Q4 2025 Arthur J Gallagher & Co Earnings Call

January 29, 2026

Speaker #1: Good afternoon and welcome to Arthur J. Gallagher & Company's fourth quarter 2025 earnings conference call. Participants have been placed on a listen-only mode. Your lines will be open for questions following the presentation.

Operator: Good afternoon, and welcome to Arthur J. Gallagher & Company's Fourth Quarter 2025 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. Some of the comments made during today's conference call, including answers given in response to questions, may constitute forward-looking statements within the meanings of the securities laws. The company does not assume any obligation to update information or forward-looking statements provided on this call. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the information concerning forward-looking statements and risk factor sections contained in the company's most recent 10-K, 10-Q, and 8-K filings for more details on such risks and uncertainties.

Speaker #1: Today's call is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during today's conference call, including answers given in response to questions, may constitute formal agreeing statements within the meanings of the securities laws.

Speaker #1: The company does not assume any obligation to update information or forward-looking statements provided on this call. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Speaker #1: Please refer to the information concerning forward-looking statements and risk factors sections contained in the company's most recent 10-K, 10-Q, and 8-K filings for more details on such risks and uncertainties.

Q4 2025 Arthur J Gallagher & Co Earnings Call

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Q4 2025 Arthur J Gallagher & Co Earnings Call

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Thursday, January 29th, 2026 at 10:15 PM

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Speaker #1: In addition, for reconciliation of the non-GAAP measures discussed on this call, as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the company's website.

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

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

Speaker #1: It is now my pleasure to introduce J. Patrick Gallagher Jr., Chairman and CEO of Arthur J. Gallagher & Company. Mr. Gallagher, you may

Speaker #1: begin. Thank you.

J. Patrick Gallagher Jr.: Thank you. Good afternoon, and thank you for joining us for our Q4 2025 earnings call. On the call for you today is Doug Howell, our CFO, and other members of the management team. We had an excellent fourth quarter and a terrific year. Our two-pronged revenue growth strategy, that's organic and M&A, delivered revenue growth of more than 30% during the fourth quarter. That includes organic growth of 5%. Adjusted EBITDA growth was 30%, marking our 23rd consecutive quarter of double-digit growth. So a great quarter, highlighting our durable value creation strategy that drives consistent double-digit growth in revenue and profits. Moving to results on a segment basis, starting with the Brokerage segment. Reported revenue growth was 38%. Organic growth was 5%, in line with our December commentary.

Speaker #2: Good afternoon and thank you for joining us for our fourth quarter 25 earnings call. On the call for today is Douglas Howell, our CFO, and other members of the management team.

Speaker #2: We had an excellent fourth quarter and a terrific year. Our two-pronged revenue growth strategy—organic and M&A—delivered revenue growth of more than 30% during the fourth quarter.

Speaker #2: That includes organic growth of 5%, adjusted EBITDA growth was 30%, marking our 23rd consecutive quarter of double-digit growth. So a great quarter, highlighting our durable value creation strategy that drives consistent double-digit growth in revenue and profits.

Speaker #2: Moving to results on a segment basis, starting with the brokerage segment. Reported revenue growth was 38%, and organic growth was 5%, in line with our December commentary.

Speaker #2: Adjusted EBITDA margin was 32.2%, and ahead of our expectation, with underlying margin expansion of 50 basis points. Let me provide you with some insights behind our brokerage segment organic.

J. Patrick Gallagher Jr.: Adjusted EBITDA margin was 32.2% and ahead of our expectation, with underlying margin expansion of 50 basis points. Let me provide you with some insights behind our brokerage segment organic. America's retail PC organic was up 5%, UK and EMEA up 7%, APAC up 3%, specialty and wholesale up, US wholesale up 7%, reinsurance up 8%, and benefits up 1%. So we continue to deliver organic growth across retail, PC, benefits, wholesale, and reinsurance, and Doug will further unpack organic in his comments. Next, let me provide some thoughts on the global PC insurance pricing environment. Q4 insurance renewal premium change, which includes both rate and exposure, continued to increase in the low single digits. Once again, property decreases were more than offset by increases across most casualty classes. Let me break that down further.

Adjusted EBITDA margin was 32.2% and ahead of our expectation, with underlying margin expansion of 50 basis points. Let me provide you with some insights behind our brokerage segment organic. America's retail PC organic was up 5%, UK and EMEA up 7%, APAC up 3%, specialty and wholesale up, US wholesale up 7%, reinsurance up 8%, and benefits up 1%. So we continue to deliver organic growth across retail, PC, benefits, wholesale, and reinsurance, and Doug will further unpack organic in his comments. Next, let me provide some thoughts on the global PC insurance pricing environment. Q4 insurance renewal premium change, which includes both rate and exposure, continued to increase in the low single digits. Once again, property decreases were more than offset by increases across most casualty classes. Let me break that down further.

Speaker #2: America's retail PC organic was up 5%. UK and EMEA were up 7%. APAC was up 3%. Specialty and wholesale—US wholesale—were up 7%. Reinsurance was up 8%, and benefits were up 1%.

Speaker #2: So, we continued to deliver organic growth across retail P&C benefits, wholesale, and reinsurance. And Doug will further unpack 'organic' in his comments. Next, let me provide some thoughts on the global P&C insurance pricing environment.

Speaker #2: Fourth quarter insurance renewal premium change, which includes both rate and exposure, continued to increase in the low single digits. Once again, property decreases were more than offset by increases across most casualty classes.

Speaker #2: Let me break that down further. Property lines were down 5%. Casualty lines, which includes general liability, commercial auto, and umbrella, up 5%. Overall, with US casualty lines up 7%.

J. Patrick Gallagher Jr.: Property lines were down 5%. Casualty lines, which includes general liability, commercial auto, and umbrella, up 5%. Overall, with US casualty lines up 7%, package up 3%, D&O down 1 point, workers' comp up 1 point, and personal lines up 5%. So many lines are still seeing increases outside of property. In fact, excluding property renewal premium change, would be at, we'd be up about 3% during the quarter. With that said, premiums are ultimately determined by loss experience, and good accounts will get some premium relief, while accounts with poor loss experience will see greater increases. Moving to reinsurance, let me provide you with some thoughts on the 1/1 renewal season. With the strong underwriting results posted by carriers during 2025, which was helped by a quiet US wind season, there was plenty of reinsurance capacity to support client demand.

Property lines were down 5%. Casualty lines, which includes general liability, commercial auto, and umbrella, up 5%. Overall, with US casualty lines up 7%, package up 3%, D&O down 1 point, workers' comp up 1 point, and personal lines up 5%. So many lines are still seeing increases outside of property. In fact, excluding property renewal premium change, would be at, we'd be up about 3% during the quarter. With that said, premiums are ultimately determined by loss experience, and good accounts will get some premium relief, while accounts with poor loss experience will see greater increases. Moving to reinsurance, let me provide you with some thoughts on the 1/1 renewal season. With the strong underwriting results posted by carriers during 2025, which was helped by a quiet US wind season, there was plenty of reinsurance capacity to support client demand.

Speaker #2: Package up 3%. D&O down a point. Workers' Comp up a point and personal lines up 5%. So many lines are still seeing increases outside of property.

