Arthur J. Gallagher & Co. (AJG) 28 Jan 222021 Q4 Earnings call transcript

Good afternoon and welcome to Arthur J. Gallagher & Company's Fourth Quarter 2021 Earnings Conference Call. Participants have been placed on a listen-only mode.

Your lines will be open for questions following the presentation. Today's call is being recorded.

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statements. within this the questions, including statements to the risks comments are of forward-looking conference laws. may Please on X-K meaning factors uncertainties These securities made the contained that forward-looking materially. and to company's could its filings cautionary the XX-K, results Some actual to subject cause response during and for call, in statements detail more of statements forward-looking differ XX-Q, in answers to constitute the refer and risk given

measures In President other on Mr. is now addition, Gallagher the and for please release reconciliations Chairman, you of to these the pleasure J. & regarding Company. my begin. materials call the refer as of J. non-GAAP Investor well other website. the Patrick section Gallagher, earnings discussed CEO and company's as It measures, Gallagher, introduce Arthur to this of information in Relations may

afternoon. joining Good you you. for our us fourth XXXX call. Thank Thank quarter earnings for

today with our as of CFO as the had well call our Howell, heads is divisions. outstanding Doug fourth the We an quarter. operating On me

brokerage combined growth revenue, growth management closing Willis mergers tuck-in organic That's top segments, and we quarter. on in XX% earnings EBITDAC Re posted of of our completed growth, XX% net growth adjusted new XX risk XX% XX% merger. of our we For and in the

the than added during Needless Our performed of billion total quarter the to proud for extremely more annualized fourth $X I'm how revenue. the year. the strategy merger just and say, our of That's fantastic. year, full team

you with brokerage fourth some segment. give detail more let outstanding starting on the quarter performance So our me

Remember, fourth of was growth IRD revenue X% XX quarter step expanded an consecutive with of that's adjusted was the in acquisition, excellent we another that have the EBITDAC of third expanded by XX the the points seasonality quarter points. basis sequential growth quarter of December margin Net And our nearly improvement. the XX%. natural basis growth was and EBITDAC During earnings expectations. XX.X reported up line reinsurance lower would our adjusted from was organic, margins XX% because

So brokerage another great for team. the quarter

world Let our with and operations. starting down around XX.X% organic, the the you me break PC walk

XX% First, retail higher increases. programs organic in by open organic, X% MGA This driven a domestic domestic placement in business wholesale our exposures XX% posted than new of includes operations of businesses. organic services, continued and business, posted excellent our Risk binding rate more and XX%. brokerage, and organic

U.S., double-digit business more of business increases. retail New to and to. Re better improved excess finally, in XXXX and retention premium stable renewal trends, up was in and continues organic from premium business XXXX Zealand and was renewal posted our Canada X% including levels. retention. helped the high business new And also Both up combined, levels retention and good was than more benefiting from Outside than XX% XX% fueled Australia, new organically business than increases strong business near is by organic Gallagher benefit was and new New existing the our of specialty X% teens up U.K.

the expectation. course and to a unemployment first global as rebound couple from quarter, economy, sequential grow. businesses Moving look up a U.S. increased than thanks of consulting organic X% points consulting in declining to brokerage we up was nice the services demand business. to our December about our over the employee for XXXX Fourth of improvement quarter our organic benefit IRD better saw and We X% in some delivered

were quarter saw above market. increases consistent PC first 'XX. during quarters renewal increases like comments Next few a Overall, we three premium the with make of I'd fourth to broadly the X% on global the

mostly premium increases brokerage up X% programs about rates property between operations and U.S. loss Shifting Canada, premiums and XX%. in geography and showed loss exposure, driven and premium up renewal comp. RPS, X%, in New professional world increase to retail professional client the vary X% a Australia, XX% binding including around property. that liability wholesale reinsurance, X% saw up Moving X.X% and which renewal workers and in increases January Within by to Zealand XX% in flattish up increases retail were price open rates in X and and up experience, renewal casualty were U.K., change six. In free both liability, includes the by

double were loss While that cat and many experienced cases that. increases rate in impacted accounts business exposed property

tended attributes be to rate history. And based specific I to on client's a healthy outcome. that loss and So be consider

retail, whether wholesale increasing almost everywhere. still or So reinsurance are premiums

difficult market see our on PC That's continuing cautious partners bearing costs. forward, I risk loss conditions because rising XXXX. throughout a Looking remain

are coverages So cost inflation frequency increased and losses underwriters causing property rethink of replacement and to the severity adequacy. catastrophe rate

in claim all lower costs frequency are future recover the are low top drivers economies potential global insurance, the also higher social On and and casualty And potential costs reinsurance side, as increases loss investment inflation, investment of underwriting for profitability. further on returns negative of increasing.

