filings.toolsItem 1. Financial Statements (Unaudited)
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Item 1. Financial Statements (Unaudited)
Arthur J. Gallagher & Co.
Consolidated Statement of Earnings
(Unaudited - in millions, except per share data)
| Three-month period ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Commissions | $ | 3,123 | $ | 2,249 | |||||||
| Fees | 1,212 | 985 | |||||||||
| Supplemental revenues | 180 | 114 | |||||||||
| Contingent revenues | 115 | 93 | |||||||||
| Interest income, premium finance revenues and other income | 86 | 247 | |||||||||
| Revenues before reimbursements | 4,716 | 3,688 | |||||||||
| Reimbursements | 42 | 39 | |||||||||
| Total revenues | 4,758 | 3,727 | |||||||||
| Compensation | 2,516 | 1,897 | |||||||||
| Operating | 643 | 490 | |||||||||
| Reimbursements | 42 | 39 | |||||||||
| Interest | 158 | 158 | |||||||||
| Depreciation | 61 | 45 | |||||||||
| Amortization | 278 | 210 | |||||||||
| Change in estimated acquisition earnout payables | 17 | 15 | |||||||||
| Total expenses | 3,715 | 2,854 | |||||||||
| Earnings before income taxes | 1,043 | 873 | |||||||||
| Provision for income taxes | 220 | 164 | |||||||||
| Net earnings | 823 | 709 | |||||||||
| Net earnings attributable to noncontrolling interests | 1 | 5 | |||||||||
| Net earnings attributable to controlling interests | $ | 822 | $ | 704 | |||||||
| Basic net earnings per share | $ | 3.20 | $ | 2.76 | |||||||
| Diluted net earnings per share | 3.16 | 2.72 | |||||||||
| Dividends declared per common share | 0.70 | 0.65 |
See notes to consolidated financial statements.
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Arthur J. Gallagher & Co.
Consolidated Statement of Comprehensive Earnings
(Unaudited - in millions)
| Three-month period ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net earnings | $ | 823 | $ | 709 | |||||||
| Foreign currency translation, net of taxes | (20) | 217 | |||||||||
| Change in fair value of derivative investments, net of taxes | (21) | — | |||||||||
| Comprehensive earnings | 782 | 926 | |||||||||
| Comprehensive earnings attributable to noncontrolling interests | 1 | 5 | |||||||||
| Comprehensive earnings attributable to controlling interests | $ | 781 | $ | 921 |
See notes to consolidated financial statements.
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Arthur J. Gallagher & Co.
Consolidated Balance Sheet
(Unaudited - in millions)
| March 31, 2026 | December 31, 2025 | ||||||||||
| Cash and cash equivalents | $ | 1,413 | $ | 1,396 | |||||||
| Fiduciary assets (includes fiduciary cash of $7,069 in 2026 and $7,142 in 2025) | 33,873 | 26,899 | |||||||||
| Accounts receivable, net | 5,960 | 5,175 | |||||||||
| Other current assets | 773 | 886 | |||||||||
| Total current assets | 42,019 | 34,356 | |||||||||
| Fixed assets - net | 762 | 789 | |||||||||
| Deferred income taxes | 43 | 43 | |||||||||
| Other noncurrent assets | 1,568 | 1,602 | |||||||||
| Right-of-use assets | 585 | 598 | |||||||||
| Goodwill | 22,958 | 22,593 | |||||||||
| Amortizable intangible assets - net | 10,366 | 10,684 | |||||||||
| Total assets | $ | 78,301 | $ | 70,665 | |||||||
| Fiduciary liabilities | $ | 33,873 | $ | 26,899 | |||||||
| Accrued compensation and other current liabilities | 4,051 | 4,017 | |||||||||
| Deferred revenue - current | 809 | 737 | |||||||||
| Premium financing debt | 156 | 226 | |||||||||
| Corporate related borrowings - current | 640 | 640 | |||||||||
| Total current liabilities | 39,529 | 32,519 | |||||||||
| Corporate related borrowings - noncurrent | 12,077 | 12,104 | |||||||||
| Deferred revenue - noncurrent | 177 | 155 | |||||||||
| Lease liabilities - noncurrent | 499 | 515 | |||||||||
| Other noncurrent liabilities (includes tax credit carryforwards of $655 in 2026 and $713 in 2025) | 2,217 | 2,025 | |||||||||
