Arthur J. Gallagher & Co. · NYSE:AJG

Arthur J. Gallagher & — Investor Presentation (March 2024)

50 slides from Arthur J. Gallagher &'s investor presentation, March 2024

  1. Slide 1: March 2024 Investor Presentation

    March 2024 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 2016 & INFORMATION ON FORWARD- LOOKING STATEMENTS Revenue Recognition Accounting Standard The financial information in the slides that follow for any period prior to 2016 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) 52,118 Employees 1.0% Yield (3) $ 0.60 2024 Q1 Dividend/Share $9.9B Total Adjusted Reve

  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 • Property/Casualty and employee benefits BROKERAGE • Retail, wholesale and reinsurance SEGMENT • Middle-market commercial focus and also serve small business, risk management

  7. Slide 7: Diverse Revenue Base

    DIVERSE REVENUE BASE Brokerage RETAIL BENEFITS INTERNATIONAL DOMESTIC RETAIL P/C 22% 40% 51% 60% WHOLESALE 15% REINSURANCE 12% Risk Management WORKERS’ LIABILITY DOMESTIC COMPENSATION INTERNATIONAL 31% 84% 62% 16% PROPERTY 7% Brokerage and Risk Management segments for the trailing twelve month perio

  8. Slide 8: Brokerage & Risk Management Segments Combined

    BROKERAGE & RISK MANAGEMENT SEGMENTS COMBINED Adjusted Revenues Organic Revenues $10,000 11.0% 19% $9,000 10.0% $8,000 9.0% $8,353 $9,915 10.2% 9.8% $7,000 8.0% FY 2022 FY 2023 FY 2022 FY 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $3,500 33.0% 21% +50 bpts $3,000 32.5% $2,500 32.0% $2,673 $3,221

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

    BROKERAGE & RISK MANAGEMENT SEGMENTS COMBINED – 5 YR VIEW Adjusted Revenues $12,000 $9,000 15% CAGR $6,000 $5,035 $9,915 $3,000 FY 2018 FY 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $3,300 34.0% 20% CAGR +650 bpts $2,400 30.0% $1,500 26.0% $1,311 $3,221 26.0% 32.5% $600 22.0% FY 2018 FY 2023 FY 2

  10. Slide 10: Brokerage Segment

    BROKERAGE SEGMENT Adjusted Revenues Organic Revenues $9,000 10.0% 19% 9.0% $8,000 $7,000 8.0% $7,267 $8,628 9.7% 8.9% $6,000 7.0% FY 2022 FY 2023 FY 2022 FY 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $3,200 34.6% +30 bpts $2,800 20% 34.4% 34.2% $2,400 34.0% $2,473 $2,963 34.0% 34.3% $2,000 33.8%

  11. Slide 11: Brokerage Segment – 5 Yr View

    BROKERAGE SEGMENT – 5 YR VIEW Adjusted Revenues $9,000 $7,000 15% CAGR $5,000 $4,237 $8,628 $3,000 FY 2018 FY 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $3,000 37.0% 20% CAGR +660 bpts $2,200 33.0% $1,400 29.0% $1,172 $2,963 27.7% 34.3% $600 25.0% FY 2018 FY 2023 FY 2018 FY 2023 Brokerage segment

  12. Slide 12: Risk Management Segment

    RISK MANAGEMENT SEGMENT Adjusted Revenues Organic Revenues $1,300 17.0% $1,200 18% 15.0% $1,100 13.0% $1,087 $1,287 13.3% 15.8% $1,000 11.0% FY 2022 FY 2023 FY 2022 FY 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $270 20.5% +150 bpts $240 29% 19.5% $210 18.5% $201 $258 18.5% 20.0% $180 17.5% FY 202

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

    RISK MANAGEMENT SEGMENT – 5 YR VIEW Adjusted Revenues $1,400 10% CAGR $1,100 $800 $798 $1,287 $500 FY 2018 FY 2023 Adjusted EBITDAC Adjusted EBITDAC Margin $280 21.0% +260 bpts $220 13% CAGR 19.0% $160 17.0% $139 $258 17.4% 20.0% $100 15.0% FY 2018 FY 2023 FY 2018 FY 2023 Risk Management segment for

  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 $867 $0 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 *2023 The amounts above represent the outstanding deferred tax asset associated with tax credit carryforwards on our bala

  15. Slide 15: Dividends Per Share

    DIVIDENDS PER SHARE $2.40* $2.40 $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 2024E *Indicated – On January 24, 2024, Gallagher’s Board of Directors declared a $0.60 per share first quarter 2024 dividend. 15 ©2023 ARTHUR J. GALLAGHER & CO.

  16. Slide 16: Full Year 2023 M&A Highlights

    FULL YEAR 2023 M&A HIGHLIGHTS $885M 51 in estimated annual new merger partners acquired revenues Fair valuations Focus on tuck-in opportunities Brokerage and Risk Management segments for the full year ended December 31, 2023 16 ©2023 ARTHUR J. GALLAGHER & CO.

