Good afternoon, and welcome to Arthur J. Gallagher and Company's 4th Quarter 2024 Earnings Conference Call. Participants have been placed on listen-only mode. Your lines will be open for questions following the presentation. Today's call is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during this conference call, including answers given in response to questions, may constitute follow-looking statements within the meaning of the securities law. The company does not assume any obligation to update information or forward-looking statements provided on this call. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the information concerning forward-looking statements and risk factors sections contained in the company's most recent 10-K, 10-Q, and 8-K filings for more details on such risks and uncertainties. In addition, for reconciliations of the non-GAAP measures discussed on this call, as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the company's website. It is now my pleasure to introduce J. Patrick Gallagher, Jr., Chairman and CEO of R2J Gallagher Mr. Gallagher, you may begin.

Thank you very much. Good afternoon and thank you for joining us for our fourth quarter 24 earnings call. On the call for you today is Doug Hall, our CFO, other members of the management team, and the heads of our operating divisions. Before I get to my comments about our financial results, I'd like to acknowledge the tragic wildfires in California. Our heartfelt thoughts are with all those impacted, including our own Gallagher colleagues. Our company and industry have such an important role and responsibility, helping families, businesses, and communities rebuild and restore their lives. And like many times before, Gallagher and the industry will rise to the occasion. Okay, on to my comments regarding our financial performance. We had an excellent fourth quarter. For our combined brokerage and risk management segments, we posted 12% growth in revenue, our 16th consecutive quarter of double-digit revenue growth, 7% organic growth, reported net earnings margin of 13.5%, adjusted EBITDA growth of 17%, and adjusted EBITDA margin of 31.4%, up 145 basis points year over year. Gap earnings per share of $1.56, and adjusted earnings per share of $2.51, up 15% year over year. The December capital raise for the acquisition of assured partners creates some noise in these headline numbers doug will peel back the impact in his comments regardless another fantastic quarter to close out another terrific year by our team moving to results on a segment basis starting with the brokerage segment reported revenue growth was 12 percent organic growth was 7.1 percent base commission and fees were 7.8 percent in line with our expectations which got offset a bit by slightly lower contingents. Adjusted EBITDA margin expanded 168 basis points to 33.1%, which includes interest income related to funds raised for the acquisition of Assured Partners. Excluding that interest income, margin expansion was 109 basis points. Let me give some insights behind our brokerage segment organic with our pc retail operations we delivered six percent organic overall the uk australia and new zealand were all in the high single digits u.s retail organic was around five percent and canada was down a couple percent impacted by lower contingents our global employee benefit brokerage and consulting business posted organic of about 10 a really strong finish that includes the catch-up of the large life case sales that shifted from earlier in 24 shifting to our reinsurance wholesale and specialty businesses in total organic of nine percent which overcame some expected market headwinds in our global aerospace business so very strong growth whether retail wholesale or reinsurance next let me provide some thoughts on the pc insurance pricing environment starting with the primary insurance market overall the global pc insurance market continues to grow with fourth quarter renewal premium increases that's both rate and exposure combined consistent with the past two quarters thus far in january renewal premium increases are ticking slightly higher than fourth quarter and are above five percent driven by increases in casualty lines like umbrella and commercial auto. Breaking down fourth quarter global renewal premium changes by product line, we saw the following. Property and professional lines were about flat. Workers' comp up 1%, general liability up 4%, commercial auto up 9%, umbrella up 10%, and personal lines up 9%. So we continue to see increases across most lines and geographies carriers are behaving rationally and pushing for increases where it's needed to generate an acceptable underwriting profit it's a great market for us to operate in because we can further differentiate ourselves with our leading tools data and expertise remember our job as brokers is to help clients find the best coverage that fits their budget while mitigating price increases we're becoming more successful securing lower pricing for our property customers especially cat exposed property which enables them to buy more limit or reduce their deductibles resulting in more coverage shifting to the reinsurance market overall one one