Speaker #2: In fact, excluding property renewal premium change, would be we'd be up about 3% during the quarter. With that said, premiums are ultimately determined by loss experience and good accounts will get some premium relief, while accounts with poor loss experience will see greater increases.

Speaker #2: Moving to reinsurance, let me provide you with some thoughts on the 1/1 renewal season. With the strong underwriting results posted by carriers during 2025, which was helped by a quiet US wind season, there was plenty of reinsurance capacity to support client demand.

Speaker #2: The property reinsurance market saw rate decreases in the teens, with lower layers holding up better than the top end of reinsurance towers. We saw some continued demand for more cover and increased purchasing by clients.

J. Patrick Gallagher Jr.: The property reinsurance market saw rate decreases in the teens, with lower layers holding up better than the top end of reinsurance towers. We saw some continued demand for more cover and increased purchasing by clients. In fact, despite double-digit price declines for property cat globally, property reinsurance premiums were down only mid to high single digits relative to last year. Within specialty lines, marine and energy experienced increased carrier competition. Pricing across casualty lines continued to be broadly stable because most reinsurers remained very cautious of US-focused casualty risks. Looking ahead, we expect the buyer's market will persist through 2026, absent any outsized current year or prior year loss activity. While clients are comfortable with their purchased reinsurance programs at 1/1, we believe it is likely that some carriers will explore buying additional protection to further reduce earnings volatility or support growth throughout 2026.

The property reinsurance market saw rate decreases in the teens, with lower layers holding up better than the top end of reinsurance towers. We saw some continued demand for more cover and increased purchasing by clients. In fact, despite double-digit price declines for property cat globally, property reinsurance premiums were down only mid to high single digits relative to last year. Within specialty lines, marine and energy experienced increased carrier competition. Pricing across casualty lines continued to be broadly stable because most reinsurers remained very cautious of US-focused casualty risks. Looking ahead, we expect the buyer's market will persist through 2026, absent any outsized current year or prior year loss activity. While clients are comfortable with their purchased reinsurance programs at 1/1, we believe it is likely that some carriers will explore buying additional protection to further reduce earnings volatility or support growth throughout 2026.

Speaker #2: In fact, despite double-digit price declines for property CAT globally, property reinsurance premiums were down only mid- to high-single digits relative to last year.

Speaker #2: Within specialty lines, marine and energy experienced increased carrier competition. Pricing across casualty lines continued to be broadly stable, because most reinsurers remained very cautious of US-focused casualty risks.

Speaker #2: Looking ahead, we expect the buyer's market will persist through 2026, absent any outsized current year or prior year loss activity. While clients are comfortable with their purchased reinsurance programs at 1-1, we believe it is likely that some carriers will explore buying additional protection to further reduce earnings volatility or support growth throughout 2026.

Speaker #2: Moving to employee benefits, we continue to see strong demand for our services as clients manage rising health insurance costs. Medical costs are expected to be up high single digits again in '26, driven by increased utilization, provider consolidation, and newer high-cost treatments and therapies.

J. Patrick Gallagher Jr.: Moving to employee benefits. We continue to see strong demand for our services as clients manage rising health insurance costs. Medical costs are expected to be up high single digits again in 2026, driven by increased utilization, provider consolidation, and newer high-cost treatments and therapies. We are engaging with employers to help them implement innovative solutions, such as telemedicine programs, wellness initiatives, and tailored benefits packages, to alleviate these cost pressures. Additionally, talent retention strategies remain top of mind for many of our clients, given the resilient US labor market, so we're expecting another strong year of growth. Moving to some comments on our customers' business activity. Our proprietary data, which has been a valuable indicator of the economy, continues to show solid client business activity.

Moving to employee benefits. We continue to see strong demand for our services as clients manage rising health insurance costs. Medical costs are expected to be up high single digits again in 2026, driven by increased utilization, provider consolidation, and newer high-cost treatments and therapies. We are engaging with employers to help them implement innovative solutions, such as telemedicine programs, wellness initiatives, and tailored benefits packages, to alleviate these cost pressures. Additionally, talent retention strategies remain top of mind for many of our clients, given the resilient US labor market, so we're expecting another strong year of growth. Moving to some comments on our customers' business activity. Our proprietary data, which has been a valuable indicator of the economy, continues to show solid client business activity.

Speaker #2: So we are engaging with employers to help them implement innovative solutions such as telemedicine programs, wellness initiatives, and tailored benefits packages to alleviate these cost pressures.

Speaker #2: Additionally, talent retention strategies remain top of mind for many of our clients, given the resilient U.S. labor market, so we're expecting another strong year of growth.

Speaker #2: Moving to some comments on our customers' business activity. Our proprietary data, which has been a valuable indicator of the economy, continues to show solid client business activity.

Speaker #2: Fourth quarter revenue indications from audits endorsements and cancellations remain nicely positive and were more favorable compared to both fourth quarter 2024 and third quarter 2025.

J. Patrick Gallagher Jr.: Fourth quarter revenue indications from audits, endorsements, and cancellations remained nicely positive and were more favorable compared to both fourth quarter 2024 and third quarter 2025. Through the first 3 weeks of January, these favorable trends continue. We're watching our customers' business activity daily, and we are just not seeing signs of economic weakness. Regardless of market and economic conditions, I believe we are very well positioned to grow. Our global resources, data and analytics, expertise, and unique product offerings put us in a spot to compete and to win. So as we sit here today, we continue to see Brokerage segment full year 2026 organic growth of around 5.5%. Moving into Risk Management segment, Gallagher Bassett. Fourth quarter revenue growth was 13%, including organic of 7%. We saw another quarter of strong new business growth and excellent client retention.

Fourth quarter revenue indications from audits, endorsements, and cancellations remained nicely positive and were more favorable compared to both fourth quarter 2024 and third quarter 2025. Through the first 3 weeks of January, these favorable trends continue. We're watching our customers' business activity daily, and we are just not seeing signs of economic weakness. Regardless of market and economic conditions, I believe we are very well positioned to grow. Our global resources, data and analytics, expertise, and unique product offerings put us in a spot to compete and to win. So as we sit here today, we continue to see Brokerage segment full year 2026 organic growth of around 5.5%. Moving into Risk Management segment, Gallagher Bassett. Fourth quarter revenue growth was 13%, including organic of 7%. We saw another quarter of strong new business growth and excellent client retention.

Speaker #2: And through the first three weeks of January, these favorable trends continue. We're watching our customers' business activity daily, and we are just not seeing signs of economic weakness.

Speaker #2: Regardless of market and economic conditions, I believe we are very well positioned to grow. Our global resources, data and analytics, expertise, and unique product offerings put us in a spot to compete and to win.

Speaker #2: So as we sit here today, we continue to see brokerage segment full year '26 organic growth of around 5.5%. Moving into risk management segment, Gallagher Bassett.

Speaker #2: Fourth quarter revenue growth was 13%, including organic of 7%. We saw another quarter of strong new business growth and excellent client retention. Looking ahead, we are well positioned to drive new business production and believe full year '26 organic growth will come in around 7%.

J. Patrick Gallagher Jr.: Looking ahead, we are well positioned to drive new business production and believe full year 2026 organic growth will come in around 7%. Fourth quarter adjusted EBITDA margin was 21.6%, a bit better than our December expectations. Looking ahead, we see full year 2026 margins in the 21% to 22% range. Shifting to mergers and acquisitions, starting with some comments on AssuredPartners. We are already seeing a lot of success with the AP team, leveraging our products, data and analytics, insights, and tools. Our teams are hard at work integrating the 300+ tuck-ins, agency management system conversions, and training of our middle office, which will be in full swing during 2026. Additionally, a little more than a week ago, all of our US retail operations were rebranded Gallagher.

