Arthur J. Gallagher & Co. · NYSE:AJG

Arthur J. Gallagher & — Investor Presentation (November 2023)

44 slides from Arthur J. Gallagher &'s investor presentation, November 2023

  1. Slide 1: November 2023 Investor Presentation

    November 2023 Investor Presentation ©2023 ARTHUR J. GALLAGHER & CO.

  2. Slide 2: Cautionary Note on Revenue Comparisons and Forward-Looking Statements

    CAUTIONARY NOTE ON REVENUE COMPARISONS PRIOR TO 2017 & INFORMATION ON FORWARD- LOOKING STATEMENTS Revenue Recognition Accounting Standard The financial information in the slides that follow for any period prior to 2017 is presented under “Old GAAP” – i.e., before implementation of the changed revenu

  3. Slide 3: Information Regarding Non-GAAP Measures

    INFORMATION REGARDING NON-GAAP MEASURES This presentation includes references to Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted Revenues, Adjusted Operating Expense Ratio and Organic Revenue Growth, which are measures not in accordance with, or an alternative to, the GAAP information provided h

  4. Slide 4: Who We Are

    • Founded in 1927 WHO WE ARE • Public since 1984 • One of the World’s leading insurance brokers (1) • One of the World’s largest P&C third-party administrators (1) Key Facts Key Shareholder Data 130 Countries (2) 49,720 Employees 0.9% Yield (3) $ 0.55 2023 Q4 Dividend/Share 9.5B Total Adjusted Reven

  5. Slide 5: Gallagher Mission Statement

    GALLAGHER MISSION STATEMENT We are an international Sales and Marketing company that plans and administers cost- effective, differentiated property/casualty and human resource risk management programs as brokers, consultants and third-party administrators. Our mission is to: • Provide superior, cost

  6. Slide 6: Snapshot of Core Operations

    SNAPSHOT OF CORE OPERATIONS • 87% of revenue* • We advise and consult on insurance programs and place insurance for clients BROKERAGE • Property/Casualty and employee benefits • Retail, wholesale and reinsurance SEGMENT • Primarily middle-market commercial clients and individuals • 76% of Commission

  7. Slide 7: Diverse Revenue Base

    DIVERSE REVENUE BASE Brokerage RETAIL BENEFITS INTERNATIONAL DOMESTIC RETAIL P/C 21% 39% 51% 61% WHOLESALE 15% REINSURANCE 13% Risk Management WORKERS’ LIABILITY DOMESTIC COMPENSATION INTERNATIONAL 31% 85% 62% 15% PROPERTY 7% Brokerage and Risk Management segments for the trailing twelve month perio

  8. Slide 8: Brokerage & Risk Management Segments Combined – YTD 3Q 2023

    BROKERAGE & RISK MANAGEMENT SEGMENTS COMBINED – YTD 3Q 2023 Adjusted Revenues Organic Revenues $8,000 11.0% 19% 10.0% $7,000 $6,000 9.0% $6,351 $7,527 9.8% 10.3% $5,000 8.0% YTD 3Q 2022 YTD 3Q 2023 YTD 3Q 2022 YTD 3Q 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $2,600 33.5% 20% $2,300 33.0% $2,000

  9. Slide 9: Brokerage & Risk Management Segments Combined – 5 Yr View

    BROKERAGE & RISK MANAGEMENT SEGMENTS COMBINED – 5 YR VIEW Adjusted Revenues $9,000 $7,000 13% CAGR $5,000 $4,549 $8,383 $3,000 2017 2022 Adjusted EBITDAC Adjusted EBITDAC Margin $3,000 34.0% 18% CAGR +650 bpts $2,200 30.0% $1,400 26.0% $1,166 $2,692 25.6% 32.1% $600 22.0% 2017 2022 2017 2022 Brokera

  10. Slide 10: Brokerage Segment – YTD 3Q 2023

    BROKERAGE SEGMENT – YTD 3Q 2023 Adjusted Revenues Organic Revenues $7,000 10.0% 19% 9.5% $6,000 9.0% $5,000 8.5% $5,555 $6,580 9.3% 9.4% $4,000 8.0% YTD 3Q 2022 YTD 3Q 2023 YTD 3Q 2022 YTD 3Q 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $2,500 35.5% 19% 35.3% $2,200 35.0% $1,900 34.8% $1,940 $2,316

