Arthur J. Gallagher & Co. (AJG) 28 Oct 222022 Q3 Earnings call transcript

Good afternoon. Welcome to Arthur J. Gallagher & Company's Third Quarter 2022 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, if you have any objections, you may disconnect at this time.

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

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

Thank and Thank for third quarter you, operator, earnings afternoon, our good for us call. XXXX joining you everyone.

CFO; of On Howell, Doug the as our well for divisions. heads today call operating as the is our

comments results, to Ian. I our of caused by I'd the acknowledge about damage Before like Hurricane to devastation get my financial

sort Our clients to same of At own same many working their coverages, ultimately diligently losses help the time, our claims for paid. doing are themselves. professionals the colleagues our get file are and through

their is to response Our responsibility. I'm paramount events In really the to such such an important impacted families, hearts aftermath lives. go industry all and part by of help out and of industry's honored insurance as those of the restore communities role with storm. to in be businesses the

third my performance. to financial on regarding our quarter Okay, comments

revenues. signed mergers quarter adjusted growth revenue, X.X% completed we we segments, growth of annualized For in XX%, totaling million organic growth of Risk and our earnings combined Management and $XX of the X XX% Brokerage growth, in about EBITDAC net XX%, posted or

by team. fantastic Another our quarter

Let our detail segment. quarter you with some on Brokerage starting give more third performance, our me

related a revenues Day were right September line $XXX EBITDAC During within than the posted X.X% tough with was growth That's that, benefits XX.X%, and IR was a timing expectation growth business. previewed full guidance. be we 'XX there quarter, Of would when our adjusted of organic. IR in from our about revenue to comparison headwind better reported we our XX%. bit Day million. a earnings XX%, was margins Net Acquisition of rollover point

brokerage Another for excellent quarter our team.

Focusing on both business continues by be segment brokerage organic, it and broad-based geography. to

you operations. and some P/C walk me more commentary, around Let detailed the world starting with provide our

Services, strong and and quarter. U.S. brokerage client Our third retail with X%. posted wholesale organic XX% last operations, and This also organic retention, businesses. posted year's binding organic Risk programs X% our Placement solid new in organic open business our more MGA consistent in U.S. with business both X% than includes about of

retention year and was New of more with business outside quarter. XX% year's than at prior revenue, third was consistent Shifting U.S. last the strong

U.K. Our and business organic new excellent businesses was with production combined posted New and retention. X%. XX% Zealand organic of Australia

new Canada business and organically business retention to benefit relative retention. robust premium renewal and remained last quarter. from continues up and strong very third year's XX% New production to increases, was consistent improved

Moving to Consulting Brokerage our business. Employee and Benefit

let and of on benefits quick employers me a we organic acquisition. consulting last expectations our organic tough with due units was you the that's about Leveling organic business signaled solid our again comparison HR that IR includes our pandemic. give December Day consistent and conclude benefits international businesses. in the mentioned as this our for business Recall last I my of XX in hiring as before and update growth strong And And our growth with I X%. IR Day, comments, reinsurance resumed faced upward coming our As that, depths our earlier, to benefits a at lives covered development quarter. September quarter year's out

was year right Third unchanged, yet organic full prior to That's expectations and EBITDAC a reinsurance after closing, line continues quarter for expected controlling our for organic be fantastic outstanding. revenues revenues while breakage X%. in included story. to our not were segment Brokerage around and with just in With

Brokerage around in all organic So of outstanding segment an either benefits X% headline comparison the controlling organic after and X.X% quarter. way, for

higher me premium some combined, of Overall, 'XX. premiums, the in let Next, give PC the and change exposure both a quarter first thoughts insurance on starting were renewal current XX.X%. our environment, That's primary that's market. third rate you in than bit renewal market half up global

quarter, rate, to with are most flat, limits. for the being half our more similar are exception business D&O, one As of first lines where customers saw but third only to in rates closer increases geographies and buying now

activity not was our slowdown. business of third quarter any economic reflective Additionally, customers'

related quarter cancellations policy In and midterm quarter to fact, endorsements, revenue above third third 'XX were combined audits levels.

third to management adjustments Looking their ahead, premiums far last midterm consistent budgets. the endorsements risk than October, higher remain overall that increase thus creative policy quarter. XX% our is and remember, also clients fit help mitigate But in and in developing that solutions renewal job with premium audit increases are level, by our year's

to me Let move the reinsurance market.

with Let reinsurance broad 'XX observations me the regarding renewal upcoming season. and provide some you

loss First, risk line will of there rates, that conditions terms is seed no vary characteristics depending question geography, and business. on history, individual and and

peak higher. likely. on and conditions are And zone cover highly property moving pricing tightening is catastrophe Second, terms

question. spill while an to appetite broad of risk Hurricane Third, deployment a shift the in lines there's and that, strategies. happen over the could is witnessed if Ian and capacity reinsurance available finally, haven't property impact reinsurance yet, amount possible of we Fourth is that open non-property it capacity

to level expected be pressuring depend significant reinsurance X/X into expected trapped and returns and in. reach likely had is additional now perhaps ILS of cat it a priority level potential renewals, capital. that in will Some their will pricing, conditions planned the already supply Ultimately, changes reinsurance further And pull returns capacity will capital from terms to capacity. attract providers back on

seems enter is the January or any capital we point, significant This will loss capital doubt the conditions in move season. next But third-party we're it carrier our see X/X for out to the play to primary in into renewal rising We influence and renewals and months. X continue set still the as stage yet future. will retail already quickly, before markets ILS risks facing given a have reason the season. is and even carriers foreseeable for hard While wholesale casualty no to for market over the at property harder XXXX time costs good important market, renewal we there this can cautiously Reinsurance see lines. partners underwrite

remained and U.S. favorable. tight, Employee our to business. Consulting broadly Benefit Moving Brokerage but market labor conditions

openings jobs September. employers to positions, of job the million million still the X are X well end more the nearly while the by in data. as for than XX U.S. reduced recent there level August, people million unemployed above open remains most During And of work of job openings according looking

conditions retaining we and businesses labor workforce. market lingering some U.S. motivating and consulting strong HR tight to for our continue expect prioritize, So demand as for see benefits their attracting, time services and

