Business Breakdowns
Episode 148 Arthur J. Gallagher: Insurance Broking
Business Breakdowns

Episode 148: Arthur J. Gallagher: Insurance Broking

Business Breakdowns

Episode 148

Arthur J. Gallagher: Insurance Broking

Mike Hayward is a portfolio manager at WCM Asset Management. We cover the role of insurance brokers like Gallagher in the global insurance marketplace, the company's history of effective acquisitions and high retention, and the unique corporate culture powering it all.

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[00:00:00] - First question - What AJG is and what they do 

[00:03:28] - Value chain and key components of the insurance industry 

[00:06:03] - Gallagher’s business segments and specialty 

[00:08:58] - Their defensibility and competitive edge

[00:13:22] - Stickiness and noteworthy retention rates

[00:17:06] - Why the market undervalues their stickiness 

[00:19:19] - Their acquisition strategy and its role in ongoing consistent growth  

[00:25:20] - What ‘The Gallagher Way’ really means and company history 

[00:29:52] - Overview of the financial model and structure

[00:34:09] - Potential risks to Gallagher’s continued success 

[00:39:21] - Industry regulation and how they can affect the business 

[00:42:46] - Lessons for investors and operators

 

Arthur J. Gallagher: Insurance Broking

Introduction

Zack
I'm Zack Fuss. And today, we are breaking down Arthur J. Gallagher, referred to as Gallagher or AJG, a global insurance brokerage. To break down Gallagher, I'm joined by Mike Hayward, a Portfolio Manager at WCM Asset Management.

AJG was established in 1927 when Arthur James Gallagher started his insurance brokerage. And today, his grandson, Patrick Gallagher, serves as CEO. Patrick started with the business as an intern in 1972 and took over as CEO from his uncle, Robert Gallagher. Pat Gallagher's father, John, held the role of Vice Chairman when his son was named CEO, just to highlight how deeply involved the Gallagher's family has been in the growth of the business.

AJG is one of the largest insurance brokerages by revenue, exceeding $10 billion, competing with the likes of Marsh & McLennan, Aon and Willis Towers Watson. During this conversation, we discussed the company's successful acquisition and integration strategy, the strength of the insurance brokerage industry and how the shifting industry dynamics will impact the durability of their competitive advantage. We hope you enjoy this breakdown of A.J. Gallagher.

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