AJG · 10-Q · 2026Q2 · Full report

Margin Drivers

Arthur J. Gallagher & Co. · 2026-08-05 · Importance 49 · Surprise 32 · No source text

Six-month 2026 brokerage net earnings increased 3% to $1,363 million, but the net earnings margin declined 424 basis points to 17.5% from 21.7%. Adjusted brokerage EBITDAC increased 17% to $2,882 million, while adjusted EBITDAC margin declined 300 basis points to 37.0%, primarily because prior-year results included $287 million of interest income from AssuredPartners financing and because of acquisition seasonality and tuck-in acquisition roll-ins. Second-quarter adjusted brokerage EBITDAC increased 16% to $1,163 million, while adjusted margin fell 284 basis points to 33.3%; the prior-year quarter included $144 million of related interest income, which adversely affected the year-over-year margin comparison by approximately 3.9%. Risk management margin performance improved, with six-month adjusted EBITDAC margin increasing 146 basis points to 22.1% and net earnings margin increasing 118 basis points to 12.2%.

Key facts

• Adjusted EBITDAC for brokerage for the three-month period ended June 30, 2026: $1,163 million; adjusted EBITDAC for three-month period ended June 30, 2025: $1,005 million (16% increase). source
• Adjusted EBITDAC for brokerage for the six-month period ended June 30, 2026: $2,882 million; for the six-month period ended June 30, 2025: $2,461 million (17% increase). source
• Six-month period 2025 adjusted brokerage EBITDAC includes approximately $287 million of interest income earned on the cash proceeds associated with the AssuredPartners Financing in December 2024, unfavorably impacting year-over-year change in adjusted EBITDAC margin by approximately 3.4%. source
• Second quarter 2025 adjusted brokerage EBITDAC includes approximately $144 million of interest income earned on cash proceeds associated with the AssuredPartners Financing in December 2024, which unfavorably impacted year-over-year change in second quarter adjusted EBITDAC margin by ~3.9%. source
• Adjusted EBITDAC margin for brokerage for the three-month period ended June 30, 2026: 33.3%; for the same period 2025: 36.1%; change: -284 bpts. source
• Adjusted EBITDAC margin for brokerage for the six-month period ended June 30, 2026: 37.0%; for the same period 2025: 40.0%; change: -300 bpts. source
• Reported compensation expense ratio for the three-month period ended June 30, 2026: 57.6%; for same period 2025: 54.8%; adjusted compensation expense ratios: 53.4% (2026) and 51.3% (2025). source
• Reported compensation expense ratios (before reimbursements) for the three-month periods ended June 30 were 60.5% in 2026 and 62.2% in 2025. source

Impact estimates