renewals were orderly and reflected an environment that generally favored reinsurance buyers growing demand for property cat cover was met with sufficient reinsurance capacity despite 2024 being an elevated year with more than 150 billion dollars of estimated insured natural catastrophe losses this resulted in property price declines that were greater at the top end of reinsurance towers and similar to january 24 renewals reinsurers continued to exercise discipline on terms and did not revert to attachment points that exposed them to greater frequency reinsurance buyers of specialty coverages saw modest price declines across many lines of coverage but again no softening in terms and conditions shifting to casualty while there was adequate reinsurance capacity reinsurers remained cautious on u.s casualty risks due to elevated loss cost trends and potential reserve looking forward wildfire losses and casualty reserve increases seem to beat the stories here in january and time will tell how each of these ultimately impacts the market. Regardless, Gallaghery had a fantastic 1-1 in this environment. Moving to some comments on our customers' business activity. During the fourth quarter, our daily revenue indications from audits, endorsements, and cancellations remained in net positive territory. The same is true for full year 2024. While the activity is not quite as high is 23 the upward revenue adjustments this past year are very close to full year 22. so we continue to see solid client business activity and no signs of a meaningful global economic slowdown within the u.s the labor market remains strong since april 24 the number of open jobs has remained relatively steady and at a level that is still well above the number of unemployed people looking for work employers are looking for ways to grow their workforce and control their benefit costs, and at the same time face wage increases and continued medical cost inflation, both are headwinds that our professionals are helping to navigate. Regardless of market conditions, I believe we are well positioned to take share across our brokerage business. Remember, 90% of the time we are competing against the smaller local broker that cannot match our niche expertise, outstanding service, or extensive data and analytics offerings. So with some nice momentum in net new business production across our brokerage business, a PC market still seeing mid-single-digit premium growth, and a strong U.S. labor market, we continue to see full-year 25 brokerage segment organic. Moving on to our risk management segment, Gallagher-Bassett. Revenue growth was 9%, including organic, of 6. Heading into 25, we should continue to benefit from excellent client retention, increases in our customers' business activity, and rising claim counts. Adjusted EBITDA margin was 20.6% in line with our October expectations. Looking ahead, we still see full year 25 organic in that 6-8% range and margins around 20.5%. Shifting to mergers and acquisitions. During the fourth quarter, we completed 20 new tuck-in mergers at fair prices, representing around $200 million of estimated annualized revenue, bringing the full year to $387 million. For those new partners joining us, I'd like to extend a very warm welcome to the Gallagher family of professionals. And of course, the big news in December was signing an agreement to acquire assured partners with $2.9 billion of annual pro forma revenue. It's a compelling opportunity to build upon our commercial middle market focus, deepen our niche practice groups, and further leverage our data and analytics, allowing us to provide even more value to clients. It should also expand our tuck-in M&A reach and create more retail and specialty revenue opportunities across Gallagher. What is especially exciting is that the combination involves two highly innovative, entrepreneurial, and although we will continue to operate as two independent companies until close, we have started discussions in our varationalism and excitement of the Assured colleagues. We anticipate we will receive necessary approvals and complete the acquisition sometime here in the first quarter. In addition to the pending Assured Partners acquisition, we have about 45 term sheets signed or being prepared, representing around $650 million of annualized revenue. Good firms always have a choice, and it would be terrific. With a strong close of the year, let me reflect on our full-year financial performance for brokerage and risk management combined. 15% growth in revenue, 7.6% organic growth, 18% growth in adjusted EBITDA, 48 mergers completed with nearly $400 million in estimated annualized revenue, and we signed a definitive agreement to acquire assured partners. These are terrific metrics, and as proud as I am of the excellent financial performance this year, I'm more proud of the way our culture is state true. Our culture is about our colleagues guided by the Gallagher way and the rock-solid foundation they form based on every interaction we have, whether it's clients, care, or with our Gallagher colleagues around the globe. Frankly, our culture is unstoppable, and that is the Gallagher way. Okay, I'll stop now and turn it over to Doug.