Looking ahead, we are well positioned to drive new business production and believe full year 2026 organic growth will come in around 7%. Fourth quarter adjusted EBITDA margin was 21.6%, a bit better than our December expectations. Looking ahead, we see full year 2026 margins in the 21% to 22% range. Shifting to mergers and acquisitions, starting with some comments on AssuredPartners. We are already seeing a lot of success with the AP team, leveraging our products, data and analytics, insights, and tools. Our teams are hard at work integrating the 300+ tuck-ins, agency management system conversions, and training of our middle office, which will be in full swing during 2026. Additionally, a little more than a week ago, all of our US retail operations were rebranded Gallagher.

Speaker #2: Fourth quarter adjusted EBITDA margin was 21.6%, a bit better than our December expectations. Looking ahead, we see full year '26 margins in the 21 to 22% range.

Speaker #2: Shifting to mergers and acquisitions, starting with some comments on AssuredPartners. We are already seeing a lot of success with the AP team leveraging our products, data, and analytics insights and tools.

Speaker #2: Our teams are hard at work integrating the 300-plus tuck-ins, agency management system conversions, and training of our middle office will be in full swing during 2026.

Speaker #2: Additionally, a little more than a week ago, all of our US retail operations were rebranded Gallagher. When it comes to our back office integration, we are ahead of plan, including going live on our general ledger HR, payroll, treasury, and T&E systems.

J. Patrick Gallagher Jr.: When it comes to our back-office integration, we are ahead of plan, including going live on our general ledger, HR, payroll, treasury, and T&E systems. So we remain firmly on track with our integration plans and are confident we will be able to deliver on our synergy targets. Moving to Q4 merger activity, we completed seven new mergers, representing around $145 million of estimated annualized revenue. This brings our full year 2025 annualized acquired revenue to more than $3.5 billion. That's fantastic. For all of our new partners joining us, I'd like to extend a very warm welcome. Looking ahead, there are thousands of brokerage firms across our footprint, and Gallagher is a great home for entrepreneurs looking to grow their business, add more value to their current clients, and further advance their employees' careers.

When it comes to our back-office integration, we are ahead of plan, including going live on our general ledger, HR, payroll, treasury, and T&E systems. So we remain firmly on track with our integration plans and are confident we will be able to deliver on our synergy targets. Moving to Q4 merger activity, we completed seven new mergers, representing around $145 million of estimated annualized revenue. This brings our full year 2025 annualized acquired revenue to more than $3.5 billion. That's fantastic. For all of our new partners joining us, I'd like to extend a very warm welcome. Looking ahead, there are thousands of brokerage firms across our footprint, and Gallagher is a great home for entrepreneurs looking to grow their business, add more value to their current clients, and further advance their employees' careers.

Speaker #2: So we remain firmly on track with our integration plans and our confident we will be able to deliver on our synergy targets. Moving to fourth quarter merger activity, we completed seven new mergers representing around 145 million dollars of estimated annualized revenue.

Speaker #2: This brings our full year '25 annualized acquired revenue to more than 3.5 billion dollars. That's fantastic. For all of our new partners joining us, I'd like to extend a very warm welcome.

Speaker #2: Looking ahead, there are thousands of brokerage firms across our footprint, and Gallagher is a great home for entrepreneurs looking to grow their business, add more value to their current clients, and further advance their employees' careers.

Speaker #2: Our M&A strategy is about being better together, so that 1 plus 1 can equal 3, 4, or even 5. Shifting to today, our pipeline is showing more than 40 term sheets signed or being prepared, representing around 350 million dollars of annualized revenue.

J. Patrick Gallagher Jr.: Our M&A strategy is about being better together so that one plus one can equal three, four, or even five. Shifting to... Let me see. Today, our pipeline is showing more than 40 term sheets signed or being prepared, representing around $350 million of annualized revenue. Good firms always have a choice, and it would be terrific if they chose to partner with Gallagher.... With a strong close to the year, let me reflect on our full 2025 financial performance for brokerage and risk management combined. 21% growth in revenue, 6% organic growth, 26% growth in adjusted EBITDAC, and more than $3.5 billion in acquired annualized revenue. Another fantastic year, driven by our talented colleagues and our bedrock culture. Frankly, our culture is unstoppable, and it drives our success year after year. That is the Gallagher way.

Our M&A strategy is about being better together so that one plus one can equal three, four, or even five. Shifting to... Let me see. Today, our pipeline is showing more than 40 term sheets signed or being prepared, representing around $350 million of annualized revenue. Good firms always have a choice, and it would be terrific if they chose to partner with Gallagher.... With a strong close to the year, let me reflect on our full 2025 financial performance for brokerage and risk management combined. 21% growth in revenue, 6% organic growth, 26% growth in adjusted EBITDAC, and more than $3.5 billion in acquired annualized revenue. Another fantastic year, driven by our talented colleagues and our bedrock culture. Frankly, our culture is unstoppable, and it drives our success year after year. That is the Gallagher way.

Speaker #2: Good firms always have a choice, and it would be terrific if they chose to partner with Gallagher. With a strong close to the year, let me reflect on our full '25 financial performance for brokerage and risk management combined.

Speaker #2: 21% growth in revenue. 6% organic growth. 26% growth in adjusted EBITDA and more than $3.5 billion in acquired annualized revenue. Another fantastic year driven by our talented colleagues and our bedrock culture—frankly, our culture is unstoppable and it drives our success year after year; that is the Gallagher way.

Speaker #2: I'll stop now and turn it over to Doug. Doug? Thanks, Pat, and hello everyone. Today, I'll first walk you through our earnings release and provide some brief comments on organic growth and margins by operating segment and also on our corporate segment results.

J. Patrick Gallagher Jr.: I'll stop now and turn it over to Doug. Doug?

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

Doug Howell: Thanks, Pat, and hello, everyone. Today, I'll first walk you through our earnings release and provide some brief comments on organic growth and margins by operating segment and also on our corporate segment results. Next, I'll move to the CFO commentary document we post on our IR website. I'll walk you through our typical modeling helpers and our outlook for 2026. Additionally, this is where I'll spend a little more time on organic and margins. Then I'll conclude my prepared remarks with my usual comments on cash, M&A, and capital management. Okay, let's go to the earnings release, to page 3. Brokerage segment Q4 organic growth was 5%. That's right in line with the information we provided you at our December IR day.

Douglas Howell: Thanks, Pat, and hello, everyone. Today, I'll first walk you through our earnings release and provide some brief comments on organic growth and margins by operating segment and also on our corporate segment results. Next, I'll move to the CFO commentary document we post on our IR website. I'll walk you through our typical modeling helpers and our outlook for 2026. Additionally, this is where I'll spend a little more time on organic and margins. Then I'll conclude my prepared remarks with my usual comments on cash, M&A, and capital management. Okay, let's go to the earnings release, to page 3. Brokerage segment Q4 organic growth was 5%. That's right in line with the information we provided you at our December IR day.

