Arthur J. Gallagher & Co. Q2 2025 Earnings Call Transcript

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

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Hi, thanks. Good evening. My first question, what was the date that you guys sent the information, the HSR information to the DoJ and responded to that request. And did you get a timing agreement there or is it just a 30-day clock that starts once you gave them all the information.

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Thank you, and then my second question, you guys I'm just trying to get a sense with the 5% brokerage outlook for the back half, I guess, are you assuming a continuation of just pricing trends that we saw in Q2 and just the slowdown in property in June? And then if I recall from the June IR Day, you were talking about some benefits business that was getting pushed to the back half. Is that still the expectation? And then what quarter are you expecting that might come on?

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

Question: Andrew Kligerman - TD Cowen - Analyst : Thank you. On the property, or just sort of an E&S writer say that we made the same point as you about June seeing a big drop off, maybe 20% to 30%. Is that baked into your guidance for the balance of the year, something along the magnitude of 20% to 30% property lines or is that just --

Question: Andrew Kligerman - TD Cowen - Analyst : Right.

Question: Andrew Kligerman - TD Cowen - Analyst : Got it. And the number I gave you might have been off because it might have been weighted more towards E&S and large risk.

Question: Andrew Kligerman - TD Cowen - Analyst : Good to hear. And then maybe just shifting to your pipeline. I mean it sounds really exciting. You've done nine mergers already. No disruption from Assured Partners you can just kind of keep going at your regular pace.

Question: Andrew Kligerman - TD Cowen - Analyst : (technical difficulty) REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 9:15PM, AJG.N - Q2 2025 Arthur J. Gallagher & Co. Earnings Call

Question: Charlie Lederer - BMO Capital Markets - Analyst : Hey, thanks. On the RPC numbers that you gave, Pat, would you be able to -- I don't think I missed it or I may have missed it, but would you be able to give an all-in RPC number -- and I guess what would that look like with 3Q and 4Q mix instead of 2Q?

Question: Charlie Lederer - BMO Capital Markets - Analyst : Got it, thanks. And I guess, the [$4.7 million] in base organic, are you expecting acceleration off of that in the back half of the year or I guess, are you expecting supplemental and contingents to kind of drive organic a little, yeah.

Question: Charlie Lederer - BMO Capital Markets - Analyst : Thank you. REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. JULY 31, 2025 / 9:15PM, AJG.N - Q2 2025 Arthur J. Gallagher & Co. Earnings Call

Question: Gregory Peters - Raymond James - Analyst : Hey, good afternoon. So I think, Doug, as you're going through in rapid fire formation in your comments, you alluded to the opportunities that you have to expand margins in all type of organic revenue environments. And I think it's particularly interesting as we think about next year. So -- could you go back and sort of unpack some of those comments and talk about the drivers, not for this year, but what you're seeing for '26 and beyond?

Question: Gregory Peters - Raymond James - Analyst : All right. I'll wait until September for more detail. I guess I want to go back to the Assured Partners transaction. I think the last time we were talking about -- or you were talking about, I should say. You mentioned or highlighted that you had to suspend I think, 11 of the 13 work streams on the integration process. And with the timing with a little bit more visibility on the timing, have you kick-started those some streams or processes for integration back up? I guess ultimately, what I'm getting here is we previously mapped out some revenue and margin assumptions for the acquisition -- and just wondering if because of this delay, it's going to cause a delay and the recognition of some of the benefits as we start to integrate that operation at the end of this year or next year?

Question: Gregory Peters - Raymond James - Analyst : Got it, thanks for the clarification on that too, Doug.

Question: Jing Li - Keefe Bruyette & Woods Inc - Analyst : Hi. Good evening. Thank you for taking my question. My first question is on pricing. You mentioned that casualty some lines and some line getting higher. Just curious any specific lines that you want to call out. Want to know the mix that drives -- and casualty line pricing like 8% in 2Q, which is in line with 1Q, which look pretty steady. Do you expect case rates going to be still bumpy when it increases volume here?

Question: Jing Li - Keefe Bruyette & Woods Inc - Analyst : Got it. Thank you. My second question is on the E&S market. One of your competitors kind of mentioned, seeing some early signs of business coming back on to the mid-market? Are you seeing any similar trends or what are you expecting for here?

Question: Jing Li - Keefe Bruyette & Woods Inc - Analyst : Got it. Thank you so much.

Question: David Motemaden - Evercore ISI - Analyst : Hey, good evening, I just wanted to confirm that in the outlook for a 5%-plus organic growth in brokerage in the back half of the year that you guys are assuming a continued 7% decline in property RPC? And then maybe if you could help us think through some of the sensitivity around that if pricing came in maybe a little bit better or if it came in maybe a little bit worse what sort of impact that might have to organic in the second half?

Question: David Motemaden - Evercore ISI - Analyst : Got it. Great. That's helpful. And then maybe just following up on that. I think you said in June, -- is that different than the down 7%? Or is that more than the down 7%? Because I think you said 5% in April and May, and then it was -- it sounds like June was definitely worse than 7%. Yes, maybe being 7% for the quarter.

Question: David Motemaden - Evercore ISI - Analyst : Got it. Okay, but you're assuming like the [8%, 9%] in in the outlook going forward.

Question: David Motemaden - Evercore ISI - Analyst : Right. No, that's fair. Thank you. And then for my second question, and I know it's early, but just wondering just given all the dynamics within the different lines, I think you had said up 4% to 6% ex property and then obviously, everything that's going on in property. Any sort of early thoughts in terms of how you're thinking about organic and brokerage in 2026?

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

Question: Mark Hughes - Truist Securities - Analyst : Yeah, thank you. Good afternoon.

Question: Mark Hughes - Truist Securities - Analyst : Pat, if I heard you properly, I think you said workers' comp was up [1%] -- and if I'm looking at it right, it was up 5% last quarter. I know you said job growth may not be as robust and maybe there's a little less wage inflation. But anything else impacting that number?

Question: Mark Hughes - Truist Securities - Analyst : The benefits organic, I think you said it was maybe a little bit faster than the overall US retail. Is that right? Do you have a specific number on that?

Question: Mark Hughes - Truist Securities - Analyst : Okay, very good. Thank you.

Question: Andrew Andersen - Jefferies LLC - Analyst : Hey, good afternoon. I think I heard you say a 5% organic in reinsurance and that's relative to some really strong quarters in recent history. Can you maybe break down just any impact on pricing on that organic number? And would also be interested in hearing maybe any benefit you saw from ILS activity.

Question: Andrew Andersen - Jefferies LLC - Analyst : Effectively. Just any impact from pricing that was a headwind to that 5%?

Question: Andrew Andersen - Jefferies LLC - Analyst : Great. And then I think in the script, you mentioned some early AI successes. Could you maybe elaborate a bit on those?

Question: Katie Sakys - Autonomous Research - Analyst : Hi, thank you for squeezing me in. I think I heard you guys mention 7% growth on E&S business in the quarter. Would you be able to break that down a little bit further, thinking about the difference between open brokerage and MGA's?

Question: Katie Sakys - Autonomous Research - Analyst : Thank you. I appreciate the additional context. And then just on thinking about the closure of the Assured Partners acquisition. I can appreciate that you don't have a whole lot of additional detail for us. But is there any changing in your thinking about the need to potentially divest some parts of that business or offer other remedies in order to get the deal over the finish line?

Question: Katie Sakys - Autonomous Research - Analyst : Excellent to hear. Thank you.