Thanks, Pat, and hello, everyone. Today, I'll quickly recap some sound bites from our quarter and replay our early thoughts on 2025, most of which Pat just touched on, then use the rest of my time to unpack the impact of the Assured Partners financing activities on our results during the quarter. Then I'll wrap up my prepared remarks with my usual comments on cash m a and capital manager okay highlights from our fourth quarter you'll see in our earnings release terrific base commission and fee organic growth of 7.8 solid supplemental growth of 4.7 and while contingents went backwards a bit this quarter we don't see that as a trend by any means as i look to 2025 brokerage organic pat relayed that we're in a favorable environment with rates still needing to increase to cover higher loss costs, trillions of global premiums growing and inflating, and our sales and service offerings outpacing our competitors, which should increase both new business and our retentions. So as we sit here today, we still believe our full year 25 brokerage segment organic growth should be in that 6 to 8% range. That's unchanged from what we said in October. As for brokerage margins, a little noise on page five of the earnings release please see the footnote you'll read that the margin was aided by about 20 million dollars of interest income earned on cash we're holding to close assured partners adjusting for that our margins would have been 32.5 percent up 109 basis points over last year that's nicely above our october expectation of margin expansion in the 90 to 100 basis point range looking ahead to 25 we are still viewing margin expansion like we have like we've said many times before we see margin expansion starting around full year organic growth of four percent at six percent maybe we could see 50 basis points and at eight percent perhaps 100 basis points of expansion of course those ranges can then be impacted by changes to interest income on our fiduciary assets and then the rolling impact of m a maybe we'll have a better read on where interest rates might go and also the impact of assured rolling into our numbers but at this time we don't see either having a so really no change to how we're thinking about margins in 2025. as for risk management another solid quarter posting six percent organic admittedly a couple million dollars below our october expectations all stemming from a smaller quarter of construction consulting revenues in the northeast and the northeast that can be just a little bit lumpy. So adjusted margin expansion of 20.6 percent in the quarter was also in line with our October expectations. And then looking forward, we're seeing full year 25 organic also in that six to eight percent range with margins again around 20 and the corporate segment shortcut table. For the interest in banking line, we are a bit better than our October forecast because we just were not into our line as much as we thought. For the adjusted acquisition lines for M&A and clean energy, both were close to our October expectations. Then when you look at the corporate line of the corporate segment, that was better than our expectation due to unrealized non-cash foreign exchange remeasurement income, which was partially offset by a return to actual. So let's move from our earnings release to the CFO commentary document that we put. First, an overarching statement please take some time to read any headers or foot to understand what information has assured partners deal so let's move to page 3 for our modeling helpers a close to what we provided back in October as for 25 we provided a first look of what we forecast again none of these numbers include any impact from assured partners turning to page 4 a first look at our corporate segment outlook for full year 25. The only impact of Assured is the interest is found in the interest in banking line. It includes additional interest expense from the $5 billion debt rate, flipping to page five of the CFO commentary document to our tax credit carry forwards. As of year end, about $770 million, that was a nice sweetener to fund future M&A. We would not expect those numbers to move much because of the Assured financing nor the roll-in of Assured's taxable income. That's because of the interest shield and also the amortization of the $5 billion deferred tax asset that we'll get with Assured partners. That should save us about $1.4 billion of tax. Moving over to page six, the investment income table. This table includes an assumption of two 25 basis point rate cuts in 25. It includes interest income from cash we're holding to pay for Assured, assuming a late March close, but it does not include interest income. When you shift down on page six to the rollover revenue table, the pinkish columns to the right include estimated revenues for brokerage M&A that we closed through yesterday. Then below that table, we've added a separate section for assured partners revenues again assuming a late March close which of course is highly dependent on regulatory approvals then just a reminder you also need to make a pick for other future M&A and then further down on that page you'll see the risk management segment rollover revenues for 25 are expected to be approximately five million dollars for each of the first two all right moving to page 7 this is a new page to help you see the impact of the assured partners financing on our fourth quarter 24 revenues, EBITDA, net earnings, and EPS by segment. The three items, just to keep in mind, there was additional incremental interest income on the cash that we were holding to fund the acquisition. There was additional interest expense we incurred on the newly issued $5 billion. And then the additional shares, you'll see that for fourth quarter, it all nets out to nearly nothing, but it does cause also the bottom, the right of that page, the assured partner's equity rates for our first quarter. This includes the full impact of the shares we issued in December and the exercise of the green shoe in early. Finally, if you flip to page 8, you'll see that this page is just a repeat of what we provided in the December Assured presentation for ease of reference. There's no new news on this page. Finally, let's move to cash, capital management, and M&A funding. Available cash on hand at December 31st was more than $14 billion, dollars of which approximately 13.5 billion will be used to fund assured partners since year-end we received another 1.3 billion dollars as the underwriters exercise the green shoe so considering free cash flow m a pipeline here in 25 it's looking like we could have 3.5 billion dollars to fund future m a then it jumps up to nearly 5 billion dollars in 26 all while maintaining a solid investment grade rating. So an excellent quarter and an excellent year to have in the books. As I reflect on 24, I have to say that we had a pretty terrific year. For the combined brokerage and risk management segments, we posted adjusted revenue growth of 14%, organic of seven, overall margin expansion of 94 basis points, and most importantly, we grew our EBITDA 18%. Those are terrific numbers and reflect what Pat said. That's our unstoppable So, those are my comments. Back to you, Pat.