X% the see up fantastic me year. And stands us Brokerage terrific Let at posting quarter organic Year-to-date, above quarter, quarters I organic a look my I books. wrap segment X.X%. that in to fourth brokerage comments as X the another growth deliver would with

mergers to and acquisitions. on Moving

brokerage we third $XX completed the about representing tuck-in estimated revenues. X new million quarter, During mergers annualized of

like $XX for professionals. of million in a thank representing an our another estimated signed growing our I'd all late additional third new welcome and Gallagher us very merger quarter, the to family revenues. extend also warm joining annualized We of partners to of

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

to segment, Gallagher Risk Bassett. move Next, I'd our like Management to

a organic was a XX.X%, growth the higher strong organic bit to our pushed IR quarter day finish Third than expectation. quarter,

and excellent. in significant We across added remains to organic profitability including basis arising That's workers' client during continue new company quarter. an the some the liability increases insurance fast-growing And both to carrier benefit client practice. on client our core compensation insurance wins, and also recent to new also existing claims due from we general

EBITDAC large September we spoke Third meeting. IR ramp-up our quarter have expectations. margin to would the XX% XX.X%, without our in with client been closer about at impact that new the was adjusted line That from

years. founded own embody to a the directly communities those solidly culture XX% many the a which My remarks that for to on thrive at great that XX ultimately our out donated company unique be the Gallagher's incredible assess in Looking not fourth believe world revenue proud culture. will industry about money Ian. October took on anniversary. our teams work the celebrate assisting organic help culture repairing grandfather the be our to toll. close margins actions our growth day fitting milestone. and for And started claims our and we marked with were that EBITDAC another will and challenging hard adjusted between that would colleagues building he us times culture we people's a Bassett forward clients and the and quarter, we file impacted conclude employees for start I Ian. individuals the What would by damage, bedrock the in note It's Gallagher XXth process to if helping Gallagher this X year way thoughts that team. the my that impacted XX% of I'll for around Gallagher for bring and XX.X% And believe their some forefront,

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

margins hello, with some cash. and comments that move remarks and my to thoughts corporate release. on website I'll M&A, Then commentary I'll prepared everyone. the on and touch using our CFO and Today, organic to document on I'll Pat, segment. make conclude debt we our post earnings some Thanks, our

on I'll our have we around that some quarter During also now are some provide my thinking started seeing comments how XXXX our first budget thoughts process. we and today, fourth

organic second first the in last quarter, organic in when exclude X.X% quarter X% of sale release That's on fairly infrequent look in us the X.X% in I Headline quarter-to-quarter, we about X% when Starting our brokerage tough Okay. boast growth. over consistent organic segment Brokerage it's We all-in When X. that earnings live that strong quarter. for you organic brings compare, Page the large to the at controlling same X.X%. year-to-date discussed with a benefits organic the range. the table

benefits team. but the X% above would That over a and our deliver for the X% when quarters, full performance headwind. Now noisy the in quarter fourth XX% and actually X%, here fantastic on sales we're about adjusting quarter. year consistent by the like at a little very looking It's third organic in a

early X% organic Brokerage segment. for in is our XXXX, feel X% for range As that to

as returning segment X, due margin of quarterly come roll-in Next of of to to and acquired year impact a reinsurance is a operations, margin adjusted Page expenses impact stronger the change this of the Brokerage the Recall, dollar. we EBITDAC turning volatility table. to out pandemic the the

Specifically, up we've been fourth first saying the be points XXX basis quarter, in second to down points in XXX quarter. points XX expect basis quarter to up down the and third basis XXX margins about year-over-year in the quarter, in

around XX.X%, right end, posted expansion. of EBITDAC deliver of 'XX XX margin our a we outlook line fourth been of around on comfortable day around about XXX In we our for relative points year expansion basis fourth margin quarter still today's margin our targeting we've which quarter, the was to to to fourth 'XX early And adjusted was are That that track the of FX 'XX, points quarter that. we're since would in suggest and margin. While XX% quarter full third guidance with with FX IR rates. basis at XX

would XXXX. basis More since we improved points XXX around that mean importantly, margins

around growth, 'XX, expect X% continue As to to XX year we maybe or at organic basis call we starting expansion points margin better ahead look it, next X%.

