Arthur J. Gallagher & Co. Q3 2025 Earnings Call Summary

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

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : My first question, I want to start on AssuredPartners. When we're thinking about well, I guess, new business by I'm assuming that, that's in the M&A line, but then what about synergies? Is that -- does that fall in the M&A line? Or is that something when they start coming online that will be included within organic revenue growth?

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : Yes, that does help. And then I guess -- I mean, I think in the past you guys have said that next year, right, feels a lot like this year. You just said that the full year is going to be, I think, just more than 6%. Based on how you guys are seeing everything today. Is there more precise guidance just in terms of the organic outlook that you're looking at for 2026?

Question: Elyse Greenspan - Wells Fargo Securities LLC - Analyst : And then my last one is on M&A. When you guys talk about the pipeline, I'm assuming that's now like a combined Gallagher and AP pipeline? And how has -- now that you guys have closed on the AssuredPartners acquisition, how has, I guess, the M&A from their side of the house? How is it like added to the pipeline as well as just when you think out about kind of your bolt-on M&A over the course of like the next year or 2?

Question: Andrew Kligerman - Cowen and Company LLC - Analyst : So I just actually want to build on Elyse's question. The first one on the organic growth. I recently spoke with two competitors in the small to middle market brokerage area. And both of them kind of said, in this shallow pricing environment, 4% to 6% is a good organic run rate that it's very doable and likely. How does that strike you? I mean does that feel like the strike zone as opposed to in the past, you were looking more at upper single digit just given the pricing environment?

Question: Andrew Kligerman - Cowen and Company LLC - Analyst : Got it. And then going back to M&As, and I get it's kind of too early to talk about AssuredPartners pipeline and so forth. But just in terms of A.J. Gallagher appetite, if a deal were to present a large deal were to come across here, your desks or if a deal outside of the REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 9:30PM, AJG.N - Q3 2025 Arthur J. Gallagher & Co. Earnings Call United States that were large to come across your desks, would that be something you could do at this stage, just given the sheer size of AssuredPartners?

Question: Charles Peters - Raymond James & Associates Inc - Analyst : Good afternoon. I guess I guess, first of all, I appreciate the disclosure on page 7 of your full commentary. And Doug, I think you mentioned just reiterated the $160 million of synergies that's not in these estimates, you can confirm that. Is that -- can you talk about the geography of that? Is that going to be -- is that going to be in the operating expense? Or is it going to be revenue and operating expense? Or -- and I'm not asking to pinpoint by quarter, just ballpark where you think those synergies, how those are going to show up when we get to the year-end '26?

Question: Charles Peters - Raymond James & Associates Inc - Analyst : And in your answer, you mentioned that you're going to have the AP gets credit for -- in their book for their revenue synergies. And so it seems like you're keeping two books for the purposes of getting through the earn-out period. But Am I to infer from your comments that you're going to be taking or trying to encourage the AP retail reps to use RPS as opposed to other sources. Is that going to help drive your wholesale organic. Or does that -- if something like that happens, is that going to AP book, and we don't see that manifest itself in terms of organic results for AJG?

Question: Charles Peters - Raymond James & Associates Inc - Analyst : I guess for the final sort of cleanup question just back to market conditions. There's a lot of rhetoric in the marketplace about where we are in the pricing cycle. And I noted your comments that you're seeing some continuing stability and especially your middle and small market exposures. But maybe you can Pat, you've been around, I don't know what number cycle you're on at this point in time, but there's a number of them. And I'm just curious how you think this is going to play out over the next two or three years because certainly, it seems like large account property is under a lot of pressure, and there are some other areas where there's pressure points? REFINITIV STREETEVENTS | www.refinitiv.com | Contact Us consent of Refinitiv. 'Refinitiv' and the Refinitiv logo are registered trademarks of Refinitiv and its affiliated companies. OCTOBER 30, 2025 / 9:30PM, AJG.N - Q3 2025 Arthur J. Gallagher & Co. Earnings Call

Question: Meyer Shields - Keefe Bruyette & Woods Inc - Analyst : My first question is a follow-up on the pricing dynamics. We do see some deceleration in casualty or 6% this quarter. Do you think the trend will continue to decelerate or stabilize for here? Just wondering like what is your expectation going forward?

Question: Meyer Shields - Keefe Bruyette & Woods Inc - Analyst : Got it. On my second question in on the industry. So we noticed on oen broker continuously expand its own wholesale operation [Landec] and recently enters the US retail market. Just wondering what's your take on this? And how does this impact that Gallagher?