Thanks, Doug. Rob, you want to open it up for questions?

Sure, Mr. Gallagher. We'll now open the call for questions. If you have a question, please pick up your handset and press star 1 on your telephone at this time. If you're on a speakerphone, please disable that function prior to pressing star 1 to ensure optimum sound quality. You may remove yourself from the queue at any point by pressing star 2. Additionally, we ask that each participant limit themselves to one question and one follow-up. Again, that's star one for questions. Our first question comes from the line of Mike Zvensky with BMO Capital Markets. Please proceed with your questions.

Hey, good evening. First question is surrounding the cadence of organic growth next year, loud and clear, six to eight, no change. I guess for both segments, I guess I'm more specifically focused on the brokerage segment. In terms of the cadence or seasonality, anything you'd like to call out? Two of your peers called out weaker seasonality in 1Q. We do know that reinsurance is overweight in the beginning of the year, too, and maybe downwards pricing there could cause some year-over-year tougher comps. let me go back to that let me let me start with the end of that is is uh there there have been i'll study a little bit about okay got so you're saying actually it could be uh higher not not uh lower even if even if uh reinsurance pricing's down okay um okay um because of demand okay i'll have a chance to talk to you again in our march ir day and we should have a better feel of the seasonality. Oh, okay. Awesome. Uh, the last question is on, um, do sharing investment income, um, thinking through, um, um, post, uh, the deal close, um, if you're able to comment. So I, you know, I, I, my understanding is that, um, the, uh, um, the company are purchasing kind of, uh, didn't fully, um, leverage its fiduciary income in that it had a lot of, um, kind of, it was direct pay relationships between the businesses paying directly to the insurance carriers and you guys might be able to optimize that working capital to gain more fiduciary assets. If what I'm describing is correct, can you offer a timeline and how that works in terms of getting those asset balances onto your balance sheet?

Yes, your recollection is correct off fiduciary cash.

Doug, is there just any, is that kind of a one-year process, or that takes many years?

Okay, thank you.

The next question is from the line of Gregory Peters with Raymond James. Please receive your questions.

Good afternoon, everyone. Hey, Greg. I guess I'd like to start for you. Yeah. Given the substantial potential loss to the insured market, I'm curious if you could give us some perspective of how it might touch your operations. I'm interested in the business going in inside RPS, if there's any impact on the wholesale market that you're seeing. If you can just talk about your perspectives of that as we watch this disaster unfold, that'd be great.

Well, first of all, Grace, Pat, we reached out to thousands of clients already to make sure that they had the knowledge of how to file claims and what have you, how to get a hold of us if they're having difficulty in filing those claims. We are presently tracking, I forget the exact number today, but we have hundreds of claims that we're helping our clients with already. I think that you've got a situation that is, we're a big player in California. We're a big player in Los Angeles. Not huge in personal lines there, but for a number of months. And then in terms of the impact of that, luckily, again, we've been able to, in some instances, we're evacuated. We did not lose anybody and don't have many of our folks that have lost any of their homes. So I think we'll be well in a strong place to help our clients. But I can't give you much more than that right now in terms of how it's going to impact our day-to-day activities out there.