Speaker #2: Next, I'll move to the CFO commentary document we post on our IR website. I'll walk you through our typical modeling helpers and our outlook for '26.

Speaker #2: Additionally, this is where I'll spend a little more time on organic and margins. Then I'll conclude my prepared remarks with my usual comments on cash, M&A, and capital management.

Speaker #2: Okay, let's go to the earnings release, to page three. Brokerage segment fourth quarter organic growth was 5%. That's right in line with the information we provided you at our December IR Day.

Speaker #2: Since then, we've received really positive feedback from the investment community for levelizing for the quarterly noise caused by the timing of large live sales and deferred revenue accounting assumptions.

Doug Howell: Since then, we've received really positive feedback from the investment community for levelizing for the quarterly noise caused by the timing of large life sales and deferred revenue accounting assumptions. That's a fantastic reflection of our sales culture, to post 5% in this quarter and 6% for the year. Flipping to page 5 of the earnings release to the Brokerage segment, adjusted EBITDAC table at the top half of the page. We told you in December that our fourth quarter 2025 headline margin would not be comparable to fourth quarter 2024, because, as the footnote to that table explains, we are no longer earning investment income on funds we were holding to buy AssuredPartners, and there would also be a rolling impact of M&A. The footnote tells you that was about 130 basis points.

Since then, we've received really positive feedback from the investment community for levelizing for the quarterly noise caused by the timing of large life sales and deferred revenue accounting assumptions. That's a fantastic reflection of our sales culture, to post 5% in this quarter and 6% for the year. Flipping to page 5 of the earnings release to the Brokerage segment, adjusted EBITDAC table at the top half of the page. We told you in December that our fourth quarter 2025 headline margin would not be comparable to fourth quarter 2024, because, as the footnote to that table explains, we are no longer earning investment income on funds we were holding to buy AssuredPartners, and there would also be a rolling impact of M&A. The footnote tells you that was about 130 basis points.

Speaker #2: That's a fantastic reflection of our sales culture to post 5% in this quarter and 6% for the year. Flipping to page five of the earnings release to the brokerage segment adjusted EBITDA table at the top half of the page.

Speaker #2: We told you in December that our fourth quarter '25 headline margin would not be comparable to fourth quarter '24 because, as the footnote to that table explains, we are no longer earning investment income on funds we were holding to buy Assured Partners, and there would also be a roll-in impact of M&A.

Speaker #2: The footnote tells you that was about 130 basis points. So the quick math shows levelizing for that gets you to 50 basis points of underlying expansion.

Doug Howell: So the quick math shows levelizing for that gets you to 50 basis points of underlying expansion, right at the midpoint of our 40 to 60 basis points of expansion we estimated during our December IR day. That's really terrific work by the team. So I'll give you some more information on brokerage margins when I get to page 8 of the CFO commentary document, because this headline noise will happen in the Q1 and Q2 of 2026 again. Sticking on page 5. Q4 Risk Management segment, organic growth was 7%, right in line with our December expectations. That reflected, reflects strong new business revenues and excellent client retention. Looking to full year 2026, we continue to see organic around 7%.

So the quick math shows levelizing for that gets you to 50 basis points of underlying expansion, right at the midpoint of our 40 to 60 basis points of expansion we estimated during our December IR day. That's really terrific work by the team. So I'll give you some more information on brokerage margins when I get to page 8 of the CFO commentary document, because this headline noise will happen in the Q1 and Q2 of 2026 again. Sticking on page 5. Q4 Risk Management segment, organic growth was 7%, right in line with our December expectations. That reflected, reflects strong new business revenues and excellent client retention. Looking to full year 2026, we continue to see organic around 7%.

Speaker #2: Right at the midpoint of our 40 to 60 basis points of expansion, we estimated during our December IR day. That's really terrific work by the team.

Speaker #2: So I'll give you some more information on brokerage margins when I get to page eight of the CFO commentary document because this headline noise will happen in the first and second quarter of '26 again.

Speaker #2: Sticking on page five, fourth quarter risk management segment organic growth was 7%, right in line with our December expectations. That reflected reflects strong new business revenues and excellent client retention.

Speaker #2: Looking to full year '26, we continue to see organic around 7%. And then, when you flip to page six, the risk management adjusted EBITDA margin of 21.6% was a bit better than our December expectation, and as we look forward, we see full year '26 margins in the 21% to 22% range.

Doug Howell: Then, when you flip to page 6, the risk management adjusted EBITDAC margin of 21.6% was a bit better than our December expectation, and as we looked forward, we see full year 2026 margins in the 21% to 22% range. So turning to page 7 of the earnings release and the corporate segment shortcut table. For the adjusted interest and banking, clean energy, and acquisition lines, all were very close to the midpoint of our December expectations. The adjusted corporate line was a couple pennies less than our midpoint estimate, partly due to a non-cash, unrealized FX remeasurement loss and a small tax item. Also, while we adjusted out, we substantially completed the wind down and annuitization of our long ago frozen pension plan.

Then, when you flip to page 6, the risk management adjusted EBITDAC margin of 21.6% was a bit better than our December expectation, and as we looked forward, we see full year 2026 margins in the 21% to 22% range. So turning to page 7 of the earnings release and the corporate segment shortcut table. For the adjusted interest and banking, clean energy, and acquisition lines, all were very close to the midpoint of our December expectations. The adjusted corporate line was a couple pennies less than our midpoint estimate, partly due to a non-cash, unrealized FX remeasurement loss and a small tax item. Also, while we adjusted out, we substantially completed the wind down and annuitization of our long ago frozen pension plan.

Speaker #2: So turning to page seven of the earnings release and the corporate segment shortcut table. For the adjusted interest and banking clean energy and acquisition lines, all were very close to the midpoint of our December expectations.

Speaker #2: The adjusted corporate line was a couple pennies less than our midpoint estimate, partly due to a non-cash unrealized FX remeasurement loss and a small tax item.

Speaker #2: Also, while we adjusted out, we substantially completed the wind-down and annuitization of our long-ago frozen pension plan. Creates a non-cash gap expense here in the fourth quarter and will again in Q1 '26, but those reversed through OCI, so it nets to zero.

Doug Howell: Creates a non-cash gap expense here in Q4 and will again in Q1 2026, but those reverse through OCI, so it nets to zero. But more importantly, we hit the market just right and didn't have to inject any cash into the plan. All right, let's leave the earnings release and go to the CFO commentary document. Starting on page 3, these are our typical modeling helpers. Most of the Q4 2025 actual numbers were close to what we provided back in December, so there's nothing new here. Looking at 2026, as you build your models, please use these helpers, in particular, the estimated impact from FX and the forecasted depreciation and earn-out payable expense. Turning to page 4 of the CFO commentary document.

Creates a non-cash gap expense here in Q4 and will again in Q1 2026, but those reverse through OCI, so it nets to zero. But more importantly, we hit the market just right and didn't have to inject any cash into the plan. All right, let's leave the earnings release and go to the CFO commentary document. Starting on page 3, these are our typical modeling helpers. Most of the Q4 2025 actual numbers were close to what we provided back in December, so there's nothing new here. Looking at 2026, as you build your models, please use these helpers, in particular, the estimated impact from FX and the forecasted depreciation and earn-out payable expense. Turning to page 4 of the CFO commentary document.