Moving the X. Pages Management X Risk on on segment and to

looking of be and year full margins XX.X%. As both and of Day adjusted -- XX% around results our about the mid- full pretty organic year and these revenue the excellent XX.X% to quarter. growth in growth IR range. Pat about And a organic would see forward, we September XX.X% Organic continuing in growth said, close margins, margins expectations. XX% XX% That to fourth upper

that XX% the we of up large Australia will we nice combined have in Add see end new high in business continued right. All at and claims, in and client, new will a roll new Looking in digits continued carrier least business around organic strong margins the we already midyear. rising to newer production, growth had 'XX, 'XX. the single win see in with

document. Let's now Starting modeling shift highlight. commentary shows CFO brokerage and A to few our with X, Page the risk typical things which to helpers. management

look since Please our for dollar at take September of the 'XX. U.S. our a quarter First, the the IR continued fourth Day. updated strengthening FX guidance of

start but of are seen what repeats just to half. for for the assume that 'XX, in best year we is in As 'XX be full projecting the first XXXX, perhaps will most

at most and is see you'll this the acquisition. estimate our of quarter The fourth really excellent for reinsurance current making to on It operations this see is of plan. a when relates with of a team London I reinsurance colleagues Second, was original in faster executing integration pace costs, progress all terrific than our couple our weeks to new our other brokerage located ago. was

for end 'XX. technology of done and system being rebuilds, As still the see 'XX early we or by

outlook. Corporate X. X M&A to and adjusting expenses, totaled costs after about clean energy Relative our outlook, the our those lines the on midpoint interest Page to in transaction-related Turning segment to large of for the September banking,

tax upside remeasurement a most of corporate items favorable the Within gain. and some was due FX to favorable line, the

towards our down one quarter, moving that fourth change outlook. Looking page, only the to significant

taxes, in on we the corporate a resulting and line X here of X, Gallagher our you'll a see in that fourth of few Footnote see a litigation lines in results. $XX litigation that gain costs out read we Net record we'll of you'll million cash. settled in Page that GAAP quarter in million, will adjust $XX gain As October, approximately and receiving down and

actually proceeds, a over put the credits the closer our during production in of thinking break investments to tax little is IR down hires good cash fund years more incremental couple $XX technology. incremental of our day. for we'll which million, As make that I'll next December our and because to work to

The should to Page This beyond. that that here even page column and highlights as that shows statement, now shows to carryforwards. that cash Energy. pinkish a $XXX now. to column to Moving It close expect And have familiar Clean we $X not billion everyone the greater be P&L. X, 'XX, our cash tax however, by we a we million of flow to and could $XXX would come in of be in peach million our reminder, flows 'XX through credit

of is top The X. the Page the to revenue Turning page table. rollover

revenues our page, December of of lower with the our is Shifting right that's million, expectations update table weeks quarter Third ago. reinsurance half 'XX line this to $XXX the X an in acquisition. on

quarter Third $XXX IR million our day revenue consistent estimate. is September with of

EBITDAC credit a is our pro to As for EBITDAC, a revenue in year tightening should great close fourth and come Punchline difference full between the story very third and terrific to and team. That's really quarter. forma.

Okay.

saying cash was have XX, to to 'XX At seems combined right stock. and in of management and without and As capacity million, 'XX capital M&A. billion future we've around $XXX about about September available we might cash That been using today. still hand $X and us that M&A on

my are Those comments. Okay.

Back for outlook fantastic and like XXXX. to you, and for months quarter, is in Another well another the fourth quarter strong the in Pat. it's X books, looking positioned terrific we're year a

Doug. for Thanks, open please. up let's if Operator, would, it questions, you

Bloomer Weston UBS. is question Please first Our from Instructions] with [Operator proceed.

question. taking Hi, my thanks for

expecting you sense a versus get in on year. of you're X% more to The on hoping target that X% growth I of maybe operations of expand sort the you're And on in potential then could a getting growth seeing hit of can kind that to how organic P&C if then you're Just that maybe a if terms environment? was recessionary you X% environment to next is international? across trying first the recession? or of magnitude wholesale to you're next just expecting X% year one -- granular. comment And what

by a year. they're division the take we take said moment we those across a I look think me -- did laying a next question. job out And Doug, good consistent pretty numbers can numbers of we I pretty ago. think thought let recession the Weston, at

at is is So And market got to look with business because the I to think going to reasons daily our we you We clients. on units our information endorsements know, can sales question our on going they're client, in that talk you put renewal. the through interesting you what's renew the estimate for you answered. look forward. we at going have prepared one But what's can remarks, as prepared recession in when one being one underlying payrolls renewal also about at a see you the of of as exposure that an and look remarks,

pretty the are year. the close I'm and clients return months XX to smart. So not after basically wanting overpay XX of in then a that or for premium wait audit, of months an

We're payrolls. a providing. payrolls those and should of and between yang sales we a being verified out yin in as underwriter their So and endorsements we okay. the are at And midterm the of door by the broker, look the decrease business seeing not perception be it's that bit Renewals seeing. that we're and big client a are what with going that's audits the

the day. left-hand So yesterday, column read every world came the to I -- didn't know I just Wall it. I Street end, Journal read the

during listen, recession. we in this seeing 'XX. and of a the the a period, financial or at subprime also year see in period, 'XX. Those that go back data And going that it is X early light those best recessions business than soft the it then, is can is the do recession to do recession our more saw we're We normal XXXX what it the into go landing supply. pandemic more do last there we typically to we way, and 'XX in drive about we're XXXX well not actually happened 'XX is for to see the -- if we shock think back underlying excess get in we case, look We if recession, demand not and it's -- the months performed quarters. few -- being supply year, when more a anything ensure and I like there in of that in Well, X next a next I contract very if I XXXX, we think and we recessions. a happens, way today, to this normal think 'XX In recession like viewing or

like world is see don't exposure this contemplation going right But change rates the lot of this months, a I stable, changed it's lot to our for a X/X for what dramatically year, that next on in seeing the been holding up X year. see I last X like -- So now. sudden units has year a of all we're from

how our budgets that range. that's So go-in case. That's our preparing we're in

how So that's to with X%. X% we came up that

give you reflection more that we'll But on December. a of in

Got it. growth double-digit us And the as more tail property long of is versus And kind just of remind high kind follow-up one can for much a low that like you of reinsurance is single, range right binds? business brokerage there well? how