helping equally will business. So coverage price employee a mitigating benefit on increases and expertise to don't clients push I rate for dramatic and and change as throughout shine find term. this in our I'm appropriate of relationships. environment near upbeat see type creativity, think continue in our consulting We while market by the carriers brokerage

employers prior season. and quarter But is as labor a lives. the know look XXXX motivate X.X demand the increase looking million and client seasonally and activity business groundwork trying to in unemployed are work. million like remains had new with largest extremely pointing benefits and more grow increased in This workforce. the team to for slight and and their services first tight for the for enrollment consistent businesses people goods you job to annual services improved market an for XX.X wins consulting With looking and lays covered As increase indications openings a quarter demand retain are strong retention attract, workforce. employee domestically than Early our over year, client our their in robust

year nice end with organic organic as we X%. is there and of even case we the improvement here full 'XX we So better. up that to in pre-pandemic we think it reported And 'XX organic 'XX X.X%. a in really will sit That's and of 'XX above from similar today, X.X% organic XXXX finished very up range ends a

to acquisitions. under Remember, seasoned a reinsurance good mergers we Let me is It the pace. way work the at close and in move by early a acquisition team December. on are well Integration great progressing was and integrator. to

that team from a we've Bassett Gallagher local our also new like and teams and revenue and hit our partner even mobilized million our loss running to as generate Re Gallagher our revenue the retail, acquisitions, generated in and wholesale On the the revenue due a very side, acquisition much to finish had expected to with of I'm strong colleagues year. Financially, tuck-in December opportunities. combined pleased small ground about XX added seasonality. the EBITDAC new

More cross and division importantly, examples of seeing already I'm cooperation collaboration.

tuck-in to a during Gallagher of for representing quickly partners Gallagher we new So our completed estimated warm family are of XX extend quarter, $XX thank mergers our of us joining Outside annualized our I'd culture. new growing million reinsurance the colleagues like Better revenues. and professionals. Together of very reinsurance, brokerage all welcome about our embracing to

sheets are of and fair merger prepared $XXX over revenues. not pipeline, at acquisition have signed we close XX look all I share. around our being As We we'll representing these annualized however, our we tuck-in know believe will term million get

expectation, Gallagher Bassett. management like segment year to to risk better to of approached margins bit the a full XX.X% Fourth December in margin our IRD move quarter, adjusted I'd our EBITDAC XX% Next, was organic quarter XX.X%. leading than

saw new and the matter Property lesser arising claims year for during Another the to extent We quarter. and co-workers great and more Liability within team. quarter full compensation a that from General

to the year about activity, good the claims New Regardless surge quarter business. from of claim in variability COVID rising short-term third workers related feel of slightly dated comp new the variant. we by late really were Omicron cases the similar

high in organic retention, digit into the new drive range. Looking forward wins continued quarter 'XX strong client fourth combined the with single should

So And in the fantastic year a to management with our margin year combined pandemic. than expansion. our completed Ethisphere we and points ethical segments, risk of of most our one organic a adjusted were more a row annualized our growth X.X% accomplishments. billion I'm it success recognized our XXth of we this produced team due franchise of proud and mergers for all $X world's culture. What was EBITDAC the than brokerage in bedrock the revenue, is XXX our more and face and estimated in of another for basis ever, more year, XX fantastic collective the extremely as Together, Institute by than companies

partners, our results, Every and our better for our stakeholders, promote deliver That and Gallagher our of and customers, us shareholders. maintain course, live up is truly teammates our get way. Our colleagues, to to the culture helps of our of all our our culture to results our diligently culture, underwriting work all culture. including better day,

it stop Doug? I'll turn now and Okay, Doug. to over

Thanks, Pat. And hello, everyone.

I'll and commentary segment now quarter terrific helpers a providing our typical margins some add management. capital there close little our we're CFO out Re our clean Willis move energy. with in on commentary earnings Then shortcut and how our bit talk a on outstanding then I'll Today, comments said organic finish thinking year. my up cash where touch acquisition corporate start our to their Pat on modeling latest As and 'XX, about and I'll for the in liquidity to release an with table. document I'll

brokerage posted last. flip up first a X% to was year let's we we full organic the All the Okay, the of of in plus six And X%. segment, nice in page release table. the organic posted earnings the to percent from half organic the for brokerage leading step 'XX XX.X%

even forward 'XX or full 'XX we Looking Pat said, similar better. as see to year

basis have in six to turn margin seasonal December quarter points page the Headline XX points adjusted fourth closing our in line December margins expansion adjusted also expectation. recall segment Willis Re that with margin with expansion Without right brokerage the XX has for table. in impact December. was we basis of X. adjusted provided EBITDAC forecast IRD all Now that, line on for adverse But in right the would expanded

XXX year was expansion points. adjusted basis full margin For

basis to points and points in pandemic. top Excluding during from 'XX. XXX was basis we it absolutely of expansion adjusted that's and Willis in execution emerge it's forget, not on XXX basis of incredible as XX Re, margin That's important 'XX before points. the up And

from on Moving 'XX.

