Arthur J. Gallagher & Co. · NYSE:AJG
Arthur J. Gallagher & — Gallagher Arthur J & — Shareholder Meeting (May 2010)
30 slides from Arthur J. Gallagher &'s shareholder meeting presentation, May 11, 2010
Slide 1: 2010 Annual Stockholders' Meeting
2010 Annual Stockholders’ Meeting Exhibit 99 TUESDAY, MAY 11, 2010
Slide 2: Please turn off all cell phones and PDAs
Please turn off all cell phones and PDAs at this time. Thank you for your cooperation. Please turn off all cell phones and PDAs at this time. Thank you for your cooperation.
Slide 3: Stockholders' Meeting Agenda
Stockholders’ Meeting 2010 Annual Meeting Chairman’s Remarks 2009: Many Successes – We Did What We Said 2010: Well Positioned to Drive Growth 1st Quarter 2010 Results Questions & Answers May 11, 2010
Slide 4: 2010 Board of Directors
2010 Board of Directors William L. Bax Frank E. English, Jr. Ilene S. Gordon Elbert O. Hand David S. Johnson Kay W. McCurdy Norman L. Rosenthal, Ph.D. James R. Wimmer Also in attendance: A. James Gallagher, Jr. – Former CEO
Slide 5: Stockholders' Meeting 2010 Annual Meeting
Stockholders’ Meeting 2010 Annual Meeting May 11, 2010
Slide 6: Stockholders' Meeting Agenda
Stockholders’ Meeting 2010 Annual Meeting Chairman’s Remarks 2009: Many Successes – We Did What We Said 2010: Well Positioned to Drive Growth 1st Quarter 2010 Results Questions & Answers May 11, 2010
Slide 7: Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995
Safe Harbor Statement Under the Private Securities Litigation Reform Act of 1995 This presentation contains forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Examples of forward-looking statements include, but are not limited to, statements relati
Slide 8: Certain Non-GAAP Financial Measures
Certain Non-GAAP Financial Measures This presentation contains supplemental non-GAAP financial information within the meaning of Regulation G as promulgated by the SEC because it is derived from our consolidated financial information but is not required to be presented in financial statements that a
Slide 9: Chairman's Remarks: 2009 Many Successes
Stockholders’ Meeting 2010 Annual Meeting Chairman’s Remarks 2009: Many Successes – We Did What We Said May 11, 2010
Slide 10: Many Successes
Many Successes – Closed Liberty Mutual/Wausau deal – 2/27/09 Established energy hubs – London, Houston, Calgary, Western Australia Hired new production talent – enhanced capabilities Gallagher Bassett Services received Reader’s Choice Award for second year in a row* Gallagher Benefit Services receiv
Slide 11: Many Successes
Many Successes – Regained ability to accept retail contingent commissions Completed $150m private debt placement at 5.85% rate Built 8 clean-energy facilities
Slide 12: We Did What We Said
We Did What We Said In 2009 Transitioned 2008 M&A into 2009 — $25m to $30m EBITDAC Harvested cost-containment initiatives — $25m to $30m EBITDAC Integrated Liberty Mutual/Wausau — Approx. $10m in EBITDAC in 2009 As a result, we grew EBITDAC by $50m in 2009 up 17% And maintained $1.28 dividend See no
Slide 13: Despite Challenges
Despite Challenges Headwinds Continued Soft P&C Insurance Market — CIAB* member survey – 5% to 6% average pricing decline Economic Issues — Reduced payrolls, exposure units and claim counts — Lag effect in brokerage renewals — Lower investment yields Challenges Continue in 2010 *Council of Insurance
Slide 14: Full Year 2009 Reported Operating Results
Full Year 2009 Reported Operating Results $ in millions except per share and revenue per employee See non-GAAP financial measures discussion. Total Brokerage and Risk Management: $ $ $ $ $ $ $ $ 5% 171,300 179,566 Revenue per employee 9% 1.41 1.53 Diluted EPS 11% 18% 20% EBITDAC margins 17% 291.0 34
Slide 15: 2009 Operating Segment Results
2009 Operating Segment Results $ in millions except per share and revenue per employee See non-GAAP financial measures discussion. Brokerage Segment: Risk Management: 2% 119,175 $ 121,144 $ Revenue per employee 16% 12.8% 14.9% Adjusted EBITDAC margins 15% 58.2 $ 67.1 $ Adjusted EBITDAC $ $ $ $ $ $ $
Slide 16: Gallagher Returns Since May 2009