Yes. All right.

next year. can -- So answer in single-digit high reinsurance now, to remember, tell is are we right the we yes, now, Right in property see a you pure range is the of treaties lot But question, got your that that XX%. best best multi-line.

on the facing a of kind high-risk closer be that's the book casualty of of tough you've of might -- a maybe at book to in XX% of put some then You season. kind that, it look got renewal XX% our I'd say is package business. a it you of lines, And

Great. then one just more. And

in that just spending that be margin of contemplate offset inflation a organic, by any net Or items? the pickup on core commentary is expansion bps X% potential may discretionary income? higher On does XX based fiduciary around of

Yes.

over I be again, you the because about numbers. all not Remember, see business, our need as that some of a at in last think our we could incremental But exposure investment be will income. investment of of hit here I'll year. our inflation to clearly said more That don't that bottom of months. the But of have December, next work inflation will thinking XX% some opinion, -- still do headline in earlier on expenses, that math it. has pressures our an to Day from some we our significant be or And to through income upside like I incremental IR and an will there about call, they there in believe result there we on couple for an that line give upside some of next XX% XXXX, inflation.

it am I through working too.

BMO next Capital is Our with from Markets. Mike Please question Zaremski proceed.

investment of the that Just guidance a or levels. interest the you rates of sense? Does on the so And current inclusive is provided curve? income that level follow-up the you kind using make are of --

You're talking about the 'XX?

Yes, 'XX.

Sorry, Doug.

Yes.

we to look our pressures hit points not investment does X when could points it income upside inflationary but to investment cost possible the all with that growth It outlook. margin at a incremental EBITDA think line. on would XX I some from organic discretionary of income, or X% that incremental not that expansion, points, will could it spend, base go basis include to be likely that some of go some XX but basis possibly upside

for the Thanks little clarification. Understood. Okay. Kind gears of bit. a switching

Gallagher accounting or Just curious, of little the to that the bit. surprised anything place business, Just you're of could years contingents Is few programs year or your potential to be there as maybe capacity? a if out not of impacts us of contemplating even any new in one into lack hurricane. a came of know I peers kind should we kind calling a -- shops ago. to into of a kind trying come rules result there's the impact

So to talking there's worth anything just there about. see trying if

commissions our just the than operating business. you We has of book outlook against develop on differently numbers in been is that. in revenues. not Our commissions believe booked that just would of see our today. our not We impact That are exposed to that on $XXX,XXX do of fully placements -- impact Ian that not we're contingent to all contingent the here

Or And change of given higher there's now on competitive side, longer? environment in it that kind may the lastly, rates consensus interest a any Great. for very M&A just competitive? Okay. the stay is still

carefully industry that off. that there's some very of And of still, see competitive. out there we're a very to very, in falls still our it's lot if No, watching interest

I recently a the know number bit. write-ups the the some of want down very people on after bit. see don't maybe that deals right early an done sign strong. is now, for about coming some that's we're competition sideline But of a deals that if sit You'll the the to

I I multiples, should have been trying clear. was So to --

you're So seeing you that? and expect south don't not multiples to move

they yet. but not we're hope do, I

next Greg question is Please Raymond from with Peters Our James. proceed.

but So over because wanted especially unpack feels we the like and pay asked back, comments for go and reinsurance in I could their be in to -- it on it's market reinsurance more online. perspectives like adequate the hard lines. your to and retentions that take now primary able going of get seminal bleeding on market, absolutely cat-exposed property, Pat, it seems really been other reinsurers an then are return business. to get moment the to where companies to haven't business higher sort be the into going your so rate And and And what's a about on we're at the marketplace

are So I commission profitability rates getting scenario yours here? on is, guess you might or some get where actually the if pressure question pressure, a as my partners pressure X these of foresee evolves market you do

think I don't No, Greg. so,

do to single every that justifies a managements. number anywhere. meet it's business level is that we had with we're every have income chance to making. the day. that very here And exactly in the has no you There the -- I've mean, market. that's work think we our that hidden They it's money. clear that of earned dollar a I And I -- see factor know been stable,

experience the retailer, you're a shingle incredibly not my as hard and are reinsurance quote you, some a market more talking person, to hard soft person but out when in retail market, I'm a with business, with Now sitting man. in beat a get you a valuable. makes market a strategy, In someone in a you

comp talking are my to happen You going about what's premium. not to

am to homeowners You're pay talking as it. going in of to know. but going next I personal and to get year? I've you're get they you you imagine, GL right going Florida. mean, know Am South that's And don't lines. cover. about, friends, down I I to got can I think I will, tons more going

way emphasis returns trusted of and how a that, they're looking lot to a much carriers are at these works get millions literally of to is all its on back this Now think, put ratings. going on not dollars we way trying adviser hundreds reinsurance, I time of the paid get to of when when

this. a will and It's this XX Greg, I reinsurance office skills, been time the brokers Yes, but important insurance is in with years where since companies, to where right capabilities, their now, would money. of their I've CFO be this been my they earn people have time say my a most is really their