these we're costs on targeted in 'XX full be below that be we're then, could XX forward, as costs IT investments ease back office we from as consulting, Incremental drive long-term E&O, to consumables. million. other returning professional categories even for planning Looking to full naturally in as total advertising, pre-pandemic will the and travel, comp for some limitations some costs such around perhaps and areas areas year D&O entertainment three growth. would as combined and But to XX certain year levels, much investments. we're showing pandemic see These making continue these spend safe. in holding million. our fees marketing, premiums work increases insurance say would 'XX, higher with Also, In 'XX,

are clear, or acquisition all view be run forma those pre-pandemic should So And Willis if some we be a over margins able pro even X% On the at XXXX, Day, back of to occur by like we Then margin And impact could around a before X% and level. of might that we the Re. organic of bit said organic. hold expansion a costs basis, absorb we show in higher. to if those so our expansion. IR can post margins that to December is X% comments margin be these organic

quarterly So A mind math some brokerage build to in naturally brokerage would you couple say models of our to would in margins as keep XXXX. segment your our for 'XX. consolidated things lift provide segment in

and seasonality, to consider And the first extent perhaps are year. since comp PNC and now second price we're in of seasonality, due exposure our quarter in First insurance. of the other seeing nuanced, business, the business, quarter larger quarter and workers revenue more not slightly to benefits benefits increases of or our EBITDAC in reinsurance is first our largest areas our we

full First quarter year a your organic might so due pick to the be mix. point simply below or

quarters full organic a math over to suggest nuance and post Again, So quarterly just pick. fourth the with your model. third you their would help your then year that's second, could

revenue table year given depths Moving from at like management on more Page to momentum said, great of have as the risk organic into in pandemic. the XX.X% Six, see it's the rebound the of continues high terrific the digits, organic and 'XX of than growth segment the is 'XX. organic year difficult single quarter excess XX%. fourth bottom and the in really 'XX will Pat full compares revenue a What you'll which And organic naturally looking with in full

Moving pre-pandemic for the seven. Adjusted that management our like our EBITDAC risk a result. table savings on XX% we a of nice more demonstrates from a just of to XX.X% ability EBITDAC than our the fantastic of segment, brokerage as investments. portion step the XX.X%. up pandemic in quarter And technology in segment full investment page to further maintain even some margin and make Again, year, levels period

right, adjusted IR $X.XX better clean midpoint is adjustments those Looking client quarter. XX% to margins and of in a eight our strong make experience segment the to for page investments continue forward, to to turn a outcomes. year In even to We drive forecast, we result mostly results earnings. claim All with on close will of as December December and better our achievable that heard of ‘XX. you Day, the enhance this the notable full corporate IR let's holding analytics did than total, tools couple But have energy as table. Day

small First million which and about M&A three transaction million quarter, items were settlement costs, related adjustments related had footnote to discussed footnote XX international of as earnouts, similar tax. we some together Willis XX as it after tax to third discussed legal most tax. the and as as in second, well And Re deferred is two non-cash, in tax other after

Now let's document starting our with commentary page our on three. website to CFO post shift we

Day couple that at to of page, Also 'XX to dollar are A As providing look FX, see most you'll related are risk IR for highlighting, estimates. early our about late segment. $X.XX 'XX headwind management close items our fourth weakening we risk management the and creating quarter, the year. next the a of and we're major brokerage first is our on brokerage first now items and U.S. to against the lines currencies December EPS

costs. Second integration

You'll read estimates reflect with in here footnote Willis provided the expense only Re. one, integration associated

six-day are $XXX Pat integration. our page million about CFO of for and the right, well page we earnings GAAP transitioning purpose over to the comfortable ultimate let's page commentary, total integration pack with addressing this of period are clean a turn where underway highlight harvest As flows. is is five The decade All energy. of from mentioned, showing still we cash of to to of a we costs

million, column up You'll we of see that really a up, generated after reported in flow. 'XX XX.X 'XX the net blue of cash million over tax step earnings XX we XX% nice GAAP and

beyond. looks step to 'XX the the cash be in a 'XX, pinkish perhaps from of year So Cash But 'XX. in column. up even in headline also take step up million flows real more and nice here a is significant a flows million $XXX and like story harvesting we'll $XXX

flow and seven encouraged in from a possibility that's X-X if of If well we a production results and table. its $XXX billion say cash acquisition the a restart off extension dollars not, Flipping credit to if with we but positioned to rollover sweetener. renewal page season. a over reinsurance and the to year that is of we're an law early a Now are December revenue happens, solid is use still year The carryovers. we start indications there have in both six the million

So revenue up it's XXX EBITDAC holding million our and nicely. respectively, of are XXX like forma million looking and pro

cash pumping in XXX At million acquisition operating is energy future start. is a cash flows cash with 'XX. cash capital right, M&A reinsurance and M&A. on from All using to available potentially hand well And a XX, we December investments, the flow are nice terrific about cash management debt. So extremely clean off for the tuck-in strong future positioned our fund expected and to as

stock. M&A using without Over years, we billion of two the do over any $X next could

also of an per XXXX. share. annual $X.XX announced to quarterly our dividend, that increase increase You would over a our Directors see X.X% that a $X.XX That's imply payout of share Board per

regular most we virtual. Again, are likely am, item, calendar X on Time am planning XX quarter March one be on Day IR Finally, Central XX. to our will mid from that

we GAAP non-cash results time allocate planned asset socialize that amortization. We'll migration reporting impact excluding During will some intangible of including to our adjusted the to results the the detail adjustments of EPS the discuss basis. representing historical all new on

great positioned as well year another in it. we that's CFO my From point, here 'XX. for extremely vantage Okay, are