  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 170 177 160 150 140 Rates 130 134 120 110 100 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% 15.6% 15.0% 14.4% 9.5% 9.8% 9.0% 9.7% 8.8% 10.0% 8.1% 5.6% 6.0% 5.5% 8.6% 4.8% 4.4% 3.8% 3.8% 4.4% 7.5% 7.5% 5.0% 3.1% 5.6% 1.9% 1.9% 4.4% 3.8% 3.4% 3.1% 2.0% -1.7% 1.8% 0.0% -0.3% 0.2% 0.

  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 Manufacturing Automotive Marine Aviation Nonprofit Construction Personal Energy Private Client Entertainment Public Sector Environmental Real Estate/ Hospitality Equity Advisors Religious Financial Institutions Restaurant Food/Agribusiness Retail and Servic

  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 $1,000 $900 $800 $700 $500 Reinsurance Non-U.S. Property & Casualty $400 Employee Benefits $300 Risk Management U.S. Property & Casualty $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

    BEHIND THE SCENES EFFORTS Centers of Excellence Update Claims support Approximately 10,600 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% 19.9% 11% 18% 2008 2023 2008 2023 See Cautionary Note on page 2 regarding the new revenue recognition accounting standard as the full y

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

    BROKERAGE & RISK MANAGEMENT ADJUSTED EBITDAC MARGIN 33.0% 31.0% 29.0% 27.0% 25.0% 23.0% 21.0% 19.0% 20.3% 21.1% 22.2% 23.6% 24.5% 25.0% 25.6% 26.0% 26.9% 30.7% 31.8% 32.1% 32.5% 17.0% 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 See Cautionary Note on page 2 regarding the new rev

  38. Slide 38: Awards & Recognitions

    Claims Specialist – 2023 (Gallagher Bassett) CAPTIVE REVIEW Elite 50 Internships – 2023 RISE 50 Elite Awards & Top 10 Best Insurance Employers – 2023 (RPS) INSURANCE BUSINESS AMERICA Recognitions Platinum Bell Seal Certification for Workplace Mental Health– 2023 MENTAL HEALTH AMERICA America’s Best

  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: 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 41 ©2

  42. Slide 42: Why Invest? We Are Just Getting Started!

    WHY INVEST? WE ARE JUST GETTING STARTED! 2900% 2,796% AJG 2400% 1900% 1400% 900% 410% 400% S&P 500 -100% Source for data: Bloomberg. Total returns from 1/1/2000 – 12/31/2023 include reinvestment of dividends. 42 ©2023 ARTHUR J. GALLAGHER & CO.

  43. Slide 43: Non-GAAP Reconciliations – Organic Revenues

    NON-GAAP RECONCILIATIONS – ORGANIC REVENUES Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Organic Revenues (Non-GAAP) Year 2022 Year 2023 Brokerage Segment 2021 2022 2022 2023 Total commissions, fees, supplemental revenues and contin

  44. Slide 44: Non-GAAP Reconciliations – Revenues, As Adjusted

    NON-GAAP RECONCILIATIONS – REVENUES, AS ADJUSTED Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Revenues, as adjusted (Non-GAAP) Brokerage Segment 2022 2023 Brokerage revenue, as reported $ 7,303.8 $ 8,637.2 Net gains on divestitures

  45. Slide 45: Non-GAAP Reconciliations – EBITDAC & EBITDAC Margin, As Adjusted

    NON-GAAP RECONCILIATIONS – EBITDAC & EBITDAC MARGIN, AS ADJUSTED Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Reported GAAP Net Earnings to EBITDAC, as Adjusted (Non-GAAP) Brokerage Segment 2022 2023 Combined Brokerage and Risk Mana

  46. Slide 46: Non-GAAP Reconciliations – Revenue, As Adjusted

    NON-GAAP RECONCILIATIONS – REVENUE, AS ADJUSTED Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Revenues, as adjusted (Non-GAAP) Brokerage Segment 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 Brokerage revenue, as r

  47. Slide 47: Non-GAAP Reconciliations – EBITDAC & EBITDAC Margin, As Adjusted

    NON-GAAP RECONCILIATIONS – EBITDAC & EBITDAC MARGIN, AS ADJUSTED Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Reported GAAP Net Earnings to EBITDAC, as Adjusted (Non-GAAP) Brokerage Segment 2011 2012 2013 2014 2015 2016 2017 2018 20

  48. Slide 48: Non-GAAP Reconciliations – Organic Revenue Ex Contingents

    NON-GAAP RECONCILIATIONS – ORGANIC REVENUE EX CONTINGENTS Brokerage Segment Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Organic Revenues (Non-GAAP) CY CY CY CY CY CY CY CY CY CY CY CY Brokerage Segment - Current Year (CY) 2001 2002 2003 2004 2005 2006 2007 2008 2009 201

  49. Slide 49: Non-GAAP Reconciliations – Operating Expense Ratio

    NON-GAAP RECONCILIATIONS – OPERATING EXPENSE RATIO Brokerage and Risk Management Segments Reported GAAP to Adjusted Non-GAAP Reconciliations (dollars in millions): Reported GAAP Operating Expense to Operating Expense, as Adjusted (Non-GAAP) Brokerage Segment 2008 2023 Brokerage revenue, as reported

  50. Slide 50: 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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