Okay. And then I guess my follow-up question is switch gears. You mentioned in your comments about the lower contingents. Just curious, given the profitability we're seeing in the industry, I would have imagined that supplementals and contingents would be up. And I think your guidance for 25 suggests that they should go back up again. But maybe you could spend a minute and give us some color on what happened with contingents and then color on your outlook.

Yeah, great question. Great. Thanks for asking. Like I said, as we get the final out of the year, and to put this in context, we see this as about in October, you know, a third of it is, two thirds of it is spread across hundreds of contracts. And so if the loss ratios are ticking up just a little bit, it might came in here in January. So that's what contingents, I think it's about 8%, even with a small blip in the fourth quarter. So it's still a terrific year. But I wouldn't overread that there's some shift in what contingents and supplementals are going to be going forward. So I would expect those numbers to grow over the blip this year considerably just a clarification on that answer doug uh uh is there a specific line of businesses or to cross you know a broader uh business set it's it's across the line right i mean it's okay for two of january thank you for your answers i guess another way of saying four million dollars of what throughout the year uh i would say so our next question comes from the

line of Andrew Kligerman with TD Securities. Pleased to see you with your questions.

Hey, good afternoon. First question is, hi, how are you? First question is around the risk management segment. Thinking back to last year, you had guided to 9% to 11% organic growth for this year, and now for next year, for 24, that is, and now for 25, you're guiding to 6% to 8%, which I still think is fabulous, but what's kind of changing that your guidance isn't quite as robust as it was to start last year?

You know, here's the thing is I think that large, and so I think if you go back and we still see that happening that we do down in Australia's left and right, that we can actually, as a carrier decides to use the process on work.

So like, you never know, you could probably find another elephant this year, right?

Yeah, that's right. In fact, Andrew, our prospect list is always filled with elements. They're just hard to hear.

Got it. And then I'm just kind of curious about your operations in India, the Center for Excellence, where I think you have about 12,000 employees right now. And, you know, as you look out through this year, do you need to add people given the assured partners transaction?

Can you keep it steady? and you know is technology making it such that you really don't need to hire that much well i think you got both ends of that correct and we're going to be using technology quite a bit and as we use technology that does make that that group there much more efficient and yet at the very same time our organic growth and our acquisition growth puts a lot more demand in the structure and so at about 12 000 employees i think that at this time next year you'll see us up additional thousands?

Yeah, the other thing, too, is think about this.

It's really, unless you standardize that service, A, you can't automate it. But B, when you do standardize it, it makes you better. Just take certificates of insurance, a million of them, pretty much error-free, brokers that can claim that.

I see. So maybe the bottom line takeaway is you may add 1,000 or 2 employees, but it's still scalable.

You're still getting better margin from that is that the right final takeaway yes you're right on the money thank you thank you our next question is from the line of the lease greenspan with wells fargo pleased to see with your question hi thanks um good evening my first question um is on the brokerage outlook for 25 um so you reaffirmed the six to eight doug i think when we last spoke in october you said you know maybe benefits is a five, reinsurance is a nine. I want to confirm that's where you still see it. And then you also had said you would provide, I think, by line in a little bit more detail at the December day, right, which did not happen. Could you give us a sense even away from benefits and reinsurance, just how you see all your businesses trending organically in the six to eight percent 25 brokerage guide?

I think, yes, confirming everything you said.

Okay, that's helpful. And then my follow-up question, you know, how do you see, how's there a pipeline, you know, of transactions, right? You guys also did, you know, a good number of bolt-on deals to end the quarter. And, you know, in terms of the AP pipeline, I know when you guys announced the deal, you highlighted the fact that there was very little overlap on pipelines. So would you expect, I guess, once that deal closes, you know, at some point at the end of the Q1, I guess, that kind of just the quarterly level of M&A activity, you know, could pick up from bringing the two firms together?