enough. sure around happening I'm robust all conversation stuff. it's there's a Fair -- this of

if the this Pat, that pretty we I recession, on -- we're a in blah, -- that. on you've a but should What pipeline, commented blah, on we you in and So strong. it's sort you've just and business Can into I blah, us to I about some talk recession, just on perform wanted also go go remind to if give know that piece, before, wanted kind how pivot the management and might about if brokerage again you but of we thinking guideposts before, know us this and of risk -- landing? I when commented think the soft be a

that's them who alternatives. self-insuring them, going you prices while pricing -- the are are They're at -- that better time, when of hard same now impact, work preventing is has and at clam. first the and should the kind same pay and their as about really they claims be upper your one of of there's in. When how right based the has and And listeners taking mean And looking I'm a are retentions the manage today dropping, are the on gone line larger alternative take and when recession, bringing that is happy showing I you for to a are of very to point lot market. the people we larger going when middle talking to us get your to of their buyers. you as companies instead I Bassett prices recessions. get Recessionary into and they're around brought market. a the accounts, all, to Gallagher same than private The say -- it higher capability move work the to has and don't especially sophisticated these up. recession know, bottom up, hard tomorrow if Greg, skills Well, today

down you'll our advance then and Now business larger that in if term, of not seeing the their recession going go and it. impact into and kind don't just But see know the I is in that probably happens any of there see they that a have claim We as population, think counts comment shifts, short slowing we clients an we'll of people cutting on We're close you're well drop. as aware better business a right to shifts, downturn can now, down we'll well Greg. be new start a quarters. lesser

me. that's the I thing think interesting to

really primary GB counts claim looked I then up. day, journal and sitting go, and and not test we well. test the They're test, And and there partners are down. at the I'm I business results every we and doing read said, are Then our As okay. and

questioning you're self-insurance. done out Clients and here's But it's that not why pointed the other do do conundrum. thing. really jump get it. out I well. get recessions of So we've -- I in Doug the the

claims. decision and big taking that move retention to to make your paying You a

good less, a You counts your have hours because be. on market. place but you a claim down you're go may It's -- see in the not jumping worked are to pretty may

the for Thanks end are it. imminent, answer It seem the you journal is like the the world but I of results. does good read guys posting too. Got and

congratulations. So

Thanks, Greg.

is question Elyse Please Greenspan proceed. with Fargo. Wells next Our from

to XXXX My the first question, I'm going direction to I want a about opposite of to talk head in about talking I go side could flip good, and be. the how recession. guess,

really we side X% a have firming. exposure said sounds saying market, good to you like have next organic to it had really But the September. and Today, As you on the you're strong for where is X% reinsurance X% in wholesale X% could really market year.

So is based. of revenue at your commission XX%

organic that So still where could an pricing be there is could Gallagher double-digit growth? firm next environment revenue print year

to god's from Elyse. Well, your lips ears,

a you at yes, see in done, markets, capacity the comes market, I'm reinsurance is hard get environments dries could whether up, and mean, write capacity -- ILS at say I going is you to on sit that a no. back could or whether cap story. look you a -- happen. job think in brokers variable I bullish smaller clearly in, capacity the could and not trapital yes, our If results there can't If in here depending take those look other

then And could said of right, X% Doug, we you XX a at margin organic, see assuming, points basis improvement.

improvement be So see margin than XX X%, sounds something we'll assuming year? could that's so level that, the that is base right, like it is better and base it that point that next the above case basis

like to don't that. I you'd basis think that that XXX it's us -- I have get and December, not posted But through this linear. a get something you our X%, of expansion, budgets. look we point, but let our If XX through think have at I might think points margin

is might is of other organic mean, spending we But in to happen. -- make that, case and a this that I yes, there want technologies in some that could And discretionary growth strategies. investing

light amount levels the little seem because side, maybe next a And has relative been capital a guys of does of historical have it such it's you years. then on M&A. M&A couple you obviously guys track right, this record flexibility the had flow strong a year. to Deal have good of over

reach know guys of and time buying shares? back is I Or and ebb time will year consider flow give pipeline strong. that still point So Will it depending something upon consider just and you is it you your where maybe some level? you deals do what the At buybacks? then

listen, interest would up, every be is Well, ended grade with maintain rating important a sure borrowing. going With we solid metric more excess day. that's if capital, to make and investment that our we up first rates more

-- on field pipeline compete M&A And and our the organic on Second We afterwards. the our every and multiples. we're of side robust. third people thing we on that of think building still team. to out bring the out day the arbitrage the create more go remember, is, is I more that And more importantly, all, get

It's us part to for work buying can But shareholders. math, certainly that put at So see multiples deliver back to its certainly of M&A every arbitrage do. of us, what to day I'd the doing we cash that more to story. more like and stock -- is the and part our our are value

very out we're there, -- So looking hard. we're

ton you right pipeline opportunities I our now. win, a in we've sometimes lose. you Sometimes But of think got

are opportunities the deals? international seeing of strength more dollar, Given the you guys for U.S.

especially pipelines now. got U.K. Well, good Australia pretty some we've and on, listen, in right Canada, the going

happy does bit but to a it's So those at there. drives dollar the to look yes, investment what acquisitions not of on And an be that, our impact choices. we'd continue have little

from is question Please next Kinar with Yaron Jefferies. proceed. Our

first noticed to Brokerage. was and I'm the specifically a question referring is in in on is headcount. nice there My headcount, I pickup one

roles you little that I X% actually despite maybe is what talk ratio type coming increase is secondly, year-over-year I'm about what was -- to the bit up you're think impressed very going Can in benefit actually a it's that of into, see and year-to-date. in the I headcount. hiring? comp And

is keeping a are you number how Or we that down? So should expect? there catch-up that

right. All

the to couple a got couple a of talk things But increase things -- unpack. So let's in of about the headcount. first, you