Speaker #2: But more importantly, we hit the market just right and didn't have to inject any cash into the plan. All right, let's leave the earnings release and go to the CFO commentary document.

Speaker #2: Starting on page three, these are our typical modeling helpers. Most of the fourth quarter '25 actual numbers were close to what we provided back in December, so there's nothing new here.

Speaker #2: Looking at '26, as you build your models, please use these helpers. In particular, the estimated impact from FX, and the forecasted depreciation and earn-out payable expense.

Speaker #2: Turning to page four of the CFO commentary document. This page breaks down our organic performance by business, and it's like what we provided for the first time at our December IR Day.

Doug Howell: This page breaks down our organic performance by business, and it's like what we provided for the first time at our December IR day. This view helps you see four things: First, it removes the quarterly comparability impact caused by the large life sales, and second, it removes the comparability impact caused by deferred revenue estimates. These two items were causing a lot of quarterly noise, but as we've said in December, and you can see here, they are really a no, never mind on a full year basis. Third thing this view does is it shows you the quarterly seasonality of our business, and fourth, it gives you organic growth, another level down in the table. Two call-outs on this page.

This page breaks down our organic performance by business, and it's like what we provided for the first time at our December IR day. This view helps you see four things: First, it removes the quarterly comparability impact caused by the large life sales, and second, it removes the comparability impact caused by deferred revenue estimates. These two items were causing a lot of quarterly noise, but as we've said in December, and you can see here, they are really a no, never mind on a full year basis. Third thing this view does is it shows you the quarterly seasonality of our business, and fourth, it gives you organic growth, another level down in the table. Two call-outs on this page.

Speaker #2: This view helps you see four things. First, it removes the quarterly comparability impact caused by the large live sales. And second, it removes the comparability income impact caused by deferred revenue estimates.

Speaker #2: These two items were causing a lot of quarterly noise, but as we've said, as we said in December, and you can see here, they are really a no never mind on a full year basis.

Speaker #2: Third thing this view does is it shows you the quarter seasonality quarterly seasonality of our business, and fourth, it gives you organic growth and another level down in the table.

Speaker #2: Two callouts on this page. First, in total, our fourth quarter and full year actuals in blue were in line with our IR Day thinking, as shown in the gray column.

Doug Howell: First, in total, our Q4 and full year actuals in blue were in line with our IR date thinking, as shown in the gray column. Second, when you move to the pinkish column, we've wrapped up our full year 2026 organic budgeting, and our outlook is unchanged. We continue to see 2026 brokerage segment organic growth of around 5.5%. That would be another fantastic year. So when you turn to page five in the corporate segment, just two small items. Our full year 2026 estimate is unchanged from 6 weeks ago, and we're now providing a first look at our quarterly estimates. That said, we do have a little more work to do on the corporate segment quarterly budget, but full year is done. So maybe a tweak here or there between quarters, and we'll update you during our March IR day.

First, in total, our Q4 and full year actuals in blue were in line with our IR date thinking, as shown in the gray column. Second, when you move to the pinkish column, we've wrapped up our full year 2026 organic budgeting, and our outlook is unchanged. We continue to see 2026 brokerage segment organic growth of around 5.5%. That would be another fantastic year. So when you turn to page five in the corporate segment, just two small items. Our full year 2026 estimate is unchanged from 6 weeks ago, and we're now providing a first look at our quarterly estimates. That said, we do have a little more work to do on the corporate segment quarterly budget, but full year is done. So maybe a tweak here or there between quarters, and we'll update you during our March IR day.

Speaker #2: Second, when you move to the pinkish column, we've wrapped up our full-year '26 organic budgeting and our outlook is unchanged. We continue to see '26 brokerage segment organic growth of around 5.5%.

Speaker #2: That would be another fantastic year. So, when you turn to page five in the Corporate segment, just two small items. Our full-year 2026 estimate is unchanged from six weeks ago, and we're now providing a first look at our quarterly estimates.

Speaker #2: That said, we do have a little more work to do on the corporate segment quarterly budgets, but full year is done. So maybe a tweak here or there between quarters, and we'll update you during our March IR day.

Speaker #2: Turning to page six, the investment income table. Three comments here. First, our '26 forecast reflects current FX rates and changes in fiduciary cash balances.

Doug Howell: Turning to page 6, the investment income table. 3 comments here. First, our 2026 forecast reflect current FX rates and changes in fiduciary cash balances. Second, our forward estimates continue to assume two future 25 basis point rate cuts over the course of the year, 1 in April and another in September. Third, the second line of this table shows you the amount of interest income we earned on funds that we were holding to buy AP. Clearly, that has gone away, and you can see it won't repeat here in 2026. More on the impact of this on our headline margins when I get to page 8. Staying on page 6, but shifting down to the rollover revenue table.

Turning to page 6, the investment income table. 3 comments here. First, our 2026 forecast reflect current FX rates and changes in fiduciary cash balances. Second, our forward estimates continue to assume two future 25 basis point rate cuts over the course of the year, 1 in April and another in September. Third, the second line of this table shows you the amount of interest income we earned on funds that we were holding to buy AP. Clearly, that has gone away, and you can see it won't repeat here in 2026. More on the impact of this on our headline margins when I get to page 8. Staying on page 6, but shifting down to the rollover revenue table.

Speaker #2: Second, our forward estimates continue to assume two future 25-basis-point rate cuts over the course of the year, one in April and another in September.

Speaker #2: Third, the second line of this table shows you the amount of interest income we earned on funds that we were holding to buy AP.

Speaker #2: Clearly, that has gone away, and you can see it won't repeat here in '26. More on the impact of this on our headline margins when I get to page eight.

Speaker #2: Staying on page six, but shifting down to the page to the rollover revenue table. The fourth quarter '25 column subtotal of 145 million dollars for brokerage came in pretty close to our December estimate.

Doug Howell: The fourth quarter 2025 column subtotal of $145 million for brokerage came in pretty close to our December estimate. Looking forward, the pinkish columns to the right include estimated 2026 revenues for brokers, brokerage M&A closed through yesterday, and you'll see that clearly excludes AssuredPartners. We provide a separate page on page seven for AssuredPartners. Finally, you'll see the same info for our risk management segment below that. Then to this, you must make your picks for what you think might be unknown M&A that hasn't closed yet throughout 2026. Moving to page seven, this is the same page that we have provided several times before. It shows you the, how we view AP, now it includes third and fourth quarter 2025 results and our full year 2026 outlook. A few comments here.

The fourth quarter 2025 column subtotal of $145 million for brokerage came in pretty close to our December estimate. Looking forward, the pinkish columns to the right include estimated 2026 revenues for brokers, brokerage M&A closed through yesterday, and you'll see that clearly excludes AssuredPartners. We provide a separate page on page seven for AssuredPartners. Finally, you'll see the same info for our risk management segment below that. Then to this, you must make your picks for what you think might be unknown M&A that hasn't closed yet throughout 2026. Moving to page seven, this is the same page that we have provided several times before. It shows you the, how we view AP, now it includes third and fourth quarter 2025 results and our full year 2026 outlook. A few comments here.

Speaker #2: Looking forward, the pinkish column to the right includes estimated '26 revenues for brokerage M&A closed through yesterday, but you'll see that clearly excludes AssuredPartners.

Speaker #2: We provide a separate page on page seven for Assured Partners. And finally, you'll see the same info for our Risk Management segment below that.

