/2021 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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