Arthur J. Gallagher & Co.To Host Regularly Scheduled Quarterly Investor Meeting Summary

The following is excerpted from the question-and-answer section of the transcript.

Question: Elyse Greenspan - Wells Fargo Securities - Analyst : Thanks. Good morning. My first question, I guess, is on the brokerage outlook, right. You guys are now looking for 7.5% for the full year. If I recall correctly, you guys on some prior calls pointed to perhaps tightening the range to 7.5% to 8%. So it does feel like it's a little bit lower. And I know there's some pushes and pulls the US and international both seem a little bit lower. But what changed broadly today versus when you told us on the Q2 call that perhaps the year would be 7.5% to 8.5%?

Question: Elyse Greenspan - Wells Fargo Securities - Analyst : And then you guys had previously said that next year looks a lot like this year, right? So it's 7.5% for the full year, kind of like a 7% for the second half of the year. So what does -- based on maybe this little bit more cautious cautiousness for half year too, what is 2025 feel like right now for brokerage?

Question: Elyse Greenspan - Wells Fargo Securities - Analyst : Did you guys say what the reinsurance organic growth is expected to be in the Q3. I know it's a smaller quarter, but what's embedded in the brokerage guidance?

Question: Elyse Greenspan - Wells Fargo Securities - Analyst : Yes. And then my last question is on the M&A side. So you guys gave a lot of color on the pipeline. But it sounds like that's a tuck in pipeline. I'm just curious if you guys can update us on what you define as it tuck in? And if you were looking at large deals, I guess, they would be and in a separate pipeline. Any color you can give us on that?

Question: Elyse Greenspan - Wells Fargo Securities - Analyst : Thank you. That's helpful. Did you find the reinsurance growth, or do you want to circle back on that later?

Question: Elyse Greenspan - Wells Fargo Securities - Analyst : Thank you.

Question: David Montemaden - Evercore ISI - Analyst : Hey, good morning. Just I had a question on the 8% organic that you guys are expecting in the fourth quarter within brokerage. Doug, you had mentioned that you're expecting some of the life sales to get pushed into that quarter just given the rate outlook. Are you expecting that it's all going to come through in the fourth quarter or that some of it gets moved to 2025?

Question: David Montemaden - Evercore ISI - Analyst : Got it. Okay. That's helpful. That makes sense. And then I heard a few times throughout the course of this call. Just on midterm policy adjustments. It sounds like the positive impact from that has been moderating a little bit on. Could you just level set us in terms of how much that has helped the organic growth, I guess, over the last few years and I guess in the first half of the year? And how we should think about that going forward?

Question: David Montemaden - Evercore ISI - Analyst : Got it. Okay. That's helpful. And then just a bigger picture question. Could you guys just remind me the size of the large account footprint that you guys have today and maybe just reset us on how you guys view the relative attractiveness of that large account market versus your core middle market that you guys have done so well and historically?

Question: David Montemaden - Evercore ISI - Analyst : Got it. Thank you.

Question: Alex Scott - Barclays - Analyst : Hey, good morning. Thanks for taking the question. I wanted to go back to the comment you made around casualty reinsurance. And I think you mentioned there were significant tightening of terms and conditions. So I just wanted to see if you could provide a little more color there. And I mean, it sounds like it was necessarily driving rate up significantly yet, but some just further market commentary there would be great.

Question: Alex Scott - Barclays - Analyst : Got it. And then I wanted to circle back on the comments you made on RPS. I mean, it sounded pretty positive on the E&S markets. And I just wanted to understand sort of the dynamics between casualty and property. I guess on casualty, are you seeing some of the capacity issues? I think you mentioned for the admitted market translate into volume moving into E&S? And are you seeing the opposite in property at all?

Question: Alex Scott - Barclays - Analyst : Got it. Thank you.

Question: Yaron Kinar - Jefferies - Analyst : Thank you. Good morning. I had a couple of questions around margins or how to think about margins. So first, with the Fed starting to cut rates, what would 8% organic growth amount in terms of margin expansion expectations compared to the 60 basis points for '24, maybe closer to 100 basis points? With the Fed starting to cut rates, so less of a favorable impact from fiduciary income going forward. What would the 8% organic growth will come to as far as margin expansion expectations? I think for '24 you talked about 8% organic growth, giving us roughly 60 basis points or I think it's closer to 100 basis points -- dollars. So if we had 8% growth in 2025 with a lower interest rate environment. What would that translate into in terms of your expectations for EBITDA expansion?

Question: Yaron Kinar - Jefferies - Analyst : Fair enough. Got it. Makes sense. And then my second question, specifically looking at the reinsurance brokerage, which I think we generally think of is one of the higher margin businesses you have. If growth there, especially rate driven growth starts slowing, does that ultimately result in a higher comp and benefit ratio because you're still paying your workforce? Or do you have offsets there, including variable comp to maybe still have margin expansion even as rate-driven growth slows?

Question: Yaron Kinar - Jefferies - Analyst : Got it.

Question: Meyer Shields - Keefe Bruyette & Woods - Analyst : Great. Thanks so much. Pat, you talked about how there's a little bit more pricing upside in smaller accounts and midsized than large. Can you talk about the exposure unit growth? Is there any meaningful slowdown that's concentrated on these smaller account size? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. SEPTEMBER 19, 2024 / 1:00PM, AJG.N - Arthur J. Gallagher & Co.To Host Regularly Scheduled Quarterly Investor Meeting

Question: Meyer Shields - Keefe Bruyette & Woods - Analyst : Okay. That's very helpful. And if I can switch over to reinsurance. We've heard a couple of other brokers talk about starting reinsurance brokerage unit. And I was wondering whether there's increased competition for the talent that you guys have?

Question: Meyer Shields - Keefe Bruyette & Woods - Analyst : Okay, fantastic. Thank you so much.

Question: Maxwell Fischer - Truist Securities - Analyst : Hi, good morning. Calling in for Mark Hughes. Just one question from me this morning. For the 8% to 9% organic outlook for the wholesale brokerage, can you provide the breakout between the open brokerage MGA binding authority businesses?

Question: Maxwell Fischer - Truist Securities - Analyst : Perfect. Thank you.