Speaker #2: And then to this, you must make your picks for what you think might be unknown M&A that hasn't closed yet throughout 2026. Moving to page seven, this is the same page that we have provided several times before.

Speaker #2: It shows you how we view AP. Both now it includes third and fourth quarter '25 results and our full year '26 outlook. A few comments here.

Doug Howell: AP's Q4 revenues were in line with our expectations for the Q4, while expenses came in a little better than expected. Some of that is a little timing between now and throughout 2026. Next, the second item, there could be some small refinements in the 2026 numbers 'cause we're still a week or so away from having AP budgets locked down. That said, we don't expect anything significant, and of course, we'll update you in the March IR day. Third, be careful when rolling in AP into your 2026 models. You can use Q1 and Q2 columns as is, but for Q3 and Q4, it is the delta between the pink numbers and the blue numbers. Fourth, I also ask you to closely read the footnote. You're gonna read three things in there.

Speaker #2: AP's fourth-quarter revenues were in line with our expectations. For the fourth quarter, while expenses came in a little better than expected, some of that is a little timing between now and throughout '26.

AP's Q4 revenues were in line with our expectations for the Q4, while expenses came in a little better than expected. Some of that is a little timing between now and throughout 2026. Next, the second item, there could be some small refinements in the 2026 numbers 'cause we're still a week or so away from having AP budgets locked down. That said, we don't expect anything significant, and of course, we'll update you in the March IR day. Third, be careful when rolling in AP into your 2026 models. You can use Q1 and Q2 columns as is, but for Q3 and Q4, it is the delta between the pink numbers and the blue numbers. Fourth, I also ask you to closely read the footnote. You're gonna read three things in there.

Speaker #2: Next, the second item: There could be some small refinements in the '26 numbers, because we're still a week or so away from having AP budgets locked down.

Speaker #2: That said, we don't expect anything significant, and of course, we'll update you in the March IR Day. Third, be careful when rolling in AP into your '26 models.

Speaker #2: You can use first and second quarter columns as is, but for third and fourth quarter, it is the delta between the pink numbers and the blue numbers.

Speaker #2: Fourth, also ask you to closely read the footnote. You're going to read three things in there. This table reflects the midpoint of our estimates and does not include any revenue or expense synergies.

Doug Howell: This table reflects the midpoint of our estimates and does not include any revenue or expense synergies. The non-cash figures shown on this page, which reflect depreciation and earn-out payable, are included within our estimates on page three, so don't double count there. And finally, you'll read that we still see annualized run rate synergies of $160 million by the end of 2026, and then up to $260 to $280 million by early 2028. I'm also more and more comfortable there could be upside to these numbers, but give us a little more time before we update our estimates. So this is a page of really, really good news. Moving on to page eight. This is a new page to help you better understand items that impact the comparability of our brokerage segment adjusted EBITDA margins.

This table reflects the midpoint of our estimates and does not include any revenue or expense synergies. The non-cash figures shown on this page, which reflect depreciation and earn-out payable, are included within our estimates on page three, so don't double count there. And finally, you'll read that we still see annualized run rate synergies of $160 million by the end of 2026, and then up to $260 to $280 million by early 2028. I'm also more and more comfortable there could be upside to these numbers, but give us a little more time before we update our estimates. So this is a page of really, really good news. Moving on to page eight. This is a new page to help you better understand items that impact the comparability of our brokerage segment adjusted EBITDA margins.

Speaker #2: The non-cash figures shown on this page, which reflect depreciation and earn-out payable, are included within our estimates on page three, so don't double count there.

Speaker #2: And finally, you'll read that we still see annualized run rate synergies of $160 million by the end of '26, and then up to $260 to $280 million by early '28.

Speaker #2: I'm also more and more comfortable there could be upside to these numbers, but give us a little more time before we update our estimates.

Speaker #2: So, this is a page of really, really good news. Moving on to page eight. This is a new page to help you better understand items that impact the comparability of our brokerage segment adjusted EBITDA margins.

Speaker #2: In the past, I’ve done a bridge in my verbal comments to get you past the noise from the impact of FX, changes in interest income, income from cash we’re holding on AssuredPartners, and then when M&A naturally runs, lower margins roll into our numbers.

Doug Howell: In the past, I've done a bridge in my verbal comments to get you past the noise from the impact of FX, changes in interest income, income from cash we're holding on AssuredPartners, and then when M&A that naturally runs lower margins rolls into our numbers. We think these tables paint a better picture than all the words we were using before. Hopefully, this will be more helpful when you build your 2026 models. Since this is the first time we've provided this page, let me make a few comments. First, the upper, upper blue table. The punchline is we improved fourth quarter by about 50 basis points. That's all due to the incredibly hard work by the team to control our costs. The lower table gets you started on modeling 2026.

In the past, I've done a bridge in my verbal comments to get you past the noise from the impact of FX, changes in interest income, income from cash we're holding on AssuredPartners, and then when M&A that naturally runs lower margins rolls into our numbers. We think these tables paint a better picture than all the words we were using before. Hopefully, this will be more helpful when you build your 2026 models. Since this is the first time we've provided this page, let me make a few comments. First, the upper, upper blue table. The punchline is we improved fourth quarter by about 50 basis points. That's all due to the incredibly hard work by the team to control our costs. The lower table gets you started on modeling 2026.

Speaker #2: Tables paint a better picture than all the words we were using before. We think these—hopefully—will be more helpful when you build your '26 models.

Speaker #2: Since this is the first time we've provided this page, let me make a few comments. First, the upper blue table—the punchline is we improved fourth quarter by about 50 basis points.

Speaker #2: That's all due to the incredibly hard work by the team to control our costs. The lower table gets you started on modeling '26. The blue section first level-sets '25 by removing the investment income on funds we were holding to buy Assured Partners, and also resets for estimated FX at current rates.

Doug Howell: The blue section first level sets 2025 by removing the investment income on funds we were holding to buy AssuredPartners, and also resets for estimated FX at current rates. FX will likely change, but at least it gets you something as of today. The pink section of this table has ranges and margin impact commentary from what we see today. The punchline is nothing has changed since our December IR day, and we still see underlying margins expanding 40 to 60 basis points in 2026, and we will also begin to benefit from synergies by being better together with AP. You'll also see that we've added a line called unknown M&A with no estimate provided. This is more of a placeholder for you to just think about other factors that could impact margin comparability. All right, let's go to page 9, to our tax credit carry forward page.

The blue section first level sets 2025 by removing the investment income on funds we were holding to buy AssuredPartners, and also resets for estimated FX at current rates. FX will likely change, but at least it gets you something as of today. The pink section of this table has ranges and margin impact commentary from what we see today. The punchline is nothing has changed since our December IR day, and we still see underlying margins expanding 40 to 60 basis points in 2026, and we will also begin to benefit from synergies by being better together with AP. You'll also see that we've added a line called unknown M&A with no estimate provided. This is more of a placeholder for you to just think about other factors that could impact margin comparability. All right, let's go to page 9, to our tax credit carry forward page.

Speaker #2: FX will likely change, but at least it gets you something as of today. The pink section of this table has ranges and margin impact commentary for what we see today.

Speaker #2: The punchline is, nothing has changed since our December IR day, and we still see underlying margins expanding 40 to 60 basis points in '26.

