The operator introduces the conference call and reminds participants of the risks and uncertainties associated with forward-looking statements. The CEO, Patrick Gallagher, Jr., and CFO, Doug Howell, are present on the call along with division heads. The company had a strong third quarter with 22% revenue growth, 10.5% organic growth, and a 22% increase in adjusted earnings per share. They also completed 12 mergers and achieved a reported net earnings margin of 15.5% and adjusted EBITDAC margin of 30.8%. The team had a great quarter overall.

In the second paragraph, the speaker addresses recent leadership appointments and reassures that they will continue as CEO and Chairman. They then move on to discussing the company's quarterly results, with a focus on the Brokerage segment. They provide details on revenue growth, organic growth, and adjusted EBITDAC, and mention that they saw growth in all regions of the world. They also highlight the performance of their retail brokerage operations in the US, UK, Canada, and Australia and New Zealand.

In the third quarter, Gallagher had strong new business wins and renewal premium increases. Their global employee benefit brokerage and consulting business saw solid results, while their reinsurance, wholesale, and specialty businesses also performed well. The primary insurance market saw a 10% increase in renewal premiums, with increases across all major geographies and most product lines. The reinsurance market remains stable, with carriers seeking rate increases to maintain profitability. Gallagher's role as a broker is to help clients find the best coverage while mitigating price increases.

The property reinsurance market is expected to see adequate capacity, firm pricing, rising insured values, and increased demand. Reinsurers are cautious about risk in the casualty market, but adequate capacity will still be available at firmer pricing. U.S. insurance carriers are facing challenges such as weather events, social inflation, and rising reinsurance costs, but their business activity remains strong. The recent Buck acquisition has been successful and the HR Consulting, Retirement, and Benefits business is well positioned for the 2024 enrollment period.

In summary, the company had a successful third quarter, with brokerage organic growth expected to be around 9%. They completed 12 new tuck-in brokerage mergers and have signed agreements to acquire two regional bank brokerage businesses. The Risk Management segment, Gallagher Bassett, also had a strong quarter with organic growth of 17.9% and an adjusted EBITDAC margin of 20.4%. Looking ahead, the company expects continued growth and strong margins in both segments. The company also values its bedrock culture.

The speaker, Doug Howell, will discuss the third quarter organic and margins by segment, as well as provide insights on the fourth quarter and full year '24. He will also mention typical modeling helpers and provide comments on cash, M&A, and capital management. The all-in brokerage organic was 9.3%, but would be around 12% if interest income was included.

The company had better results than expected due to strong performance in reinsurance and London specialty. Base commission and fee organic growth was 9.6%, while supplementals and contingents were up 5%. Despite some softness related to the Maui fires and slight increase in expected insurance carrier loss ratios, the company still achieved fantastic results with 9.3% total organic growth. The global renewal premium increases were around 10%, similar to the second quarter. However, there will be a point of organic headwind in the fourth quarter due to an accounting change. Adjusting for this, the company expects underlying organic growth of 9%, but the headline might appear to be 8%. Overall, the company is on track to achieve upper 8s to 9% organic growth for the full year.

The company's adjusted EBITDAC margin for the quarter was 32.4%, which exceeded expectations. Organic growth and incremental interest income contributed to the expansion, while M&A and technology investments had a slight impact. The company expects 40-50 basis points of expansion in the fourth quarter and is projecting 30-40 basis points of expansion for the full year '23. Next year, the company anticipates 7-9% organic growth and potential margin expansion of 50 basis points. The first quarter of '24 will have a tougher year-over-year comparison due to the roll-in impact of Buck.

The Risk Management segment had a strong finish to the third quarter, with 17.9% organic growth and 20.4% margins. This was due to higher claim counts from new business wins. For the fourth quarter, organic growth is expected to be around 13% and margins just above 20%. This would result in a record year for Gallagher Bassett. For 2024, early estimates point towards 9-11% organic growth and 20% margins. The corporate segment also performed well, with adjusted third quarter results coming in $0.03 better than expected due to lower borrowings and FX remeasurement. There were also some adjustments to amortization and depreciation expenses. Updated numbers for the fourth quarter and 2024 will be provided during the December IR Day.

The CFO discusses the corporate segment outlook for the fourth quarter, noting an increase in interest and banking expense due to anticipated borrowing. They also mention the $670 million in tax credit carryforwards and the $153 million in rollover revenues for the third quarter, which exceeded expectations. The CFO also mentions the potential for future M&A, with available cash on hand, strong cash flow, and the possibility of using stock to fund smaller acquisitions. They are also mindful of maintaining their investment-grade rating and estimate $3.5 billion in capacity for future M&A funding in 2024.

The speaker is congratulating Patrick and Tom on their new roles and discussing the company's positive outlook for the year. They are ready to answer questions and have a call scheduled for December to provide more information. They expect organic growth of 7-9% and a 50 bps margin expansion in 2024, with potential impacts from investment income and recent acquisitions. The next question is from Elyse Greenspan of Wells Fargo.