We in count substantially of head have actually our our offshore increased centers excellence.

quality And work been terrific in significantly for the a the up us. improve the we've think as know, offerings. do -- you we're a right result, now. XX considerably up And As that of years of can it more spot we're insurance that so talking for our We in offer ramping to that. about offshore that now that's

there. When you're So that opportunity the bonus this resources of the timing. quarter, offshore is the -- that's drop to it comp driving the comes what's do with some metric in ratio seeing mostly to has

we If ahead you our bonus a I on recall accruals. were little last quarter, said

as of rates pool. of did little well, year, bit year. the million have didn't $X some of probably we pool that the bonus. this -- something post we that in timing inflation in that to raise like So our this which quite this is the What's -- the much another a quarter, have offsetting in offset We away gave

organic to I'm last for in of in X%? Got it. 'XX, the curious the end the weeks? growth what estimate bottom the X at range What least increase X% to And the from led changed

listen, brought think different Ian in tone a I has Well, that the marketplace.

I think you're reserve seeing across some of strengthening line. reports

the were between be reinsurance the that about XX XXXX we've we -- to felt remember, growth. got and organic happen is 'XX saw and to somewhere XXXX You outlook X% reason we and X% saying X% to why talked

at starting context So relative we're And that years. and in tighten we looking a in the bit. little see X renewal pipeline, in our range to of the as different September, could getting thought process comment the really on what we're to closer now we budget up

I If in, and very what they're was on think going we have the that well. -- that's not that a conversations casualty that some that Yaron, wonder before I've some that benefit happens, the our we're be putting to as possibility. look loss bleed Today, our of And we will good from you, think will the it with across that had that into and pros, Also, cost verdicts reinsurance lines. and pressure level on clear loss cat if carriers.

guess, trying following I typically Maybe on or to X shift rates question. environment it. up some of maybe markets, fees? see kind over and do you last commission to in on what Greg's Got pressure what one, clients

middle, accounts clients, probably, their Primarily XX% of go market, choice. we're you'll the where about have in middle is from typically, transparent. as This XX% XXX% your market, say, retail to being, upper

have an conversation. know contingents. we adult They We collect

accepting Let's disclosed. supplemental. XXXX This They're is all choice. and client not and trouble, to me go all again, get for back convenience in

thing, risk little fee a And manager, we're they so to then happy as they there's a and that. bring get usually in a if with shift of bigger, that type

is question David ISI. Evercore from with next Motemaden Our

how -- of had to Just you basis benefit move quantify past how for But fell rates. just think short-term double side, in check just that margins? to the income. maybe to the it line? about Could impacted in revenues quarter? what And I this quarter? XXX generated the How said then just question talk much much was bottom a every this million the income that just to investment wanted on fiduciary it's points the you've $XX

Okay. I'll in bites. that of take couple different a

This a what as quarter, we do rate how much way of let's to year. full call at as Then bottom the result income fell is better mean a look million it, a additional for me for of asking that Maybe does take you're changes. investment had this $XX.X to to it that line.

we I'm sitting we XXX beginning from over expansion XX might X standing forward, Then out we that of if points in And looked at what looked basis year, If had were we years. and we January, said about X% we we points of of when get was -- is January you 'XX. when XXXX, said look had about that the to on organic in of margin margin here recall since to we we expansion. said, and we be again, the back able said in XX posted basis that

organic in the between points looking say, So that say, might up, $XX point investment to be We're and, this expansion. let's XX more basis happened income a XX running of still investment But is at of million what's that since margin expectations. income better let's year. year

revenues year. $XX So more of that's about this million

And way of $XX to we're is, the line. the drop look that did go? so bottom of -- Well, it of to million at dropped one-third all, revenue I go? going where first the Where did that we

$XX So that that that of on support $XX revenue the of XX% additional leadership runs $XX million. we to about million our call leaves Usually, field $XX and revenues. million organic of pay producers million, have Well, that to that.

$XX result you I that tell and $XX the to down investment incremental explain relative income, million expense. our incremental we're we Well, year. raises did at incentive beginning a we go that to can of know where travel year. now outlook comp of spent incremental and some and hiring, on organic about as So the incremental also $XX one-third. went million this some million And entertainment about to -- incremental we incremental it's again, Maybe

beginning the expectation to at this we of an the IT Again, And is on to bandwidth year those extra at our have than probably the we have projects. of against in projects million expected trips $XX and expectation. beginning then Now that's would we spent the betterment due because implement mostly inflation, year. versus it's due the not our finally, to increased order

been clients. basis efforts the So margin for it's the I relative two still value-added in outcome. delivered darn expansion in year I'm yet proud of years this been beginning disciplined the IT really of of at that great And what had done other really here pretty the and of And expectations deliver my terrific their me, opinion. job sitting that they've their in good has travel in selected team investments. And They a to wise in a inflationary XXX this environment XX top think on year, an XX bringing have the our year. about to points is to we year, to they've think pretty been previous a I it's they're the