Pat? the year. Before turn back a and like for I terrific Gallagher thank it team you, I'd fantastic to over Pat, to quarter entire

and questions Thanks, Doug. let's go to please. answers Operator,

Thank for from first research. Instructions] question you. The Wolfe Zaremski Our [Operator is of now Mike open call is questions.

on guys, this Hey, for Mike. is actually Charlie

So pricing the and organic at half you decelerating organic us you back historical two the been to decelerating times growth and provide be comfortable accelerating. in But Can been color is to almost outstanding positive has seems your with growth on guiding makes level? while has what of year well. GDP some as

seeing that any not deep we're way, quarter. remarks. lines now my not from out that are where continue, got We They just for a are form falls every the into the holds way rates We're in into the think of need that in or what along renewals, to But rate. it their remarks. shape out. underwriters reasons market rate to will. about you've And all of that, off see I kinds simple. situation first backing my hold. the laid single I'd for seeing beyond going We're the obviously in market prepared as it relief is, talked won't, It's day. it

our becoming growth to slight, are for think markets and point in think to We far when more. there. a We pullback find think there's there's there's what sitting We that comes for asking and exposure re accelerators there harder lot it there wholesaling X.X to think more think then consulting it. still advice, are that that come. in unit tough We a of more placements. need overshadows are inflation benefit a still I are maybe that underwriters the that pent-up

Got free color. any M&A you the -- there's transaction is M&A. year? Or And chance on is flow it. know this spend well. it? because said your going don't guess integration entire then, great reinsurance decisions have on impact the you Does cash I I any there That's of

course, the years. spend have X think of I over next we we billion couple Of to said

almost little that's next billion year. think year I billion the X final X and a over in

we So every free seeing have quarter. pipeline. get push right what does year. about a plenty There's pretty people the we're more have we're that in of and acquisition done by our happen to that fund to our have something cash end we first excited now. year in But little It slower pipeline

Our from next coming Raymond Peters is question James. of Greg

do Doug, wondering can't but times I'm you fast. pre-pandemic I I can XX know really it if say

Pre-pandemic. Pre-pandemic,

know. I I Obviously, don’t couldn’t.

just teasing. I'm

question the three. sheets, term So a commentary And course, see, the view you CFO looking about et let's page I I us And give outstanding, on on in had a M&A. always Pat, of was cetera.

up. weighted in, ratio, last the So, of then, EBITDAC ultimately, of close, there, of has quarterly sheet three you can question. the you page us out Doug, -- about And two-part that trending two years? the the it's you and average multiple term definitely talk secondly, changed drop to then supplement over number tuck-in. sheets on the that you or term give us When close And give rate how numbers, are three

I'm there. curious views your about So just

great. Yes,

to said And usually moving we're things we're first the When me do one where competition, will in deal. down dozen, more bids. be reputation Let sheet, close. usually two actual tuck-ins, if there'll path about years, especially take of $X a a thinking over to get you moving there's three and we're question. take the can our we down, going of an to to dozen a your term really going that we part a our a that, deal the of get today is last Having spreadsheet, it's considerably million

and about sure that part what really our quite So competitors. and to of partners the honestly, provides diminish our than that And substantially is hard we better that Gallagher, doesn't all they're trying new But smart well private are good future they're make equity of are we funded. they're more fact people. competitors being think the excited exciting which

signed number do you get you tell ones for I the So yeah, keep finally to. But back, slip we ones signed I don't it sheets, have records that sheet, where term of And of XX% we specifically, that. term I I'll XX% ones closed half close should we of should about get of the anecdotally, we that half say, we're we preparing will of we than we a don't sheet, the have will while more way. can't have that to close a term oh, a XX% that should take the close We the we those. don't net. where I out

of ticked Yes, not up little terms the multiple as multiple In a our what as multiples bit, the much has. Greg.

also, still you drive those quite there. But a that gone arbitrage there's terrific have bit, up have a multiples realize the too. growth rates to So

justification multiple XX. pretty I of range It's think XX multiples. still versus buying acquisition. when XX, rate So in for run to eight our trading XX, good But to tuck-in comes that a we're it higher there's

best to opposite, you, speculating the are directly polar future. space some it rearview Brown feels I Marsh Yet, the And year their a the brokerage for times, start at stock and seem the from map rough guess, like insurance a stocks out. for a traded follow It's little it bit. a and Got been And to question. brokerage Brown is & that is it mirror. too pretty the up your out off for optimistic in market. the rhetoric are

to moment appreciate the certainly doing stock I'm that doesn't what this what market, is your So guys trying guess perspective the you to just seem market on at gauge time. I in considering are