So, Elise, this is Pat. I'll answer that. I think that, first of all, you know, we have to continue to operate these enterprises separately until we're closed. but we do know that there's very little overlap at all and assured partners has been very very good at tucking acquisitions and as you saw in our uh when we were making the announcement there has not been between things that we wanted to put on and things that they actually bought so there we view their uh pipeline is very doing and not a lot of overlap and i think that's going to be fantastic team doing this stuff we're impressed with what we've seen and due diligence and the like as to what they've done, what they've bought, and the pricing they're getting for that. And I think you will see us increase substantially the number of deals. Now, they're small deals. They're very good at tuck-in bolt-ons and small privately held firms in and about many of the – And then the 1.3 – oh, sorry, go ahead.

Oh, I was just going to say the 1.3 billion from the green shoe, right, that wasn't contemplated, right, because the financing was there without it. So is that just extra cash that you have for the pipeline, the capital that Doug was talking about in his comments?

Yes.

Okay, thank you.

Thanks, Luce.

Our next question is from the line of Mark Hughes with Truist Securities. Please proceed with your questions.

Yeah, thank you. Good afternoon.

Hey, Mark.

Doug, the guidance you gave for the first quarter contribution from assured partners, is there any seasonality there, or is that just the timing of the deal?

Right now, we've assumed that's just the timing of the deal. And then anything that might be a public entity type business might be skewed to July. So you'd see a little bit of seasonality, but what you see in there is a pure...

And then, Pat, in the wholesale business, you gave the wholesale and reinsurance together, I think, up 9%. Any detail you can provide on wholesale observations on the E&S market?

Let me take a look, Mark. Yeah, I think I've got that. I think that you've got to look at our UK specialty at that. Re is pretty good.

Understood. Thank you.

The next question is from the line of David Motor Moten with Evercore ISI. Please just see what your question.

Hey, good evening. I had a question for Doug, just trying to unpack the brokerage organic this quarter. And I don't want to nitpick too much, but you guys were looking for 8%. And I'm just wondering, so was the entire differential, just the contingents and the life sales came back as expected, and it was just totally offset by the contingents? Just hoping you can unpack that a little bit.

Yeah, you're right. The base commission and fees at seven, you know, contingents and sub, the difference of the seven in your observation.

Okay, great. Thanks for confirming. And then I wanted to follow up just on, I guess I was surprised the RPC stayed at 5% just given the property price was flat versus up four last quarter. So I'm wondering if maybe it's mixed, but I'm wondering if there's anything else from sort of like an increased purchasing or buy-up dynamic that you guys are observing as the property market, as the property rates moderate here.

Well, we see that across that. Yeah, I mean, we've always said it's been a long time we've talked about this. As rates are going up, you know, customers opt out of certain coverages, and that might mean by raising deductibles or reducing limits on it. sometimes they'll drop some coverages. So if rates are, remember, rates are still increasing. I think it's important that they're buying more and then the customers, they are buying more coverage on it. So they'll opt in.

Insurance to value is a big deal too. Much more pressure on insuring to value.

Got it, thanks. And then maybe just to sneak one else in, one other one in. Doug, I think you had said last call that the underlying brokerage business is running at like a 7% to 8% organic growth just on an underlying basis, but then the 25% range is in the 6% to 8% range. So I guess I'm wondering, is that 6% just sort of conservatism? What sort of scenario would sort of get you guys out of that 7% to 8% range?

Well, listen, I think right now that, you know, we said, you know, way back in October that, you know, next year felt a lot like this year, and we're kind of in that mid-7% range somewhere this year, 11.5%. So we think we'd like to stick with that. I think our team's working pretty hard to always, the market's changing. We'll see what wildfires do. We'll see what casualty reserves will do. We're still digesting that. I will say on the wildfires, Maybe you know this. I still don't know how the extra living expenses cost on that. And then, you know, you can't open up the news any day without somebody taking a casually reserve strength. Cause carriers take a really hard look at what they're doing with the rates. So, you know, it isn't nice being in that range versus years ago when we were pretty excited about 1% or 2% organic growth.

Yeah, no, completely agree.

Our next question is in the line of Katie Sackis with Autonomous Research. Please just see what's your question.

