Arthur J Gallagher & Co.
) reported first-quarter 2014 operating net earnings of 39 cents
a share that outperformed the Zacks Consensus Estimate by 52%.
However, the result increased from the prior-year quarter number
The improvement was driven by top-line growth at Arthur J
Gallagher & Co.
Total revenue amounted to $915 million, significantly surpassing
the Zacks Consensus Estimate by 15.8%. Results also jumped 36%
year over year. Top-line growth primarily resulted from better
results in both its Risk Management and Brokerage segments.
Total commissions and fees earned improved 18% year over year to
$668.7 million in the quarter.
Arthur J Gallagher & Co.'s total expense also increased 38%
year over year to $868.7 million during the quarter. The rise in
expenses was mainly attributable to increased compensation cost,
operating expenses as well as significantly higher cost of
revenues from clean coal activities.
This segment of Arthur J Gallagher & Co. reported total
revenue of $567.6 million that increased 24% year over year. This
was driven by a 3.3% improvement in base organic commissions and
fees during the reported quarter.
Total expense escalated 25% year over year.
Adjusted earnings before interest, tax, depreciation and
amortization (EBITDA) improved 34% year over year to $110.7
Risk Management Segment
Total revenue in this segment amounted to $160 million increasing
7% year over year. Also, organic fees rose 6% year over year
during the same time period.
Total expense during the first quarter increased 6.7% year over
Adjusted EBITDA increased 8% year over year to $26.0 million.
This segment reported total revenue of $186.4 million that
increased nearly three times year over year.
Expenses more than doubled to $209.5 million in the quarter.
Loss before interest, tax, depreciation and amortization was $6.0
million, wider than the loss of $8.5 million incurred in the
Total assets as of first-quarter end stood at $7.28 billion
increasing 6.1% from the 2013-end level of $6.86 billion.
Cash and cash equivalents improved 25% to $739.2 million at
first-quarter end from $298.1 million at the end of 2013.
Recently, the company announced an underwritten public offering
of 19 million common shares with an intention to grant a 30-day
option to purchase another 2.85 million common shares.
Arthur J Gallagher & Co. intends to deploy the net proceeds
to finance a portion of its recent Wesfarmers insurance brokerage
The company announced ten mergers with annualized revenues of
approximately $153.6 million.
Of late, the company also inked a deal to acquire the Wesfarmers
Insurance Brokerage operations. The transaction includes
the OAMPS businesses in Australia and the United Kingdom, Crombie
Lockwood in New Zealand and the associated premium funding
operations. Pending regulatory approvals, the transaction is
expected to culminate in the second or third quarter of 2014. The
acquisition will help it fortify its presence in Australia and
Arthur J Gallagher & Co. presently carries a Zacks Rank #3
(Hold). Other better-ranked insurance stocks worth reckoning
Erie Indemnity Co.
Marsh & McLennan
). While Alleghany Corp. sports a Zacks Rank #1 (Strong Buy),
Erie Indemnity and Marsh & McLennan carry a Zacks Rank #2
GALLAGHER ARTHU (AJG): Free Stock Analysis
ERIE INDEMNITY (ERIE): Free Stock Analysis
MARSH &MCLENNAN (MMC): Free Stock Analysis
ALLEGHANY CORP (Y): Free Stock Analysis
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