Speaker #2: And we will also begin to benefit from synergies by being better together with AP. You'll also see that we've added a line called 'unknown M&A' with no estimate provided.

Speaker #2: This is more of a placeholder for you to just think about other factors that could impact margin comparability. All right, let's go to page nine, to our tax credit carry forward page at December 31st.

Doug Howell: At 31 December, we had $731 million of tax credit carry forwards, and you'll see in the footnote there that says that we have another $1 billion of future tax benefits related to our purchase of AP. The punchline from this page is the same. It creates a nice cash flow sweetener to fund future M&A. As for some modeling thoughts, when you're modeling cash flows, just assume our cash taxes paid will be about 10% of EBITDA for the foreseeable future, and that should get you close. All right, let's move to cash, capital management, and M&A funding.

At 31 December, we had $731 million of tax credit carry forwards, and you'll see in the footnote there that says that we have another $1 billion of future tax benefits related to our purchase of AP. The punchline from this page is the same. It creates a nice cash flow sweetener to fund future M&A. As for some modeling thoughts, when you're modeling cash flows, just assume our cash taxes paid will be about 10% of EBITDA for the foreseeable future, and that should get you close. All right, let's move to cash, capital management, and M&A funding.

Speaker #2: We had $713 million of tax credit carryforwards, and you'll see in the footnote there that says we have another $1 billion of future tax benefits related to our purchase of AP.

Speaker #2: The punchline from this page is the same. It creates a nice cash flow sweetener to fund future M&A. As for some modeling thoughts, when you’re modeling cash flows, just assume our cash taxes paid will be about 10% of EBITDA for the foreseeable future, and that should get you close.

Speaker #2: All right, let's move to cash capital management and M&A funding. When I look at available cash on hand, expected free cash flows, and future investment-grade borrowings, over the next two years, we might have close to $10 billion to fund M&A before using any stock at attractive multiples.

Doug Howell: When I look at available cash on hand, expected free cash flows, and future investment-grade borrowings, over the next two years, we might have close to $10 billion to fund M&A before using any stock at attractive multiples. This is an important point. While we talk about organic a lot, it's worth a reminder that our M&A strategy creates immediate shareholder value through a nice price arbitrage, and it also creates long-term shareholder value through additional sales talent, niche expertise, and further scale. Those are my comments. An excellent '25 for our combined brokerage and risk management segments: organic growth of 6%, more than $3.5 billion of estimated acquired revenues, adjusted EBITDA growth of 26%, and adjusted EBITDA margin of 35%, up 70 basis points this year on an underlying comparable basis.

When I look at available cash on hand, expected free cash flows, and future investment-grade borrowings, over the next two years, we might have close to $10 billion to fund M&A before using any stock at attractive multiples. This is an important point. While we talk about organic a lot, it's worth a reminder that our M&A strategy creates immediate shareholder value through a nice price arbitrage, and it also creates long-term shareholder value through additional sales talent, niche expertise, and further scale. Those are my comments. An excellent '25 for our combined brokerage and risk management segments: organic growth of 6%, more than $3.5 billion of estimated acquired revenues, adjusted EBITDA growth of 26%, and adjusted EBITDA margin of 35%, up 70 basis points this year on an underlying comparable basis.

Speaker #2: And this is an important point. Well, we talk about organic a lot. It's worth a reminder that our M&A strategy creates immediate shareholder value through a nice price arbitrage.

Speaker #2: And it also creates long-term shareholder value through additional sales talent, niche expertise, and further scale. So those are my comments. An excellent '25 for our combined brokerage and risk management segments.

Speaker #2: Organic growth of 6%, more than $3.5 billion of estimated acquired revenues, adjusted EBITDA growth of 26%, and adjusted EBITDA margin of 35% — up 70 basis points this year on an underlying comparable basis.

Speaker #2: And it might be worth a reminder that, since COVID hit us, every year our margins have marched higher. We're up over 400 basis points since then.

Doug Howell: It might be worth a reminder that since COVID hit us, every year, our margins have marched higher. We're up over 400 basis points since then, and we still see many more opportunities to improve. Those are fantastic results. We're on to 2026. We have an unstoppable momentum driven by an amazing culture. I see 2026 being another terrific year. Okay, back to you, Pat.

It might be worth a reminder that since COVID hit us, every year, our margins have marched higher. We're up over 400 basis points since then, and we still see many more opportunities to improve. Those are fantastic results. We're on to 2026. We have an unstoppable momentum driven by an amazing culture. I see 2026 being another terrific year. Okay, back to you, Pat.

Speaker #2: And we still see many more opportunities to improve. Those are fantastic results. So we're on to '26. We have unstoppable momentum, driven by an amazing culture.

Speaker #2: '26 being another terrific year. Okay, back to you, Pat. Thanks, Doug. Operator, let's go to questions and—

J. Patrick Gallagher Jr.: Thanks, Doug. Operator, let's go to questions and answers.

Speaker #2: answers. Thank you.

Operator: Thank you. The call is now open for questions. If you have a question, please pick up your handset and press star one on your telephone at this time. If you are on a speakerphone, please disable the function prior to pressing star one to ensure optimum sound quality. You may remove yourself from the queue at any point by pressing star two. Additionally, we ask that each participant limit themselves to one question and one follow-up question. Again, that is star one for questions. Our first question is from Rob Cox with Goldman Sachs. Please proceed.

Speaker #3: The call is now open for questions. If you have a question, please pick up your handset and press star one on your telephone at this time.

Speaker #3: If you are on speakerphone, please disable the function prior to pressing star one (*1). To ensure optimum sound quality, you may remove yourself from the queue at any point by pressing star two (*2).

Speaker #3: Additionally, we ask that each participant limit themselves to one question and one follow-up question. Again, that is star one for questions. Our first question is from Rob Cox with Goldman Sachs.

Speaker #3: Please proceed.

Speaker #4: Hey, thanks. Good

Rob Cox: Hey, thanks. Good afternoon.

Robert Cox: Hey, thanks. Good afternoon.

Speaker #4: afternoon. Hey,

Doug Howell: Hey, Rob.

Douglas Howell: Hey, Rob.

Speaker #4: Hey, first question for Rob. You know, there's been a lot of talk about digital infrastructure, and, you know, I think some industry participants have commented that growth in the economy, excluding digital infrastructure like data centers, is not all that inspiring.

Rob Cox: Hey, first question for you. You know, there's been a lot of talk about digital infrastructure. And, you know, I think some industry participants have commented that growth in the economy, excluding digital infrastructure, like data centers, is not all that inspiring. Could you just talk about how you're positioned to take advantage of digital infrastructure build-out? And somewhat related, I'm just curious how your construction practices have been performing recently.

Robert Cox: Hey, first question for you. You know, there's been a lot of talk about digital infrastructure. And, you know, I think some industry participants have commented that growth in the economy, excluding digital infrastructure, like data centers, is not all that inspiring. Could you just talk about how you're positioned to take advantage of digital infrastructure build-out? And somewhat related, I'm just curious how your construction practices have been performing recently.

Speaker #4: Could you just talk about how you're positioned to take advantage of digital infrastructure buildout? And somewhat related, I'm just curious how your construction practices have been performing recently?