perspective Omicron incremental a beginning going and investment were of answer depths long-winded to still So year, at I but the we at the -- on crisis we on, the and beginning relative organic the income that's in gives sitting of think relative a remember, to expectation, incremental were had the it you still we of we pandemic. year. the -- And where the

the along So returning way. expenses way out we still pandemic have done our of those

to So I where it hope gets to a long go. need long you story, answer, you but

really that reinsurance I that little it switching above you're that X% a just just talk point the digits been gears maybe think, what's from -- helpful. single from definitely being Yes, that's to to could just well experiencing high going. deal a about in I I guess digit? I that XQ. this how conservative. of outcomes stopping range market guess and there? 'XX be high may maybe But the And did. feels you the given organic, guess That's X% quarter in The single accelerated around

good the just most The paid. was market. is he the talking returns, essence point what worrying when to It's very at balance They supply their and they take is that guy to reinsurance, down sure going or imbalance. They want the in to this the messing they're buyers of a You're the got ago, gal sophisticated path at good dealing get out And being how the demand, advantage capital, returns. it's is, be looking bit the to want substantial. it. getting They a players. make wasn't as with about like around buying coming Doug said demand want of he you've

they policy, market, not progression. get pay policy the policies in in is and returns pay And into earlier dropping us. hopefully the us and I deductibles more lower a the are around, going buyers what to But ultimately that these by it's commission. this help by And very good linear so case capacity. That's we're I question going down mean, to money. it's by they're paying But more not et bring keep client bad get are that sophisticated. linear. They'll large, is limits, not moving was on to middle umbrella the the they'll paying more reinsurance. Price reduce that -- us money, used XX%. to to it's us up going cetera. but We're

Yes.

but bell curve, -- XX% around think symmetrical thought a -- I wouldn't a on I -- bit to I say little it's it's a X% X% of that.

than So favors X more it's maybe points bare on of that probably it, case side on the case and either the bull that on it.

just then it. And X Got helpful. That's maybe more.

organic want a type in that given what there to be expect one but don't scenario? recession. in growth or be on any early if 'XXs you a here, early is you would there of XXXXs, mentioned was that thoughts Downer have the Debbie You like don't I guys

job, he time. take back taking and Doug our did did, results back it go 'XX. very are in -- I think back public to good of I a sure mean, going

good for do extremely good well what we times and payrolls think brokers. are recessions are Certainly, bad I times. premiums. and in our drive not Sales

brokers them listening them sales more that, who of and to our in down, what if with the help go talking that. So the get people professionalism, have capabilities there's hit. our niches we'll that feel us local in our this, no and you about to deal how can the said interested Having payrolls impact question you, takes

to sudden quite contraction be get there's a of recession a seeing would the adjustment slowdown of exposure just we're When the rate a fleet. They trucks and seeing refer an out you that. I not will listen, that it I'm not I covers may a will if we may that they as additional Might -- on not mileage it. completely we're not evaporate we it, units, recession, you of to I'm take to the insure that being say, wanted know on different year. stuff take looking on, deductibles. and of into a you They for have just all environment, employee much, some that on come comes next that but at convinced stay may running our with inflating downer as environment, type When Yes. in into will on jumping to recession, help versus a still also good new if a retention a they get company, opportunity. you're because an us

applied, a environment. in X workforce broker, are that to those X and people when flight performing So their quality what very terms looking or in well things increases, stable of us rate see I for

to pick If I'd hard if see how in be a to want you there, number we pressed organic a be X% me less would it have than downer growth.

with Goldman Please is from Our question Cox Rob Sachs. next proceed.

market inflected hoping brokerage last from you and I question. talk just to here? I was noticed the and what quarter-over-quarter accelerated XX% how see And brokerage broadly could one had XX% open versus trending just I about quarter. you E&S open

-- from The premiums That's there, that the out of that move business to the rate, people E&S primaries. accounts interest need, move, market of markets form, that more we're markets, can pace answer they quite I tough clients cover flexible That at And market. question, large primary they are are E&S investing of in able on accounts. Did are you're the market much freedom terms think small Rob? as sucking to not a and seeing as of honestly, move freedom the so in is fire. in your seeing everything why

Yes. Very helpful.

with proceed. Hughes Please Mark from Securities. is question next Truist Our

the spillover some you're potential afternoon. of saying. Have what you just hardness on that past, in influence from the reinsurance but the wonder to hear going lines I the have non-property how cat lines, Pat, seen the other Thank the business you about talked of much casualty to good property I market. is you,

to it. sort Just curious about hear of more

this situation that year given the need other team amounts because my that good did the whole advance it's like length -- the likely year, supply to our need dearth the likely, folks bit time what the percent. to can't take you'll this or last do last that you cat and to quarter. caution Katrina. given I've you is our for have what are times chance this me I I've imbalance, But is need past. that I even as now a it for can where in you And telling lines situation give me can't you and again, Andrew demand that more capacity because travelers of have of Let back a when capital exactly increase very to say in life. the reinsurance when that a learn on in business the and is and their take that are spend this with you of a and you can't lines or in the rate, been what to to loads pricing dates, has -- of yes, to But well. or something had can add in about do happened you have or retailer anything talked at But the other coverage, selling I you. -- and or hyper I I

more you. I'm along And sorry that about that. I'm not specific learning with

and is shading interesting. of about still then accounts? accounts, in Any No. talked smaller middle looking good -- No, the you larger see any terms between exposure units And endorsements. economy you market, differentiation