  11. Slide 11: Brokerage Segment – 5 Yr View

    BROKERAGE SEGMENT – 5 YR VIEW Adjusted Revenues $8,000 $6,000 14% CAGR $4,000 $3,812 $7,292 $2,000 2017 2022 Adjusted EBITDAC Adjusted EBITDAC Margin $3,000 37.0% 19% CAGR +690 bpts $2,200 33.0% $1,400 29.0% $1,039 $2,491 27.3% 34.2% $600 25.0% 2017 2022 2017 2022 Brokerage segment for the full year

  12. Slide 12: Risk Management Segment – YTD 3Q 2023

    RISK MANAGEMENT SEGMENT – YTD 3Q 2023 Adjusted Revenues Organic Revenues $1,000 18.0% $900 19% 16.0% 14.0% $800 12.0% $797 $947 12.5% 16.8% $700 10.0% YTD 3Q 2022 YTD 3Q 2023 YTD 3Q 2022 YTD 3Q 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $190 20.0% 29% 19.0% $170 18.0% $150 17.0% $145 $186 18.1% 1

  13. Slide 13: Risk Management Segment – 5 Yr View

    RISK MANAGEMENT SEGMENT – 5 YR VIEW Adjusted Revenues $1,200 8% CAGR $1,000 $800 $737 $1,092 $600 2017 2022 Adjusted EBITDAC Adjusted EBITDAC Margin $220 19.0% +130 bpts $180 10% CAGR 18.0% $140 17.0% $127 $202 17.2% 18.5% $100 16.0% 2017 2022 2017 2022 Risk Management segment for the for the full y

  14. Slide 14: Tax Credit Carryforwards

    TAX CREDIT CARRYFORWARDS $1,200 $1,000 $800 $600 $400 $200 $112 $147 $233 $342 $478 $683 $857 $962 $998 $1,074 $773 $669 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 *2023 *2023 represents the period ended September 30, 2023 The amounts above represent the outstanding deferred tax asset

  15. Slide 15: Dividends Per Share

    DIVIDENDS PER SHARE $2.20* $2.20 $2.00 $1.80 $1.60 $1.40 $1.20 $1.00 $0.80 $0.60 $0.40 $0.20 $0.00 1984 2023E *Indicated – On October 25, 2023, Gallagher’s Board of Directors declared a $0.55 per share fourth quarter 2023 dividend. 15 ©2023 ARTHUR J. GALLAGHER & CO.

  16. Slide 16: Third Quarter 2023 YTD M&A Highlights

    THIRD QUARTER 2023 YTD M&A HIGHLIGHTS $475M 37 in estimated annual new merger partners acquired revenues Fair valuations Focus on tuck-in opportunities *On October 31, 2023, Gallagher completed the acquisition of Eastern Insurance Group, LLC, with pro forma revenues for the trailing 12 months ended

  17. Slide 17: Where We Are Going

    WHERE WE ARE GOING • Driving new business production • Continuing tuck-in M&A BROKERAGE • Growing global brand recognition SEGMENT • Leveraging internal resources and processes across divisions • Increasing data utilization to deliver a better client experience • Increasing global presence in claims

  18. Slide 18: US Commercial P/C Pricing & Inflation

    US COMMERCIAL P/C PRICING & INFLATION 180 CPI 170 176 160 150 140 Rates 130 132 120 110 100 90 80 US Commercial Rate Index reflects the cost of P&C premiums relative to the year 2000. Constructed using Counsel of Insurance Agents and Brokers (CIAB) data. CPI index uses data from the Bureau of Labor

  19. Slide 19: US Commercial P/C Pricing

    US COMMERCIAL P/C PRICING Commercial Casualty 15% 10% 5% 0% -5% Commercial Property 25% 20% 15% 10% 5% 0% -5% -10% Reflects Counsel of Insurance Agents and Brokers (CIAB) data. Commercial Casualty represents the average of commercial auto, workers comp, general liability, umbrella, cyber and D&O. 19