Gallagher Returns Since May 2009 Broker Basket (equal weight) includes AJG Total Returns May 12, 2009 - May 10, 2010 (Returns since last year's meeting) AJG 25% Broker Basket 20% S&P 500 30% Fin'l Index (S&P 500) 35% -5% 0% 5% 10% 15% 20% 25% 30% 35% 40% Jun-09 Aug-09 Oct-09 Dec-09 Feb-10 Apr-10 AJG
Slide 17: Gallagher Stock Performance Through Economic Recession
Gallagher Stock Perform Through Economic Recession* Broker Basket (equal weight) includes AJG Total Returns January 1, 2008 - March 31, 2010 AJG 15% Broker Basket -5% S&P 500 -16% Fin'l Index (S&P 500) -42% -75% -70% -65% -60% -55% -50% -45% -40% -35% -30% -25% -20% -15% -10% -5% 0% 5% 10% 15% Mar-0
Slide 18: Gallagher 10 Year Total Return & Price Appreciation versus S&P 500
Gallagher 10 Year Total Return & Price Appreciation versus S&P 500 Total Returns January 1, 2000 - March 31, 2010 -30% -20% -10% 0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100% 110% 120% AJG Total Return AJG Price Appreciation S&P 500 Total Return S&P 500 Price Appreciation Power of Dividends 10 Years A
Slide 19: Business Generates Cash
Business Generates Cash See non-GAAP financial measures discussion. (In millions) - Dividend $0 $50 $100 $150 $200 $250 $300 $350 Cash Generation EBITDAC
Slide 20: Uses of Cash
Uses of Cash Return cash to stockholders Pay dividends – $1.28/share, a 5.3% yield at May 7, 2010 Repurchase shares but currently favor dividends Buy brokers Mix of cash and/or stock Currently 75% stock and 25% cash Neither segment needs substantial capital or cap-ex
Slide 21: Prudent Balance Sheet
S&P 1000 2009 Global Insurance Broker Avg. 2009 Gallagher 2009 ($ millions) Prudent Balance Sheet Source for S&P 1000: Thomson Reuters Spreadsheet Link. Unfunded pension liabilities available on an annual basis only and may not reflect 2009 amounts in all cases. *Global Insurance Brokers’ EBITDAC ad
Slide 22: 2010: Well Positioned to Drive Growth
Stockholders’ Meeting 2010 Annual Meeting Chairman’s Remarks 2009: Many Successes – We Did What We Said 2010: Well Positioned to Drive Growth May 11, 2010
Slide 23: Well Positioned Coming into 2010
Well Positioned Coming into 2010 Challenging headwinds continue Rollover of 2009 M&A into 2010 – $12m to $15m EBITDAC – includes Liberty Mutual/Wausau Cost containment – net $20m reduction in costs Potential – up to $6m to $10m net earnings from clean energy facilities in 2010 and up to $40m a year
Slide 24: 2010 - Driving Global Growth
2010 – Driving Global Growth Cross-selling and new sales initiatives SalesForce CS | Sales Goal 2010 New producer and sales team hires Expanded worldwide capabilities through Gallagher Optimus Network Compensation from carriers
Slide 25: 2010 - Driving Global Growth
2010 – Driving Global Growth Opportunistic acquisitions Securitas – Brazil FirstCity – London Developing our next generation Gallagher EDGE Program — Mentoring new producers — Focused training — Cross-divisional Gallagher Internship Program — 160 college students — Allows company to identify and dev
Slide 26: 1st Quarter 2010 Results
Stockholders’ Meeting 2010 Annual Meeting Chairman’s Remarks 2009: Many Successes – We Did What We Said 2010: Well Positioned to Drive Growth 1st Quarter 2010 Results May 11, 2010
Slide 27: 1Q 2010 Segment Operating Results
st Q 2010 Segment Operating Results $ in millions See non-GAAP financial measures discussion. Total Brokerage and Risk Management: $ $ $ $ 6% 17.4% 18.5% Adjusted EBITDAC margins 11% 68.8 76.5 Adjusted EBITDAC 3% 401.7 414.9 Revenues % Change 1Q 09 1Q 10
Slide 28: Going Forward Our Focus Is On...
Going Forward Our Focus Is On… Growth and performance improvement Increase new sales and client retention Continue cost containment Investing for the future Enhancing technology to support future growth Online and classroom sales/service training Retaining the Gallagher culture Niche expertise Teamw
Slide 29: Questions & Answers
Questions & Answers Questions & Answers
Slide 30: 2010 Annual Stockholders' Meeting
2010 Annual Stockholders’ Meeting TUESDAY, MAY 11, 2010
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