AJG Q2 Earnings Meet Estimates, Revenues Miss on Higher Expenses

AJG's Revenue Mix Shows Broad Growth

Commissions climbed 35.1% year over year to $2.44 billion, while fees advanced 23% to $1.18 billion. Supplemental revenues increased 36.9% to $141 million, and contingent revenues improved 24.7% to $91 million.

These gains were partly offset by a 57.9% decline in interest income, premium finance revenues and other income to $98 million. The prior-year quarter benefited from interest earned on cash raised for the AssuredPartners acquisition.

Gallagher's Brokerage Results Stay Strong

Brokerage revenues rose 25.7% year over year to $3.50 billion. Organic commissions, fees, supplemental revenues and contingent revenues increased 5%, reflecting 4% growth in organic base commissions and fees and a 20% increase in organic supplemental revenues.

Organic contingent revenues declined 8%. During the quarter, the segment completed six acquisitions with estimated annualized revenues of $58 million compared with nine acquisitions and $291 million of annualized revenues acquired a year earlier. 

Adjusted Brokerage EBITDAC increased 15.7% to $1.16 billion. EBITDAC represents earnings before interest, taxes, depreciation, amortization and changes in estimated acquisition earnout payables.

The adjusted EBITDAC margin contracted 280 basis points to 33.3%. The comparison was pressured by lower interest income, AssuredPartners seasonality and the inclusion of acquired businesses.

AJG's Risk Management Gains Momentum

Risk Management revenues before reimbursements increased 15.6% year over year to $453 million. Reported fees rose to $445 million from $383 million, while organic fees advanced 12%.

The segment completed one acquisition with estimated annualized revenues of $5 million. In the year-ago period, Risk Management did not close an acquisition. 

Adjusted EBITDAC improved 21.7% to $101 million. The adjusted margin expanded 140 basis points to 22.3%, benefiting from stronger fee growth and lower compensation and operating expense ratios.

The adjusted compensation expense ratio declined 160 basis points to 59.6%, helped by headcount controls. The adjusted operating expense ratio edged down 10 basis points to 18.1%, aided by savings in client-related expenses.

Gallagher's Cost Pressure Reported Profit

Total expenses increased 30.6% year over year to $3.59 billion. Compensation expenses rose 29.2% to $2.33 billion, while operating expenses increased 30.8% to $679 million.

Amortization surged 67.2% to $301 million, reflecting the impact of acquired intangible assets. Interest expense increased 6.3% to $168 million. 

Reported net earnings fell 12% to $324 million, while diluted GAAP earnings declined to $1.25 per share from $1.40. Total-company EBITDAC nevertheless increased 10.5% to $946 million.

The effective tax rate declined to 21.7% from 22.3%. Corporate EBITDAC improved to a negative $98 million from a negative $111 million in the prior-year quarter.

AJG's Balance Sheet Supports Capital Returns

Arthur J. Gallagher ended the quarter with total assets of $81.81 billion, up 15.8% from year-end 2025. Cash and cash equivalents were $1.39 billion, while total stockholders’ equity increased 1.7% to $23.75 billion.

Corporate-related borrowings totaled $13.48 billion, including $1.52 billion classified as current. Gallagher also had $134 million of premium financing debt. 

During the quarter, AJG repurchased shares for around $170 million. The company declared dividends of 70 cents per share, up from 65 cents in the year-ago quarter.

Management highlighted strong client retention, new business generation and continued demand for advice, analytics, specialty expertise and claims advocacy amid a complex risk environment.

Zacks Rank

Arthur J. Gallagher currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Brokerage Insurers

Brown & Brown, Inc.’s BRO second-quarter 2026 adjusted earnings of $1.07 per share missed the Zacks Consensus Estimate by 0.9%. The bottom line increased 3.9% year over year. Revenues of $1.67 billion missed the consensus mark by 2.9% but increased 30.4% year over year. Acquisition activity supported the top line, while organic revenues declined 0.7%. 

Commissions and fees rose 32.4% to $1.65 billion, while investment and other income declined to $22 million from $36 million. Adjusted EBITDAC margin contracted 100 basis points to 35.7%. Adjusted net income attributable to the company increased 18.4% to $361 million. 

Willis Towers Watson Public Limited Company WTW reported second-quarter 2026 adjusted earnings of $3.35 per share, beating the Zacks Consensus Estimate of $3.13 by 7%. Earnings increased 17% year over year. Revenues rose 9% to $2.46 billion and surpassed the consensus estimate of $2.42 billion by 1.7%. 

Organic revenues grew 5%. Reported revenues increased from $2.26 billion in the prior-year quarter. Excluding foreign-currency movements, revenues advanced 8%. Acquisitions and divestitures contributed 3 percentage points to the quarterly change. Adjusted EBITDA increased 13% year over year to $529 million. The related margin widened 70 basis points to 21.5%, reflecting improved operating leverage and stronger adjusted profitability.

Aon plc AON reported second-quarter 2026 adjusted earnings of $3.81 per share, which surpassed the Zacks Consensus Estimate by 1.1%. The bottom line advanced 9% year over year.

Total revenues of $4.2 billion grew 2% year over year.  The top line missed the consensus mark by 0.4%. Organic revenue growth was 5%. Total operating expenses inched up 1% year over year to $3.3 billion. Adjusted operating income amounted to $1.2 billion, up 5% year over year and in line with our estimate.

Zacks' Research Chief Names "Stock Most Likely to Double"

Our team of experts has just released the 5 stocks with the greatest probability of gaining +100% or more in the coming months. Of those 5, Director of Research Sheraz Mian highlights the one stock set to climb highest.

This top pick is a little-known satellite-based communications firm. Space is projected to become a trillion dollar industry, and this company's customer base is growing fast. Analysts have forecasted a major revenue breakout in 2025. Of course, all our elite picks aren't winners but this one could far surpass earlier Zacks' Stocks Set to Double like Hims & Hers Health, which shot up +209%.

Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

This article originally published on Zacks Investment Research (zacks.com).

Zacks Investment Research