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Arthur J. Gallagher Beats on Q4 Earnings as Revenues Rise

Arthur J. Gallagher & Co . AJG reported fourth-quarter 2015 adjusted net earnings of 59 cents per share that surpassed the Zacks Consensus Estimate by 4 cents. The bottom line improved 9.3% year over year on top-line growth.

Including non-recurring items, net income came in at 35 cents per share, up 12.9% year over year.

Operational Update

Total revenue amounted to $1.3 billion, up 7.3% year over year driven by better performance by its Risk Management and Brokerage segments. Revenues missed the Zacks Consensus Estimate of $1.4 billion.

Total commissions and fees earned improved 7.2% year over year to $971.2 million in the quarter.

Arthur J. Gallagher & Co.'s total expense increased 8.3% year over year to $1.3 billion during the quarter. The rise stemmed from an increase in compensation cost, a rise in operating expenses and higher cost of revenues from clean coal activities.

Full-Year Highlights

Arthur J. Gallagher's 2015 adjusted net earnings of $2.59 per share surpassed the Zacks Consensus Estimate by 5 cents. Earnings improved 12% year over year.

Revenues came in at $5.4 billion, up 17.4% over 2014.

Segment Results

Brokerage : The segment reported adjusted revenues of $852.1 million, up 11% year over year. The improvement was driven by a 2.4% increase in base organic commissions and fees.

Total expense escalated 12% year over year.

Adjusted earnings before interest, tax, depreciation and amortization (EBITDAC) improved 12% year over year to $210.9 million.

Risk Management : Total adjusted revenue amounted to $181.3 million, up 8% year over year. Also, organic fees rose 10.5% year over year.

Total expense decreased 2.5% year over year.

Adjusted EBITDA rose 17% year over year to $31.1 million.

Financial Update

Total assets at 2015 end amounted to $10.9 billion, up 9% from $10.0 billion at year-end 2014.

Cash and cash equivalents increased 11.8% to $1.9 billion at year-end 2015 from $1.6 million at the end of 2014.

Shareholders' equity came in at $3.7 billion as of Dec 31, 2015, up 12% from Dec 31, 2014.

Acquisition Update

During the fourth quarter, the company closed 15 acquisitions with annualized revenues of over $46 million, taking the full-year tally to 42 acquisitions closed, with estimated annualized revenues of $223 million.

Zacks Rank and Performance of Other Players

Arthur J. Gallagher presently carries a Zacks Rank #3 (Hold).

The bottom line at The Travelers Companies, Inc. TRV and Aflac Incorporated AFL outperformed their respective Zacks Consensus Estimate in the fourth quarter. The same at RLI Corp. RLI missed our expectation.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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