Hi, thank you. Good evening. I guess my first question is, you know, thinking about the last call, I think, Doug, you'd mentioned that you expect brokerage organic growth in 2025, you know, split between the components to come from about half new business and then perhaps a quarter each to rate and exposure. Has your perspective on the components of that Brokerage Organic Growth Guide changed in the context of the Assured Partners acquisition?

Yeah, we've summarized it pretty quickly. That's what we're still...

Okay, sounds good. And then, you know, it looks like international retail brokerage growth kind of continues to cool off a little bit. How are you guys thinking about the environment for organic growth abroad this year versus what looks like perhaps a little bit more stable growth in the U.S.

Okay, I think you've got to really look at that by geography. I mean, there's parts of the world that are just really, really growing incredibly well. We've had our board meeting and did a deep dive into some of our Latin American businesses. Not huge in part of the whole overall enterprise, but incredibly nice growth there. And so it depends. Canada, a little bit of a slowdown, talked about that. But as you look across the whole patch, it's hard to put a finger on it, which is why we try to give you a guidance in terms of the overall, how it should shake out. We definitely have some geographies that are doing extremely well and just have continued future growth that is going to be fantastic. in December.

But UK retail, especially, is still in high single digits. We said that it was 6% before. UK retail, I think we said 8%. This quarter, we're saying closer to 9%. Canada may be the one that's... And then we need to have that perspective.

Appreciate the additional caller there. Thanks, guys.

The next question is from the line of Meijer Sales with KBW. Please choose your question.

Great, thanks. I like how everyone's playing minute Canadian. You mentioned obviously accurately that there's a ton of adverse development that we're seeing in general liability. And I was wondering what is of any direct impact when you've got, I don't know, more frequent claims or more attorney involvement in terms of how Gallagher Bassett grows revenues?

Well, I mean, clearly it claim activity helps us i mean there's no question about it but when it comes to severity we don't participate in our clients up or down in terms of severity we do everything we can to manage the final outcome and we we contend and we believe we have the data and analytics to prove this that if you hire gallagher bassy your outcomes meaning your final settlements will be superior and that does not mean that we're taking advantage of the claimant that means that we're handling the claimants actually better than you see in the general market so it's uh if you've got some severity out there and there that creates frequency frequency definitely helps gallagher bassett that's we we get paid essentially on a

per claim basis as does economic growth because with economic growth comes more employment and remember most of gallagher bassett's revenue is a good portion of our workers compensation driven way we can do new nurse care case management the way we have we deal with them so often so you know when when gallagher bass and i think that's the environment we're in 12 13 14

billion dollars and remember when by and large about 60 cents to 65 cents on every premium dollar turns into a claim that's the function of the industry we're seeing that of course in the west coast and so if you're going to have an impact on your costs you better pay attention to that portion of the dollar that goes out the door and claims again we think we do that at a level that's better than the competitors, both TPAs and...

Okay, no, that's very helpful, very thorough.

Switching gears, I'm just looking for an update on the multiples for M&A, because we've seen not only your acquisition of Assured Partners, but a lot of the other big brokers out there have made big acquisitions, and I don't know if that speeds up or decelerates competition for tuck-ins. well if this of course is all speculation on my point but remember when we try to share with you pretty much every quarter what we are buying at and you're not seeing our tuck-in acquisitions and the activity that we do on our smaller deals anywhere near the uh the treetop levels of multiples that were that have been running up over the years i do think that the assured partners acquisition. We're a very smart seller. I think we were an opportunistic buyer. And I definitely think there's a signal there.

Okay, perfect. Thank you so much. Our next question is from the line of Rob Cox with Goldman Sachs. Please receive your question.

Hey, thanks. And apologizing for asking another question on brokerage organic. But when you consider the 6% to 8% organic growth range. Could you give us some insight into what level of renewal premium change you're thinking about within that? Because I'm wondering if you're assuming sort of some of the acceleration that you think may be happening in the casualty market or if you don't need that to achieve the 6-8.

You know, we think that business wins right now. And here, go back. When there's not as much chaos in the market. We get to show our tools and capabilities shine brighter because when it's chaotic in the environment and customers are listening to big rate increases, they're just trying to get their insurance placed. They're already a bit stung by the fact that now we'll be able to go in and show profit.

