Arthur J. Gallagher & Co. Announces Record First Quarter Results

Apr 17, 2001, 01:00 ET from Arthur J. Gallagher & Co.

    ITASCA, Ill., April 17 /PRNewswire/ -- Arthur J. Gallagher & Co.
 (NYSE:   AJG) today announced record first quarter results.
     Total revenues for the three month period ended March 31, 2001 increased
 17% from $169,208,000 to $198,812,000.  Net earnings for the first quarter of
 2001 were $23,462,000, an increase of 40% from net earnings of $16,817,000
 recorded in the first quarter of 2000.  Quarterly net earnings per share were
 $.27 compared to $.20 for the first quarter of 2000, a 35% increase.
     Michael J. Cloherty, Executive Vice President, stated that the Company was
 extremely pleased with its record results to date and offered the following
 commentary for the first quarter:
     Commissions continue to benefit from the hardening of the insurance
 marketplace resulting in 10% growth for the quarter.  Achieving this increase
 despite a flattening of the Company's national revenue-sharing commissions is
 a tribute to the Company's new business initiatives and client loyalty.
     Fee income increased 19%, again reflecting increased new business
 production as well as outstanding account retention.  Our risk management
 divisions continue their record of exceptional revenue growth as the hardening
 insurance marketplace and premium rate increases force insurance buyers to
 seek alternative risk management techniques to control their cost of risk.
     Investment income increased 113% for the quarter primarily due to the
 outstanding results in the unconsolidated equity investment portfolio of AJG
 Financial Services.  Birchwood Acres, the Company's land development project
 in Florida, completed its first real estate transaction, and the Company's
 proportionate share of the income was $3,000,000 for the quarter.  The Company
 also recognized a gain of $800,000 in the quarter on the sale of a qualified
 low income housing partnership and in addition, a $2,400,000 gain on the sale
 of a benefit administration book of business.  Mr. Cloherty noted that the
 Company's return on its strategic investments is expected to continue to
 fluctuate over the remaining quarters of 2001 as equity partners continue to
 seek marketshare and new sources of income production.
     Salaries and Employee Benefits/Other Operating Expenses were higher than
 usual in the quarter reflecting increases in incentive compensation related to
 the significantly improved investment results, the Company's tax-advantaged
 investment strategies discussed below, and the increase in new commission and
 fee income.  The previously announced expenses related to the operations of
 synthetic fuel facilities, performance-related investment fees, costs of
 professional services, and start up expenses also contributed to the higher
 than usual increases during the period.
     The Company's income tax rate was reduced year-to-date from the 34%
 recorded in the first quarter of 2000 to 20% during the first quarter of 2001
 reflecting tax credits earned from the Company's previously announced
 partnerships in synthetic fuel production.  The Company expects such credits
 and the related operational expenses to grow as production at the partnership
 facilities continues to increase.
     Arthur J. Gallagher & Co., an international insurance brokerage and risk
 management services firm, is headquartered in Itasca, Illinois, has offices in
 nine countries and does business in more than 100 countries around the world
 through a network of correspondent brokers and consultants.  Gallagher is
 traded on the New York Stock Exchange under the symbol AJG.
     Except for the historical information and discussions, statements
 contained herein may constitute "forward-looking statements" within the
 meaning of the Private Securities Litigation Reform Act of 1995.  These
 statements involve a number of risks, uncertainties and other factors that
 could cause actual results to differ materially, as discussed in the Company's
 filings with the Securities and Exchange Commission.
 
 
                           Arthur J. Gallagher & Co.
                         Comparative Financial Analysis
                      (In Thousands Except Per Share Data)
 
                                                  Three months ended March 31,
                                                     2001              2000 *
     Revenues:
       Commissions                                 $107,231           $97,679
       Fees                                          76,383            64,386
       Investment income and other:
         Investment income                            5,629             5,145
         Income from equity investments,
          partnerships and joint ventures             6,758             1,380
         Other income                                 2,811               618
           Total investment income and
            other                                    15,198             7,143
             Total revenues                         198,812           169,208
 
     Expenses:
       Salaries and employee benefits               105,912            91,330
       Other operating expenses                      63,573            52,211
             Total expenses                         169,485           143,541
 
     Earnings before income taxes                    29,327            25,667
     Provision for income taxes                       5,865             8,850
             Net earnings                           $23,462           $16,817
 
     Net earnings per common and common
      equivalent share                                 $.27              $.20
     Weighted average number of common
      and common equivalent shares outstanding       86,063            82,398
 
     * Restated for poolings of interests.
 