am as there's never everything, is today. our everything been Well, that Greg, this going been and a is bullish I've years, I way. I in XX Pat. as period for where Normally mean, time

got a good deal question with let's why what's middle they try rates critical. are that with not and the or But XX rate market. environment question are that analytics even going what's Vertical XX a like critical. deal. absolutely it by what the is. analytics to flew of happening type When geography can getting volumes have me We line, start good with stronger. look can you. at of And and show into data compete time the you to them asked that the that And we've opportunity ago, we is now. right on your never do And That's private take we tell here. to let working. I've have a ups competitor. we around we rates are why these why these minutes asked we are the absolutely telling happening roll over selling you capabilities can fact spend when the day now I'm That's I it's been answering years smaller have people and unbelievable equity. by a So do we with know blind the we renewals XX% the that and compete, customer why right have have by you Data totally

this see last years. opportunity I So buying the is the in five greatest

Yes.

results tonight. beginning seems Travelers the so improve. risk It about rate. out at combined combined but picture, -- ratio, like global XX% I, your in And it difficult at the are XX% further looking to reported bearers Berkeley the comments, results, out just with your are of with And part you ratio and an market I look bearing risk Just was a was answer. driving came an talked listen, you're

when lends so it's it And you risk guess question, I what are say market? we difficult the missing bearing

inflation. Well, let's with start

blip a Oh, your rate. to at work X% it's the that And to guess six. gone was going radar, that's I yeah, going was be by a now You've done now. inflation all actuarial on not happen.

on. today? at does on level it and on build look of now. it done of go last the years few nuclear, a nuclear $XXX And could ago, mean, the a got and a isn't What foot house costs. cost for Well, we to that certainly I let's I Secondly, settlements. number square

think The other for than it's been true ever. saying too now thing this I is, I've years, more

less not are making incredible about substantially they where where every a Our They're underwriters they'll day they've they're everywhere walk XX% you partners And analytic they're very smart. know than in they that They making deserve. you underwriting that world around just skills. money. that's know or And got it's our and and to and deal very, data the get want something it. going or not in broker, talking know, buying start to be money

releases, reserve be Greg, also there's a let's ratio. think, a the I and huge think, just cat, say more x some difference just inflation a prospect x have in, things, reserve That's estimate XX% then of than original I the was. coming on just combined what

challenging companies. think I'm not the I the So health the that of -- insurance

they're too if case that would I think that there's high. need they've got don't know their rates where they think say they them right I now. a

too picks, case so going just right low. just And just losses are have low. see they're be [ph] information are while more don't that the courts open that see when I say they to more now unfortunately you're the wouldn't best [CASM] think the current I too up, the

think just I case I any at -- filed. by case a that for cutting other everything books There'll [indiscernible]. rates. And means. continued for not in So There's a be we get rates look interesting there's when increase

goes is, not middle most now work you is a know that through of up. flat, it This work XXs was is up, was comp this adjustment where in hard everything the market comp

is roof. unbreakable. liability bit is comp through little professional comes work Cyber the up going As almost a

are at line, seeing accounts, perspective, there sit we daily not them you this. by look are our you lose placing from These and geography looking carriers So line discipline. and by geography

quarter the the congratulations on And year. Got it. answers. Thanks for and the

from Our Yaron next Kinar question of comes Jefferies.

more the to want current don't So accelerates pick that at, but Expenses in get margins compressed trying little or rise with confirm Essentially, accelerate expectations, wouldn't my just the question up than that pace that, of may in if you case? see I'm also release, that there's could I right? expenses get economic beyond bit. what revenue to earnings increase in a the that your situation first recovery organic comment estimate.

But That's comment. that's a [indiscernible] just margin comment. not

equal, guess if your I beyond else does And the would come margins accelerate expected? Okay. economy better actually than in margins, all expectations,

supply think that we a economy on we get we question if this normal. listen than for your Yes, say year is services and the year organic exposure did that case goods What demand implication to units accelerates there's We can back do that have. -- that grow increase, the better pent-up we next chains, right.

there at approximately the They commentary, were then comment right XX% on page together, XX%.? three And brokerage CFO year XX.X. in being at and in Okay. 'XX, full margins

there upside issue? just So a that. be that should some still Is to rounding

right, All thanks.

is of pretty have First been mean, years, margin ago. XX pretty it here said long that good. I proud across darn ever that that brokerage wasn't I you way and the space, XX look plus that we're of when all,

proud So you of number to pretty that got to be industry. compared the

have why The yes, Second round because XX%. all, of even it don't we crystal don't ball. a more we reason is

a But like We also saying over in our right will come year. we bit the as do. have chance number At the margins more, really we're commentary with at business we X%, we more of over those see maybe X%, little we've think than we FX next adjustments change said slightly there, could what could got that X%, just that. a that a little Yes, international holding decent true. we

greater XX.X a XX you left this but have pegging read wouldn't XX.X. operations, being than reinsurance when little those indicator exactly an with could than a all you roll the factors as that we I is in more And that. get we're So like then, year, bit rounded XX%