Things aren't when tools and capabilities to buy your insurance threw up put to bed soon so i think i would have killed in the past as doug alluded to when we're talking about up one up two for a five percent premium rate growth as an environment that would that would be nirvana 10 years ago so i i think it's a very strong place to be remember our job is to mitigate that for our clients but it's a great place for us to show exactly what doug was saying, which is our capabilities. In particular, in the areas of data and analytics, which I want to remind the listeners, you don't get a chance to listen to the smaller brokers that we're competing with on a quarterly basis. We're pulling away from them more and more with our capabilities. And clients, I'm talking middle market clients, very much appreciate the ability to sit and talk with them about people like you buy this, or you should have this type of limit because in our data we see losses at this size. That capability is just getting, it's getting more and more attention by the buying community, and it's differentiating us every single day to a greater.

That makes sense. Thank you for all the color. Pivoting to reinsurance brokerage, I just wanted to ask, because I know your growth has been a good bit stronger than your two largest competitors in the reinsurance brokered space for a number of years now. And Gallagher has a lower revenue base, but it doesn't seem like that would be the only driver of the outperformance. So I was hoping you could remind us what's driving Gallagher's ability to deliver what's been more like double-digit organic growth in reinsurance.

Well, I think that it's just blocking and tackling. I think one of the things that we found there is it's a great sales team. They're backed up by terrific analytics, incredible capabilities in consulting on capital management, and there's no doubt being part of Gallagher has offered them some additional opportunities.

Yeah, I think that they get to see firsthand what's going on in their retail industry.

Thank you.

Our next question is a follow from the line of Mike Zaremsky with BMO Capital Markets.

Pleased to see with your questions. Oh, great. My follow-ups on reinsurance as well, just the strong results. Just curious, maybe on mix on reinsurance, do you potentially have a greater mix towards casualty or specialty Europe-focused that could be helping kind of the outlook given casualty pricing is accelerating?

We have a terrific casualty bulk of business. you know north american u.s business um well and also remember where's the pain right now it was a reinsurance buyer it's casually in these calls is and there's no question about it uh that that's the that's the area that's got some pain and our team is really really good got it maybe

since it's not 6 15 i'll sneak one last one in just curious um health inflation for employers at least some of the stats we've seen, it's expected to rise 25 versus 24. Maybe you disagree with that. But does that provide any uplift to organic for employee benefits? I know there's a lot of building blocks for employee benefits.

Every time we get – we are clearly a leader in our capabilities to consult, manage, and place health and welfare. and it's a huge problem for employers and it's going up as it seems to never stop doing and so there's all kinds of tools that you need to have in your toolbox to handle that and we're very very good at that and by the way we're extremely good at it in the commercial middle market where I think there's maybe not as much competition frankly.

Thank you. Thank you. Our final question is from a follow from Alex Scott with Barclays. Please receive your question.

Thank you all this This is Justin on for Alex, just kind of going back into the broker segment and the commercial motor market. Just wanted to ask, I understand, you know, seems like 90% of the time you guys are competing against independent brokers. I was just curious in light of sort of the large scale acquisitions that's been taking place, whether or not you see sort of this, you know, 90% number to dwindle over time and just think about 25 and ahead.

Oh, the assured partners people are competing with those same independents in communities that we're not in today, which is only going to increase when you take a look at our at-bats. Our number of at-bats are going to go up substantially because of assured partners, and 100% of those at-bats, that's not true. 95% of those at-bats are going to be against smaller players.

Yeah, I think the fragmented markets, and so we're competing against the other 20.

Sure thing. Thank you for the color.

Thanks, Justin. Thanks, Rob. I think we're ready to wrap up here, and I just have a quick comment, and that is thank you again for joining us this afternoon. You all know now we had a great, excellent year of financial performance. A huge thank you goes out from this table to our 56,000 colleagues around the globe. It's your creativity, expertise, and unwavering client focus that continue to set us apart. We look forward to speaking with the investment community at our mid-March IR Day, and thank you all for being with us this evening.

This does conclude today's conference call. You may now disconnect your lines at this time.