-- to and I there and say, Wall thing No. I people read Journal, okay, but I data it. mean well, it also seeing referring I and no, that's and it keep I'm talk I like, and I they're our can't to back then Street and break like the I can't in so not go, or going construction there's going sorry, come the up And decrease I the sit with are, and the hurting -- and and cargo, now roof happening ships is -- marine is then business. roof. through if we've seems the cruise mean, to be cargo, is really through I our any things tank trucking in cargo checked and retail What's something holding that's

that see anecdotal a of and stores. and time and are kind I've it's read we get are broad I So data growth these our on -- weird what a them These in not continued every day. business based points seeing. is we can it's got, what And -- higher we're geographic, what solid,

You cliff? I fall off just a seeing not We're guess. it.

is next from Our Bank America. Shanker Josh question with of

Yes.

at I their about if a borrow they in higher that's we're Some debt. market to competition competitors, higher about your one talk of not mind? How do it role different deals. And just for where in rate think to consideration. costs? you so generally appetite Is private still them your their have asked interest a is environment? being in the about debt I the at the about cheap people think for of And marketplace equity want when

we that an right be aren't come prices people that when competing that a higher, we is every day. chosen still be But appetite adding does really If points capabilities extra resources. in when of our these to somebody of you're deals, return debt into to the dissimilar with we're structure And change Josh, think organization now. decides And on strong price just early Yes, offering. capabilities. they're I to XXX we're signaled don't but really win have That turn they not competing or kind what on increased expectations. maybe on want we cost on. basis an Their

in So about about this price. come it of It's comfortable now think because we're that it will And pain. should down compression capabilities. a I entirely with then to the cause will by where we isn't PEs, pricing probably excel

that are Well, meant higher But here, these money yes, is I mean, Josh. for competitors. dream over expanded last with Doug multiples me have price our was think free. I is Prices deals. years the substantially. what Yes, little our to a similar five

a So now maybe I'm and see And there. you little that strong we paying that a annuity and don't as it hoping money, in for not but before. was show for isn't recession, as one, slowdown start

all got be to X.X Our sorry, stop EBITDA. at to some market got and lever in the We've times has about going music be chairs the are competitors times. aren't is the happy point, that X full. at I'm to

XX-year scare away, peak to obviously I suppose. going now? their pay But is. to really to I'm they're think goes what if not tenure, And X% and over more if stay Doug Am exit, away. right here it the we that base, have to But we'll where see a a at go able you XX-year here. more it's got seems they're XX-, to we're that go them mean, confidence isn't while, from for maybe really here I I I higher the it's high. But cause going than I mean, to guess.

returns with agree The Yes, outstanding. have I'd I been agree that. with that.

Our Autonomous Research. with final Tunis is from proceed. question Ryan Please

to in wanted $XX the can't guy, a went that just in land, the last below-the-line you first remember line. is somehow the had broker I that good direction. time that's million I say item a right nice

I think that even of some organic. your count competitors as might

Yes. Go ahead, Ryan.

guess, time picture But on question, just it. I lean need We -- one yes, margins. I spending margins don't Doug, in had 'XX. bigger your take to it But on

strong, as don't been. high really also years. for could And as been not it's the case would think been obviously I your -- in past couple mean, have have but growth So been has which organic of too, I expense soft it

right, an to have you has to clearly, this the I'm be element allowed to make thinking about cycle. of of seems there So guys I investment organic -- kind like sure some want

on just I'm curious, it? to to the And about curious, think pull you way do. kind has just of the you some right forward of is investing to some I'm take growth that organic So potentially past we that maybe Like, any strong organic allowed wouldn't the kind of to were been had environment? have over guess, X% if have improve years than able a guys you you to couple more the capabilities organization I of that the

Yes.

I minutes Gallagher doing spending Submit. niche our our enhancements about division talked IR talked talk on their We've you our earnings you IR got we've value-added calls, We've first They're hear if think go right money X Days, think to you you our and it. we're minutes about we're the business. And or about X the to and about in about all or prepared you've that Days, notes all listen during of you, our to these your lot client-centric We've hour talking features to listen And about back of I SmartMarket, Drive. that. we but X talked talk Gallagher an a X get leaders talked the remarks. in investments resources.

If that's content to you year. of all every adding there, out that at and look is our it investment we're

investment are we us So to a business better. running of right make a it substantial in amount has now that

up real showing it's to organic in be honest. think I our

them around service. a well investments long reason capabilities sales we to turn how into as niche right our to years we of set it. are we on And make now, know turn organic point. side, perform posting our terrific and to we're of request ago, hour Those the still investments at yet, XX.X% blood service. it's we it that in better think our we've and just made within production the our in because continue why of this around us the things our on type didn't one took operating XX I of margins

So come we're another this business. to at that take we frankly, interns that's I business. number. U.S., of the another U.S.-based the don't outside And like interns. are a XXX. and these very our their people take add paid at to the young to our free, These our If people for it's organization a or, the proud to look had would work that, summer, that that closer people in XXX say I we probably look know future aren't internship, investing in of fact business

colleagues to us. joining I than work So We had and the a New year performance. on and this again, evening. Thanks quarter. Ryan, our around in our third at We're of to We Have with Investment financial thank I'm their for Day XX,XXX proud that. dedication in you everybody, an great December fantastic look York. again our evening. more person delivering well excellent globe need to very clients. forward for really appreciate a everybody. We speaking hard to in you, thank of way Thanks,

conference. Thank you. conclude This does today's

lines may for this your your at You you thank disconnect and time, participation.