  20. Slide 20: Sales Culture Performs Through Cycle

    SALES CULTURE PERFORMS THROUGH CYCLE Hard Firm 25.0% Market Soft Market Shallow Market Market 19.8% 19.8% 20.0% 16.0% 15.0% 14.0% 10.0% 9.8% 9.0% 9.7% 9.5% 10.0% 8.1% 5.6% 6.0% 5.5% 8.9% 5.0% 4.4% 3.8% 3.8% 4.6% 7.5% 7.5% 5.0% 3.1% 5.6% 2.0% 2.0% 4.4% 3.8% 3.4% 3.1% 2.0% -0.8% -1.7% 1.8% 0.0% -2.4%

  21. Slide 21: Consistent Growth Strategy

    CONSISTENT GROWTH STRATEGY 21 ©2023 ARTHUR J. GALLAGHER & CO.

  22. Slide 22: Consistent Growth Strategy: Organic

    CONSISTENT GROWTH STRATEGY: ORGANIC 22 ©2023 ARTHUR J. GALLAGHER & CO.

  23. Slide 23: Driving Brokerage Organic Growth

    DRIVING BROKERAGE ORGANIC GROWTH 23 ©2023 ARTHUR J. GALLAGHER & CO.

  24. Slide 24: Niche Expertise Teams - Brokerage

    NICHE EXPERTISE TEAMS - BROKERAGE Affinity Life Sciences Automotive Marine Aviation Nonprofit Construction Personal Energy Private Client Entertainment Public Entity Environmental Real Estate/ Hospitality Equity Advisors Financial Institutions Religious Restaurant Food/Agribusiness Technology Global

  25. Slide 25: Driving Risk Management Organic Growth

    DRIVING RISK MANAGEMENT ORGANIC GROWTH 25 ©2023 ARTHUR J. GALLAGHER & CO.

  26. Slide 26: Risk Management Growth Focuses on Four Market Segments

    RISK MANAGEMENT GROWTH FOCUSES ON FOUR MARKET SEGMENTS ALTERNATIVE PUBLIC SECTOR MARKET ENTITIES PARTICIPANTS LARGE COMMERCIAL INSURANCE CARRIERS ENTITIES 26 ©2023 ARTHUR J. GALLAGHER & CO.

  27. Slide 27: Consistent Growth Strategy: M&A

    CONSISTENT GROWTH STRATEGY: M&A 27 ©2023 ARTHUR J. GALLAGHER & CO.

  28. Slide 28: Acquisition Revenue Growth

    ACQUISITION REVENUE GROWTH $1,100 U.S. Property & Casualty Risk Management $1,000 Employee Benefits Non-U.S. Property & Casualty $900 Reinsurance $800 $700 $500 $400 $300 $200 $100 $0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2

  29. Slide 29: M&A Opportunities Continue

    M&A OPPORTUNITIES CONTINUE Vast Pipeline Acquisition Units Limited Strategic Core Competency Consolidators Domestic and international Retail P&C Culture markets highly fragmented Wholesale Ability to reinvest in: Proven history 18,000+ agents/ brokers just - People in the U.S. Benefits - Systems Abi

  30. Slide 30: Platforms in Place for Bolt-On M&A

    PLATFORMS IN PLACE FOR BOLT-ON M&A 30 ©2023 ARTHUR J. GALLAGHER & CO.

  31. Slide 31: International Correspondent Broker Network

    INTERNATIONAL CORRESPONDENT BROKER NETWORK Client Capabilities in 130 Countries 31 ©2023 ARTHUR J. GALLAGHER & CO.

  32. Slide 32: Productivity and Quality

    PRODUCTIVITY AND QUALITY 32 ©2023 ARTHUR J. GALLAGHER & CO.