terribly So say read I would would into it. much not too

Okay, good. I'm confirmed. that's glad

margin? you XXXX Willis was for as on the I numbers the on placeholder. 'XX Re, guidance based update a any Finally, think initial used still kind of and revenues offered the

little and We're EBITDAC, Yes. good that's strong month, about in We the two as of team. looking brought a bit we feel a just over a onboard and together January months now. and we extremely the remarks, really our XXX of X, million revenue almost And good. $XXX prepared With still coming team's well. over good said million

of ISI. [Operator Instructions] comes Motemaden question David from Our next Evercore

behind drivers through contributed And could you walk of net you that much in question outlook. up a that different how how shaping that see brokerage Just in exposure XXXX business, the terms X%. on to elements in pricing, new wondering organic those X%, XXXX just those the if the

Okay.

all, opt out when coverages the to they So got down. customers for customers first opt-in let's There's of new their lost opt control of budget for that you insurance components of rate. impact when want break out the more and because opt-in, spends

that just losing. more of before and because the believe it -- third we're we down, a what have fact we're selling is break you comes say we're business is, that So versus let's that just X% we if

coming third I from that a a and number rate. think probably third that's of from coming there's its exposure, of

the exposures -- three mitigate customers to you've see So up come years. ways couple harder grow, as rate and up creative to exposures. of our with customers their a opt more the increases of It's next is happening opt more which we over that is out them kind impact help with can on multi-year of got come all of we What's interesting there. -- can

to If you them. insure and had you XX got trucks XX of now

insure trucks. not just can't You two

off you can If increases. you it, we take less or top more forward, increase the premiums, we would on of exposure net of probably that fueling maybe XX% of with as you less limits units going mix more kind rate higher a and a see wins maybe to growth continue deductible, and -- organic take rate increases think rate as opt impact you in grow. to from But I toggle have than that out exposure, that new

driven. it's exposure to growth, of going As organic unit you push be XX%

Awesome, cadence, quarter color. it I be was of driven? a but benefits a long workers about seems by benefits in light. like year, and December. employee just the also really I partially first a It's it here. And little quarter guess it that's Are that's seasonality first maybe X% you you expecting being the to up off sounded driven pretty I comp granular was when definitely would than that. and the better don't a that want organic full in think maybe that But bit little the more employee comp mentioned strong, Or is than get too And year? why that seven? great lower Thanks maybe deceleration Doug, just there. the for workers

to the you I'm X, make you saying Actually just pick, if pick. have

about to. point you If you're the said the X, get X%, picking quarter, a lower it's X% and number is I first that probably next year in that

don't would on impact of If you X%, that pick I an that it have think big you.

lower comments So a what point about was my in said year average. I than the full

that's I grow right say would our what PNC So as now. fast it's that just cautioning doesn't business. as

of just tuck-ins. guys a for dry years. makes the Without stock, X the sneak That that's for have more issuing It's over And on I two next one lot. sense. Okay. lot powder M&A a billion could in, if then

point, You increasing. something repurchases? two? if all, you next the some Is I guess you some that's think also capital over or at institute you wondering up mentioned something might that return through earlier consider to share would that come at allocating is year competition I'm

we'll dividends. investment something to at right? grade that's our look that maintain Absolutely, repurchases make we capital, have rating, if Absolutely, want solid and sure we excess share

Elyse next Greenspan Our of is from question Wells Fargo.

related My clean energy. first question is to

of the I there's get think there. then, in a the to continue you perhaps go Doug, the thought could past rolling guys sense to amortization extended, not would be laws x if said kind you the I that I credits, that of So to you had be of out generate implied chance EPS. wanted you thought just route some able a timing And you

events. So now are these independent

nature still out other the meaning you cash more among will to is on and energy out that clean generate if roll investments, items. backs able EPS intangibles, So in you're some estimate credits

us an extension see backing happens of don't what of not. I going or with off metric, that towards regardless

a brokers of going route. think it. what other done to your answer doing. We've with we're it's are work question, We an lot that consistent So on

comfortable route. environment. it's be going pretty that I a the an think fact provides What technology we're happens in woken so And benefit the has going that this to to terrific with with think to our up Congress extension? spring, that we

see we include to So it. way and their finding spot they bill cleared, a a that hope

track a you can perhaps them from that be upon cadence from does a cash just when generate in get happen you were at unchecked, that? if with XXXX, that at depending credits So generating on credit back would generating perspective a and you

a broke it say You again, question. just sorry? bit kind Can Elyse, of little you on that up

to year, to I was saw would the saying if at you credits we same that from you be this in regenerate clean cadence expect able investments XXXX? it are your energy

Yes, decommissioned, pick it. They planned I won't think as will so. location I a listen, to were be earnings we start XX not But posted some more The million up. that $XX be tax whole XX, would not made being million be of there plants XX. on after decommissioned.