Question: David Motemaden - Evercore Inc - Analyst : I had a question just on the property market. It was encouraging that RPC held in at down 5%. I think it was down 7% in the second quarter. Just given the light storm season, I'm just wondering how you're thinking about just the property market overall going forward, not only for the fourth quarter, but then also for next year?

Question: David Motemaden - Evercore Inc - Analyst : Got it. That's helpful. And so the sort of like a down 5% to 7% is embedded, Doug, and your early thoughts on next year looking similar to this year?

Question: David Motemaden - Evercore Inc - Analyst : Okay. Great. And then also it seems like the RPC was fairly stable with what you guys had said in some of the other lines versus September. Just if I think holistically about the book, could you just talk about what RPC is trending at or what it was in the third quarter compared to the second quarter and maybe where it was in the first quarter?

Question: David Motemaden - Evercore Inc - Analyst : Got it. And then maybe if I could just sneak one more in. I noticed that you guys generated about $500,000 on AssuredPartners fiduciary balances in the third quarter. Is I would have thought that, that would be a decent size opportunity for you guys. Is that something -- it doesn't look like much of a change in your fiduciary expectations for the fourth quarter. I know the interest rate environment has changed a little bit. But how are you thinking about the fiduciary cash at AssuredPartners? And how much revenue do you think you can generate off of that next year?

Question: Andrew Andersen - Jefferies LLC - Analyst : Just as we're thinking about kind of the building blocks to organic here, I think you've talked about international a bit as maybe being additive or incremental. I guess if I look at some international retail, UK, Canada, Australia and New Zealand, it's kind of been

Question: Andrew Andersen - Jefferies LLC - Analyst : And then in the past, we've talked about maybe 6% organic underlying expansion of -- how should we think of maybe the sensitivity there if that growth is being led by specialty, which I would think is a little bit higher margin versus retail, which is maybe a little bit below. Any sensitivity would be thinking about there?

Question: Katie Sakys - Autonomous Research - Analyst : Just a quick one from me. I realize it might be a little bit too soon to tell, but thinking about the 200 bps headwind from roll-in on this quarter's Brokerage adjusted EBITDAC margin. How might we think about impact from rolling of M&A going forward?

Question: Robert Cox - Goldman Sachs Group Inc - Analyst : Just a question on reinsurance brokerage. Just wanted you guys to help me out here. So you've been growing in excess of your two larger peers in this business for a while. It sounds like you're still confident here if pricing takes another leg downward, I'm just trying to gauge your confidence level in still being able to achieve like high single-digit organic here. And is that due to growth in adding new accounts? Or is that growth in accounts that you already have?

Question: Robert Cox - Goldman Sachs Group Inc - Analyst : That's super helpful. And just wanted to follow up on contingents. I mean, profitability for these insurers seems to be pretty good. And I think those are a little lag there. So I'm just curious if your thought process on contingents plays into your thought process on relatively stable organic growth next year?

Question: Michael Zaremski - Bank of Montreal - Analyst : The organic viewpoint next year, what's your estimate of embedded in there on lumpy life sales? I know you guys don't love us asking about it or maybe I'm wrong, but you do keep bringing it up. So I feel like I have to ask.

Question: Michael Zaremski - Bank of Montreal - Analyst : Okay. So not quantifying it, but I guess I asked and that was asked is -- if we look at the RPC trends in recent quarters, and I think you unpack some of your thoughts next year for property to David's question. It would kind of would imply that if we assume the current RPC trend sticks that 6% to 8% is just -- is a high bar, unless there's just like other factors, which maybe it's lumpy life, and you just alluded to maybe there's maybe there's the contingent and sub trend growing faster or it's reinsurance. So I know I'm saying a lot, but maybe is there, should we not be focusing on kind of the RPC as much as we used to because there's kind of other levers you have to pull on organic to be able to to do so well next year on a decelerating kind of pricing environment?

Question: Michael Zaremski - Bank of Montreal - Analyst : Okay. That's helpful. And maybe just lastly on M&A. So to the extent -- I'm sure you guys will hit your targets on Assured in terms of all the synergies and whatnot. Clearly, it will be a great deal for everybody. So curious if there's other assurers out there. Obviously, there's a lot of roll-ups out there. But I recall, Pat, you said that for Assured, you didn't get a look at later of those properties that Assure had purchased, so you kind of felt more comfortable doing this deal because they didn't say no to to Gallagher in the past. But -- so are there similar ones out there? Or maybe you just would be willing to do more of just other roll-ups that might have been looked at Gallagher in the past too?