| Total liabilities | 54,499 | 47,318 | |||||||||
| Stockholders' equity: | |||||||||||
| Common stock - issued and outstanding 256.9 shares in 2026 and 257.0 shares in 2025 | 257 | 257 | |||||||||
| Capital in excess of par value | 17,638 | 17,783 | |||||||||
| Retained earnings | 6,446 | 5,806 | |||||||||
| Accumulated other comprehensive loss | (566) | (525) | |||||||||
| Stockholders' equity attributable to controlling interests | 23,775 | 23,321 | |||||||||
| Stockholders' equity attributable to noncontrolling interests | 27 | 26 | |||||||||
| Total stockholders' equity | 23,802 | 23,347 | |||||||||
| Total liabilities and stockholders' equity | $ | 78,301 | $ | 70,665 |
See notes to consolidated financial statements.
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Arthur J. Gallagher & Co.
Consolidated Statement of Cash Flows
(Unaudited - in millions)
| Three-month period ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net earnings | $ | 823 | $ | 709 | |||||||
| Adjustments to reconcile net earnings to net cash provided by operating activities: | |||||||||||
| Net gain on investments and other | 2 | (6) | |||||||||
| Depreciation and amortization | 339 | 255 | |||||||||
| Change in estimated acquisition earnout payables | 17 | 15 | |||||||||
| Amortization of deferred compensation and restricted stock | 33 | 28 | |||||||||
| Stock-based and other noncash compensation expense | 17 | 14 | |||||||||
| Payments on acquisition earnouts in excess of original estimates | (45) | (10) | |||||||||
| Provision for deferred income taxes | 97 | 56 | |||||||||
| Effect of changes in foreign exchange rates | (4) | 24 | |||||||||
| Net change in accounts receivable, net | (869) | (658) | |||||||||
| Net change in deferred revenue | 87 | 78 | |||||||||
| Net change in other current assets | 84 | 18 | |||||||||
| Net change in accrued compensation and other accrued liabilities | 411 | 416 | |||||||||
| Net change in income taxes payable | 52 | 27 | |||||||||
| Net change in other noncurrent assets and liabilities | (87) | (94) | |||||||||
| Net cash provided by operating activities | 957 | 872 | |||||||||
| Cash flows from investing activities: | |||||||||||
| Capital expenditures | (36) | (28) | |||||||||
| Cash paid for acquisitions, net of cash and restricted cash acquired | (289) | (332) | |||||||||
| Net proceeds from sales of operations/books of business | 4 | 2 | |||||||||
| Net funding of investment transactions | 1 | — | |||||||||
| Net funding of premium finance loans | 82 | 83 | |||||||||
| Net cash used by investing activities | (238) | (275) | |||||||||
| Cash flows from financing activities: | |||||||||||
| Payments on acquisition earnouts | (115) | (11) | |||||||||
| Proceeds from issuance of common stock | 55 | 1,335 | |||||||||
| Repurchases of common stock | (310) | — | |||||||||
| Dividends paid | (180) | (166) | |||||||||
| Net change in fiduciary assets and liabilities | (68) | 21 | |||||||||
| Net borrowings on premium financing debt facility | (78) | (75) | |||||||||
| Borrowings on line of credit facility | 1,975 | — | |||||||||
| Repayments on line of credit facility | (1,690) | — | |||||||||
| Net borrowings of corporate related long-term debt | (314) | 1 | |||||||||
| Debt acquisition costs | 2 | 2 | |||||||||
| Net cash (used) provided by financing activities | (723) | 1,107 | |||||||||
| Effect of changes in foreign exchange rates on cash, cash equivalents, restricted cash and fiduciary cash | (52) | 67 | |||||||||
| Net (decrease) increase in cash, cash equivalents, restricted cash and fiduciary cash | (56) | 1,771 | |||||||||
| Cash, cash equivalents, restricted cash and fiduciary cash at beginning of period | 8,538 | 20,468 | |||||||||
| Cash, cash equivalents, restricted cash and fiduciary cash at end of period | $ | 8,482 | $ | 22,239 |
See notes to consolidated financial statements.