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QX guys I Willis Re M&A put you with sheet, it with Okay. the bucket. saw in that in then, the And

then you to embedded assuming I'm give So quarterly basis, just build. And growth did like a commentary that calls off from if I'm revenue Willis there's the would your assuming additive based that, be on Re you'll Re today? then just M&A us on And is at on revenue that XXX. forward the of Willis go from the the just

Yes.

to it. go XXX what grid to the would make I is CFO of have I commentary do page line up we line, while activity. add of quarter that I question quarter that phone that acquisitions how the there, and then let's that sure did acquisition understand for of the six And fourth to a your on the think the I'd restate shows the I fourth can provided subtract and in up up adds other we're including here. XXX. we during vast majority much

helpful. last on fine. one margin. that's That's No, And then one

that. restate me Let

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other above the line fourth So we have it. in quarter acquisitions

that. So take a look at

get coming I And X% expansion, you're the going that margin around year organic to we unchanged Okay, throughout December, that right? or could account? guide correct, call sorry. guess to this Thank X%. into margin of modest let above should if see was all expense commentary expect level we brokerage, your you of some you. take then so So, expect the expansion should in me from a

Yes, assume. that would be what you would

Peters of from James. is question Greg Raymond next Our

a minute the faster expect If we to of one more supplements than just maybe your Great, brokerage about in supplements when little business. drivers just a thanks also the to ask or growth in ask improve, allowing you're starts and I up. contingent and acquisitions? for of organic contingents maybe base outside me to supplement follow of grow spend to carriers the the wanted that line bit contingents broadly, and are the a expecting, of profitability

premium on your The nicely of And both contingents, is be simple, premiums profitability and growth, those very the question should yes. supplementals. and answer revenue And growing by to profitability. impacted driver inflation, growth is on

we appetite momentum the getting around can a really lot. our need we that, that they bring carrier's through also help added value then, our continued to been for our match Greg, risk. on And smart where We're products, market advantage through customers you've

And continuing it. relationship recognize value carriers. And the add with they so in it's -- we're our to

So your becomes grow statement, continue should should business as positive, all there It is to right. from benefit that. more

I remember remember and market. this started is you I when smart dating me, but

I of amount accounting for whatever us you it's it's number how the business was update premium So it it two looks in you're of ago? using? terms clients, or of a versus you guess that year can ago brought metrics give you where today since years that up, or an Whether of

proof do pudding yeah, can The that, has all, the been of with first Well, Greg. smart market. in I

insurance when to was and it. companies blunt, data analytics worth not perfectly or You to some it. was around reasons all started whether were of And there sold we kinds really there for be being skepticism

United utilized Okay, our has across brokerage very locations now Canada, operation, It's question been et and U.K., that in been accepted. cetera. being Gallagher outside utilized States, well answered. including global the RPS It's

it's very XX across than to carriers broad So probably getting recepients more XX today.

think IR that about. we when back to our we about Think talked days Yes.

to There XXX U.S. the our how offshore and things in of U.K. New centers retail, we U.S. use how Canada, that about our the This business mostly the minority initially an perhaps developed here And we around business techniques our Zealand, planted the -- bringing in positions our example relations retail we're our around now not be vice of we've in terms world about locations that Australia, into to of some and are of that take and carrier terms world done then, is platform, back U.S. the bring U.S. core can versa. speak seed of Europe. we the spread other and the Here excellence. as a of in in

you're out [ph], talk same looks right the world. And this proving yes, it by we're world, all with around we that's Greg, the and at rolling the out the different retail when something nuances [NAB] country. is So, about why around

very our insurance million good income to been to of companies that. and for very, it's $XX closer the about And tie we're people from generating

everybody. for win-win So it's been a

last Doug, margins. your the Thanks before used question in would Great, have, I the color you. for quote thank I've there. guess to I reference about

grow I trees moon. the think on you a don't to call, had conference well, previously said

might brokerage on EBITDAC there you begin pressure in or reporting your When in out? be mean, downward fees top margins? on at some on up, do we everyone's or margin something rounding some margin that pressure to to point, I business. commissions cause going that would might So have guys you're some expansion, you a downward think XX% --

non-discretionary between contraction. expansion I think difference margin a Well, there's margin and discretionary

I limits that that's can organic margins. rest the [indiscernible] there I the just scale pretty incremental think lives good growth our and product and if story. its of And think, a we advantages, just have scale for post happy are be would very X% organic, somehow to all has of

It's just strategy. not strategy, it's acquisition Right. margin talking about

investments. there in and to XXX% make we grow client organic compete don't that investments yet, They business. stellar to growth, does the not right. the And more that demanding. the to make are require what moon us for in in continue importantly, from clients to It's and are post order more You to but becoming need demands us us

announce. you. I we an have do, So for answer will But don't we when

Tiger. the putting like I next my the go for years, in five of X% idea Well, organic get them model margin expansion and so

from of Truist. Our Mark is next question Hughes

to Quick question shifts broader risk quick you. a in be kind that like trends third update the among do PNC potential management Thank thank interesting. afternoon. way, Yes, view what's parties business, outsourcing using latest your comprehensive you. of operation the the would your on in to a more management players, Good risk major just