 

SOURCE Arthur J. Gallagher & Co.
    ITASCA, Ill., April 17 /PRNewswire/ -- Arthur J. Gallagher & Co.
 (NYSE:   AJG) today announced record first quarter results.
     Total revenues for the three month period ended March 31, 2001 increased
 17% from $169,208,000 to $198,812,000.  Net earnings for the first quarter of
 2001 were $23,462,000, an increase of 40% from net earnings of $16,817,000
 recorded in the first quarter of 2000.  Quarterly net earnings per share were
 $.27 compared to $.20 for the first quarter of 2000, a 35% increase.
     Michael J. Cloherty, Executive Vice President, stated that the Company was
 extremely pleased with its record results to date and offered the following
 commentary for the first quarter:
     Commissions continue to benefit from the hardening of the insurance
 marketplace resulting in 10% growth for the quarter.  Achieving this increase
 despite a flattening of the Company's national revenue-sharing commissions is
 a tribute to the Company's new business initiatives and client loyalty.
     Fee income increased 19%, again reflecting increased new business
 production as well as outstanding account retention.  Our risk management
 divisions continue their record of exceptional revenue growth as the hardening
 insurance marketplace and premium rate increases force insurance buyers to
 seek alternative risk management techniques to control their cost of risk.
     Investment income increased 113% for the quarter primarily due to the
 outstanding results in the unconsolidated equity investment portfolio of AJG
 Financial Services.  Birchwood Acres, the Company's land development project
 in Florida, completed its first real estate transaction, and the Company's
 proportionate share of the income was $3,000,000 for the quarter.  The Company
 also recognized a gain of $800,000 in the quarter on the sale of a qualified
 low income housing partnership and in addition, a $2,400,000 gain on the sale
 of a benefit administration book of business.  Mr. Cloherty noted that the
 Company's return on its strategic investments is expected to continue to
 fluctuate over the remaining quarters of 2001 as equity partners continue to
 seek marketshare and new sources of income production.
     Salaries and Employee Benefits/Other Operating Expenses were higher than
 usual in the quarter reflecting increases in incentive compensation related to
 the significantly improved investment results, the Company's tax-advantaged
 investment strategies discussed below, and the increase in new commission and
 fee income.  The previously announced expenses related to the operations of
 synthetic fuel facilities, performance-related investment fees, costs of
 professional services, and start up expenses also contributed to the higher
 than usual increases during the period.
     The Company's income tax rate was reduced year-to-date from the 34%
 recorded in the first quarter of 2000 to 20% during the first quarter of 2001
 reflecting tax credits earned from the Company's previously announced
 partnerships in synthetic fuel production.  The Company expects such credits
 and the related operational expenses to grow as production at the partnership
 facilities continues to increase.
     Arthur J. Gallagher & Co., an international insurance brokerage and risk
 management services firm, is headquartered in Itasca, Illinois, has offices in
 nine countries and does business in more than 100 countries around the world
 through a network of correspondent brokers and consultants.  Gallagher is
 traded on the New York Stock Exchange under the symbol AJG.
     Except for the historical information and discussions, statements
 contained herein may constitute "forward-looking statements" within the
 meaning of the Private Securities Litigation Reform Act of 1995.  These
 statements involve a number of risks, uncertainties and other factors that
 could cause actual results to differ materially, as discussed in the Company's
 filings with the Securities and Exchange Commission.
 
 
                           Arthur J. Gallagher & Co.
                         Comparative Financial Analysis
                      (In Thousands Except Per Share Data)
 
                                                  Three months ended March 31,
                                                     2001              2000 *
     Revenues:
       Commissions                                 $107,231           $97,679
       Fees                                          76,383            64,386
       Investment income and other:
         Investment income                            5,629             5,145
         Income from equity investments,
          partnerships and joint ventures             6,758             1,380
         Other income                                 2,811               618
           Total investment income and
            other                                    15,198             7,143
             Total revenues                         198,812           169,208
 
     Expenses:
       Salaries and employee benefits               105,912            91,330
       Other operating expenses                      63,573            52,211
             Total expenses                         169,485           143,541
 
     Earnings before income taxes                    29,327            25,667
     Provision for income taxes                       5,865             8,850
             Net earnings                           $23,462           $16,817
 
     Net earnings per common and common
      equivalent share                                 $.27              $.20
     Weighted average number of common
      and common equivalent shares outstanding       86,063            82,398
 
     * Restated for poolings of interests.
 
 SOURCE  Arthur J. Gallagher & Co.