  33. Slide 33: Optimizing Productivity & Quality

    OPTIMIZING PRODUCTIVITY & QUALITY Utilizing Harmonizing Centers of Agency Excellence Systems Leveraging Investing in Sales Force Business Management Intelligence, Tools CONTINUE TO CONTINUE TO Data & IMPROVE IMPROVE Analytics PRODUCTIVITY & PRODUCTIVITY Utilizing Sourcing & QUALITY QUALITY Standardi

  34. Slide 34: Behind the Scenes Efforts

    B̀EHIND THE SCENES EFFORTS Centers of Excellence Update Claims support Approximately 9,700 associates Policy checking & issuance • Increase quality • Improve process • Control operating costs Accounting support • Reduce E&O costs Analytics & • Easy for new acquisitions to leverage Robotics Renewal s

  35. Slide 35: Benefits from Centers of Excellence

    BENEFITS FROM CENTERS OF EXCELLENCE Reduce Costs Foster Innovation Increase Speed to Market Focus on Core Improve Quality 35 ©2023 ARTHUR J. GALLAGHER & CO.

  36. Slide 36: Reduced Adjusted Operating Expense Ratio

    REDUCED ADJUSTED OPERATING EXPENSE RATIO Brokerage Risk Management 21% 28% 20% 27% 19% 26% 18% 25% 17% 24% 16% 23% 15% 22% 14% 21% 13% 20% 12% 19% 20.8% 13.5% 27.0% 20.4% 11% 18% 2008 3Q 2023 - TTM 2008 3Q 2023 - TTM See Cautionary Note on page 2 regarding the new revenue recognition accounting stan

  37. Slide 37: Brokerage & Risk Management Adjusted EBITDAC Margin

    BROKERAGE & RISK MANAGEMENT ADJUSTED EBITDAC MARGIN 34.0% 32.0% 30.0% 28.0% 26.0% 24.0% 22.0% 20.0% 20.4% 21.2% 22.1% 23.6% 24.5% 25.3% 25.6% 26.0% 26.9% 30.7% 31.8% 32.1% 32.5% 18.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 TTM 9/30/2023 See Cautionary Note on page 2 regarding th

  38. Slide 38: Awards & Recognitions

    Top 10 Best Insurance Employers – 2023 (RPS) INSURANCE BUSINESS AMERICA Awards & Platinum Bell Seal Certification for Workplace Mental Health– 2023 MENTAL HEALTH AMERICA Recognitions America’s Best Large Employers – 2023 FORBES MAGAZINE Best Place to Work for LGBTQ+ Equality – 2022 HUMAN RIGHTS CAMP

  39. Slide 39: Maintain Unique Culture

    MAINTAIN UNIQUE CULTURE 39 ©2023 ARTHUR J. GALLAGHER & CO.

  40. Slide 40: Maintain Unique Culture

    MAINTAIN UNIQUE CULTURE The Gallagher Way since 1927 40 ©2023 ARTHUR J. GALLAGHER & CO.

  41. Slide 41: One of the World's Most Ethical Companies

    ONE OF THE WORLD’S MOST ETHICAL COMPANIES® Gallagher recognized by Ethisphere® Institute 13 times • Industry-leading com m itment to ethics and dedication to integrity • Chosen for: • Prom oting ethical business standards and practices • Exceeding legal com pliance standards • Innovating to benefit

  42. Slide 42: Why Invest?

    WHY INVEST? You Believe Our Company Has: • Right management GALLAGHER IS • Unique culture WELL-POSITIONED • Proven growth strategy FOR FUTURE GROWTH • Continuing M&A opportunities • Increasing productivity/quality • Good use of leverage • Strong balance sheet • Excellent return to shareholders 42 ©2

  43. Slide 43: Why Invest? We Are Just Getting Started!

    WHY INVEST? WE ARE JUST GETTING STARTED! 2900% 2,829% AJG 2400% 1900% 1400% 900% 400% 357% S&P 500 -100% Source f or data: Bloomberg. Total returns from 1/1/2000 – 9/30/2023 include reinvestment of dividends. 43 ©2023 ARTHUR J. GALLAGHER & CO.

  44. Slide 44: Additional Information: Ray Iardella

    Additional Information: Ray Iardella Vice President, Investor Relations [email protected] Phone: 630.285.3661 ©2023 ARTHUR J. GALLAGHER & CO.

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