the for thanks Well, Pat. is question, Mark. This

do. outcomes risk that. quite the analytics. and do, actually all in part now, this. stand Chubb again, for that no, looking Bassets Well, I the pays that. companies, I is think in systems from almost to the I And on right ACE And a of outsourced work They And ends is you outcomes kinds and very management have twice say our driving of advantages. that more But to honestly, then, you believe you a future management I'll of at for you I that. honestly sense. There are that. once than over investment, also you at And in our our five their you the pay forefront believe revenues. claims in go, big are and heck direction. are them fact, toe Both but names. secret to that, growth as fact don’t. on return pent-up would companies got Willis any of we did some got And no the that program about can’t their that opportunities makes don't. talking than we've understand a a you're will companies I data you we at toe And when largest years. you've for at outsourced XX expertise. Gallagher as going of work up invest the doing opportunity, it's we own come do. them, combination, superior. now substantial all can behalf insurance why superior it people think probably very States. It's next there with Chubb the when those we of actually Gallagher we companies a we And ability been do United lot and do the we we We've began were That partners name scale continued to seriously Prior will much looking you ask I that I been a trading of that prove in show insurance doing their to I portfolio. were these that to to got come can't see bet mention they mentioned service insurance of Arch going you day And Starting literally on claims? ROE you've move that decade. start Bassett it's before that don't the

final question comes of Derek from KBW. Our Han

talk the Your comp support of of which could kind that the kind inflation the number. of in staff? that threat some I ratio taken producers impacting hoping is curious been good quarter, in actions pronounced if quite And a the you you've is versus from impact more XXXX. But wage was that among about is how you're know, hire to just you trying

producers -- competitive that the very paying is, a I'm And the community. their brokerage a Well, of pays significant local of we're our on one that's very one formula with probably them of of Derek comfortable is book. are we still the broker only proud percentage that things very the

platform that sell agency the it got to the got, we've that one Illinois, fact has and that analytics we've about you is, to way. Jones pay want Where that you Or aboard what isn't But happy that what we've percentage. there think gives has like do you you a the kind come this from there. would that So in global relationships Alsip, platform, got? do data and to the reach of a it from hope the you have we're

and part expense really, comp for self-regulated. So producers of our benefits and big a is self-generated

excellence. and made our using you office our investments back standardizing know, middle centers offshore And process we've office of our layer and layer, as in substantial our

we made us reduce inflation raise and of could raise our an As our even a gave little a tell decision We pool we raises helping this that, our a costs. Bonuses, quality earned ago, it's you, that what raise not to hedge. XX we've have We bit employees. we And people. of I'll raises. a been year. years we've feel because we've fair, -- people, depths we've care of raises holds result recognize actually of a sizable taking of them, gave The these pandemic. our our as their been The like is they've to the people earned been contribution hold are got the in our doing. result culture their what of

Deming you we've And without effective. making So our years quality best low quality. our can't worked also the for reducing more It's and raising costs. it's cost high have on is said our folks

day job up plus want in every We our people service India get great that have for XX,XXX XXXX do a that another do and to clients.

So them we pay well.

it as good Our retention as is pre-pandemic. today was

workforce think our that well-positioned is I right now. So for

they workforce I be us, deserve think and our here we've very on and numbers but and we're our us, So helping helping scales get that. that are our technologies our well. our helping recognized the that people despite to recognized proud volumes press of workforce those paid us, are And control are

been everywhere home. agile for XX with work, now work, the Well, also we agile years. you've heard our agile workforce work from and work last how We've

at was entire So force Bassett's pre-pandemic field probably home. XX% of Gallagher

us. the people this territory not stick to new employees. is listen We We to want for So, around.

our than pre-pandemic. were different Doug our no turnaround rates rates are As retention said, they and

Gallagher So the hasn’t recognition great yet. hit

what kind to growth constraints wanted you. or confident to you from And of your a of plus really, plus. about brokerage real chain X% organic sense growth. organic That’s kind rate that. get of back or going any achieving kind Are embedding Okay. just labor really I beating of sounded very Thank slowdown potential the supply maybe helpful. expectations of know percent constraints? could hikes But the maybe on you

tickets. into small is I’m The of infrastructure. the our too work. coming Every large and book they more of is that commercial, There their at But all increases up in kind of that. insurance through their property of account of and portfolio. lines money a Hold DC. is you little flow has inflation. commercial with Every an sorry, going optimist. as contractor all of from situation are significant that way from loaded business benefits Payrolls mentioned of think employment be -- I Derek the up that to need to it’s not out bill look personal I industry that’s of got brokerage I’m going the the an Washington cost just business a much earlier whole in touch can all single the than stimulus nice

Well, Thanks here thanks everybody. joining today. I appreciate you being for us.

As know the fourth and full for an thank like our would colleagues you quarter we all XXXX. globe year. such around delivered year excellent outstanding I an to

have were efforts. our good speak to with Investor you forward direct And very of We results March Our again much. you in reflection Thank evening. their look Meeting. a

This does today’s conference conclude call.

time. for Thank at your your evening. and participation You a lines may this you great disconnect have