Elyse Greenspan asks about the growth of the reinsurance business and what the company is assuming for next year. Patrick Gallagher says the team has exceeded expectations and the business momentum will be good, but he cannot give an exact answer yet. Douglas Howell adds that they will provide more information in December. There is also an earn-out associated with the transaction.

The M&A environment is robust and there are no surprises in terms of upcoming deals. The Eastern transaction may be delayed due to an HSR filing. The company expects to have a good estimate of their acquisition earn-out by December. The market has not seen any significant changes in buyers or deals.

Patrick Gallagher discusses competition in the private equity market and the potential reasons for banks to exit. He also mentions the potential for M&A opportunities with aging business owners and the company's robust pipeline. Jon Newsome asks about the shift between excess lines and standard carriers.

Patrick Gallagher, CEO of Arthur J. Gallagher & Co., discusses the current state of the excess and surplus (E&S) market and the company's recent acquisitions of Cadence and Eastern banks. He mentions that the E&S market is growing and submissions are at an all-time high, particularly in the property line. He also notes that terms and conditions are not softening and business is not flowing back to primary insurers. In response to a question about the company's multiples, CFO Douglas Howell explains that the disclosed multiples of 10 to 11x EBITDAC do not include the larger transactions of Cadence and Eastern, which typically have higher multiples. The company is still seeing great opportunities for tuck-in acquisitions at slightly higher than 10x.

The speaker discusses the potential for acquiring smaller insurance agencies at a 10-12x multiple due to the value of future opportunities within Gallagher. They also mention the potential for synergies in larger transactions, but note that the focus is on acquiring firms with a similar culture and community focus.

The speaker discusses recent interactions with Cadence people and their excitement about the company's ability to help them move upstream and close bigger deals. They also mention their interest in potential acquisitions, but emphasize the importance of cultural fit.

The speaker is discussing a potential business deal around the table, and mentions that XYZ did not sell to them. They explain that some deals would interest them, but they would have to navigate a cultural shift. The speaker then brings up a previous decision not to join Gallagher, citing resistance to change as the main reason. They also mention that their competition has been offering cash incentives without requiring any changes, but now this strategy is causing issues. The speaker then addresses a question about the Cadence deal, confirming that it has a high margin and mentioning tax benefits.

The company is expecting to receive $250 million in deductions over the next 15 years, which will benefit them greatly. This may not have a big impact on other companies, but it is a win-win situation for both the buyer and seller. The company also has $670 million in clean energy credits available, which will have a similar effect as another free Cadence. The new appointments at the company may lead to promotions for other managers as well. These promotions were not a secret within the company.

During a conference call, a question was asked about the corporate segment profit for 2024. The speaker, Douglas Howell, stated that they haven't given any guidance yet and suggested waiting until December. He also mentioned that it is difficult to make predictions due to factors such as FX remeasurement gains, acquisition costs, and tax restructuring. The speaker, Patrick Gallagher, also mentioned that there is pressure on medical costs, with full insured renewals showing 7-9% increases and stop-loss market averages at 17-18%.

The speaker discusses the company's growth numbers, stating that they are seeing about 8-9% growth in both work comp and health insurance in the United States. They attribute this growth to both the macro environment and their efforts to gain market share. They have been measuring their market share gains and have identified 32 verticals where they are seeing significant growth. They also mention that they compete with smaller companies most of the time and have a clear understanding of their business in different areas. They expect their growth to continue next year, with a focus on specific verticals.

The paragraph discusses the growth rate and share of new business in Gallagher's verticals compared to the general book. The company's acquisitions have been successful in increasing share and bringing together relationships and capabilities. The estimated 7% organic growth next year is expected to come from net new business wins, exposure units, and rate increases. The recent Cadence, Eastern, and M&T Bank broker deals are also mentioned.

The speaker addresses a question about the sustainability of the company's organic growth, specifically in relation to their relationship with Cadence Bank. He also discusses the potential impact of larger insurance brokers getting into the wholesale business, but states that it would not affect Gallagher significantly as their wholesale business is not entirely reliant on the company's placements.

The speaker explains that if a company chooses to enter the market, it would have no impact on their company. They also mention the benefits of being part of Gallagher and how acquisitions can quickly take advantage of the resources. However, the success of using these resources may vary and may not immediately show in the company's organic growth. The speaker also mentions that the company's organic growth may be understated due to not considering new business wins from mergers in the first year.

The company had a successful merger partner in September, which impacted their acquisition revenues. They have shown strong growth and capabilities during their Investor Relations Day. The company does not have any seasonal patterns and their P&C business is steady throughout the year.

The company is not experiencing large fluctuations in its reinsurance and employee benefits businesses. The recent acquisitions are expected to complement their existing strengths in certain industries and regions. Corporate expenses were high due to tax and litigation items, but on an adjusted basis, expenses were down. There are no significant underlying changes in the company's expense structure.

Patrick Gallagher thanks everyone for joining the call and acknowledges the hard work of their 50,000 colleagues around the world. He expresses excitement for future prospects and the company's ability to increase productivity and quality. He also mentions an upcoming IR Day in December. The operator then concludes the call.

This summary was generated with AI and may contain some inaccuracies.