Speaker #2: Well, first of all, our construction practices are our largest practice. And as you know, we emphasize our vertical capabilities at every production opportunity. We have very strong vertical capabilities, and about 90% of our new production around the United States—actually, around the world—falls into those niches.

J. Patrick Gallagher Jr.: Well, first of all, our construction practice is our largest practice. As you know, we emphasize our vertical capabilities at every production opportunity. We have very strong vertical capabilities that about 90% of our new production around the United States, actually, around the world, falls into those niches. As Doug made in his comments, when we do an acquisition, one of the benefits of that is we pick up people that add to our vertical capabilities. And of course, one of those, everybody's focused on data centers, as we are as well. We have the ecosystem to do the job for our clients across the entire span of what needs to go into a data center construction site. You've got real estate issues, you've got supply chain issues, you've got energy issues, et cetera, et cetera.

Speaker #2: As Doug made in his comments, when we do an acquisition, one of the benefits of that is we pick up people that add to our vertical capabilities.

Speaker #2: And, of course, one of those—everybody's focused on data centers, as we are as well. We have the ecosystem to do the job for our clients across the entire span of what needs to go into a data center construction site.

Speaker #2: You've got real estate issues, you've got supply chain issues, you've got energy issues, etc., etc. In fact, our head of construction, Brian Cooper, was just recently quoted in Leaders Edge, which is the broker's magazine, about all the things that we're pulling together.

J. Patrick Gallagher Jr.: In fact, our Head of Construction, Brian Cooper, was just recently quoted in Leader's Edge, which is the Brokers magazine, about all the things that we're pulling together in that ecosystem to be able to take advantage of that opportunity. And a great bit of that opportunity is just the subs and all the activity that has to go in to the whole process of building it. There's a huge drain on capabilities locally just for the construction expertise. And so I think every one of us that has contact with those types of clients, that are gonna be building those centers out, leasing them, renting them, whatever, is gonna need an awful lot of cover.

In fact, our Head of Construction, Brian Cooper, was just recently quoted in Leader's Edge, which is the Brokers magazine, about all the things that we're pulling together in that ecosystem to be able to take advantage of that opportunity. And a great bit of that opportunity is just the subs and all the activity that has to go in to the whole process of building it. There's a huge drain on capabilities locally just for the construction expertise. And so I think every one of us that has contact with those types of clients, that are gonna be building those centers out, leasing them, renting them, whatever, is gonna need an awful lot of cover.

Speaker #2: In that ecosystem, to be able to take advantage of that opportunity—and a great bit of that opportunity is just the subs and all the activity that has to go into the whole process of building it.

Speaker #2: There's a huge drain on capabilities locally, just for the construction expertise. And so, I think every one of us that has contact with those types of clients that are going to be building those centers out, leasing them, renting them, whatever, is going to need an awful lot of cover.

Speaker #2: You're going to need an awful lot of capability in simply placing the huge amounts of cover needed, and we're right there in the middle of that.

J. Patrick Gallagher Jr.: You're gonna need an awful lot of capability in simply placing the huge amounts of cover needed, and we're right there in the middle of that mix.

You're gonna need an awful lot of capability in simply placing the huge amounts of cover needed, and we're right there in the middle of that mix.

Speaker #2: mix. Thank you.

Rob Cox: Thank you. That's helpful. I just had a follow-up on casualty pricing and your outlook for RPC embedded in, you know, your organic growth outlook for 2026, which is unchanged. It just seems like, you know, the RPC for casualty has dropped a little bit here versus the high single-digit levels earlier in the year. Just curious if you think that's a trend. I know there's been some companies out there talking about loss trend behaving a little bit better, more in more recent periods.

Robert Cox: Thank you. That's helpful. I just had a follow-up on casualty pricing and your outlook for RPC embedded in, you know, your organic growth outlook for 2026, which is unchanged. It just seems like, you know, the RPC for casualty has dropped a little bit here versus the high single-digit levels earlier in the year. Just curious if you think that's a trend. I know there's been some companies out there talking about loss trend behaving a little bit better, more in more recent periods.

Speaker #4: That's helpful. And then I just had a follow-up on casualty pricing and your outlook for RPC, embedded in your organic growth outlook for 2026, which is unchanged.

Speaker #4: It just seems like, you know, the RPC for casualty has dropped a little bit here versus the high single-digit levels earlier in the year.

Speaker #4: Just curious if you think that's a trend. I know there have been some companies out there talking about loss trend behaving a little bit better, more in more recent periods.

Speaker #2: Yeah, I think that basically we're not—I mean, I'm talking from a street perspective now. I'll let Doug comment on what we're seeing in our actual data.

J. Patrick Gallagher Jr.: I think that basically, we're not—I mean, I'm talking from a street perspective now. I'll let Doug comment on what we're seeing in our actual data. But no, we're not, we're not seeing, you know, people jumping on the casualty bandwagon here like they are property. Property is softening, there's no question about it. I think that casualty is still got a heavy focus from the underwriting community, both on the reinsurance side and the primary side. I'm not so sure that they're confident in past years' reserves, and so I'm not, I'm not seeing the same, same kind of activity there that we see on the property side at all.

Speaker #2: But no, we're not seeing people jumping on the casualty bandwagon here like they are on property. Property is softening, there's no question about it. I think that casualty has still got a heavy focus from the underwriting community, both on the reinsurance side and the primary side.

Speaker #2: I'm not so sure that they're confident in past years' reserves, and so I'm not seeing the same kind of activity there that we see on the property side at all.

Speaker #5: Yeah, Rob, if I read across my page on casualty renewals, you know, maybe in '22 we're at 8.4, in '23 it's somewhere between 8.4 and 8.7, '24 was 8.5, this year's 8.1.

Doug Howell: Yeah, Rob, if I read across my page on casualty renewals, you know, maybe in 2022 we're at 8.4, in 2023 is somewhere between 8.4 and 8.7. 2024 was 8.5. This year is 8.1. So I mean, this is-- we're just not seeing in our numbers any big pullback in casualty pricing. And all the, all the, you know, systemic factors that are out there that are naturally pushing casualty rates higher, like Pat said, on some and all of them that you read about, I just don't see softening coming in the casualty lines. So what do we assume for next year as we're thinking about it? We're assuming that casualty rates will be up in that 7 to 8% range.

Douglas Howell: Yeah, Rob, if I read across my page on casualty renewals, you know, maybe in 2022 we're at 8.4, in 2023 is somewhere between 8.4 and 8.7. 2024 was 8.5. This year is 8.1. So I mean, this is-- we're just not seeing in our numbers any big pullback in casualty pricing. And all the, all the, you know, systemic factors that are out there that are naturally pushing casualty rates higher, like Pat said, on some and all of them that you read about, I just don't see softening coming in the casualty lines. So what do we assume for next year as we're thinking about it? We're assuming that casualty rates will be up in that 7 to 8% range.

Speaker #5: So, I mean, we're just not seeing in our numbers any big pullback in casualty pricing. And all the, you know, systemic factors that are out there that are naturally pushing casualty rates higher—like Pat said on some, and all of them that you read about—I just don't see softening coming in the casualty lines.

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Q4 2025 Arthur J Gallagher & Co Earnings Call

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Arthur Gallagher

Q4 2025 Arthur J Gallagher & Co Earnings Call

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Arthur Gallagher

Q4 2025 Arthur J Gallagher & Co Earnings Call

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