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Arthur J. Gallagher & Co.
Consolidated Statement of Stockholders’ Equity
(Unaudited - in millions)
| Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2025 | 257.0 | $ | 257.0 | $ | 17,783 | $ | 5,806 | $ | (525) | $ | 26 | $ | 23,347 | ||||||||||||||||||||||||||||
| Net earnings | — | — | — | 822 | — | 1 | 823 | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | (20) | — | (20) | ||||||||||||||||||||||||||||||||||
| Change in fair value of derivative instruments, net of taxes of $(7) million | — | — | — | — | (21) | — | (21) | ||||||||||||||||||||||||||||||||||
| Compensation expense related to stock option plan grants | — | — | 20 | — | — | — | 20 | ||||||||||||||||||||||||||||||||||
| Common stock issued in: | |||||||||||||||||||||||||||||||||||||||||
| Two purchase transactions | 0.1 | 0.1 | 17 | — | — | — | 17 | ||||||||||||||||||||||||||||||||||
| Stock option plans | 0.4 | 0.4 | 36 | — | — | — | 36 | ||||||||||||||||||||||||||||||||||
| Employee stock purchase plan | 0.1 | 0.1 | 15 | — | — | — | 15 | ||||||||||||||||||||||||||||||||||
| Shares issued to benefit plans | 0.5 | 0.5 | 131 | — | — | — | 132 | ||||||||||||||||||||||||||||||||||
| Deferred compensation and restricted stock | 0.2 | 0.2 | (55) | — | — | — | (55) | ||||||||||||||||||||||||||||||||||
| Common stock repurchases | (1.4) | (1.4) | (309) | — | — | — | (310) | ||||||||||||||||||||||||||||||||||
| Cash dividends declared on common stock | — | — | — | (182) | — | — | (182) | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2026 | 256.9 | $ | 256.9 | $ | 17,638 | $ | 6,446 | $ | (566) | $ | 27 | $ | 23,802 |
See notes to consolidated financial statements.
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Arthur J. Gallagher & Co.
Consolidated Statement of Stockholders’ Equity
(Unaudited - in millions)
| Common Stock | Capital in Excess of Par Value | Retained Earnings | Accumulated Other Comprehensive Loss | Noncontrolling Interests | Total | ||||||||||||||||||||||||||||||||||||
| Shares | Amount | ||||||||||||||||||||||||||||||||||||||||
| Balance at December 31, 2024 | 250.0 | $ | 250.0 | $ | 16,069 | $ | 4,986 | $ | (1,151) | $ | 26 | $ | 20,180 | ||||||||||||||||||||||||||||
| Net earnings | — | — | — | 704 | — | 5 | 709 | ||||||||||||||||||||||||||||||||||
| Net purchase of subsidiary shares from noncontrolling interests | — | — | — | — | — | 3 | 3 | ||||||||||||||||||||||||||||||||||
| Foreign currency translation | — | — | — | — | 217 | — | 217 | ||||||||||||||||||||||||||||||||||
| Compensation expense related to stock option plan grants | — | — | 18 | — | — | — | 18 | ||||||||||||||||||||||||||||||||||
| Common stock issued in: | |||||||||||||||||||||||||||||||||||||||||
| One purchase transaction | 0.1 | 0.1 | 17 | — | — | — | 17 | ||||||||||||||||||||||||||||||||||
| Stock option plans | 0.7 | 0.7 | 68 | — | — | — | 69 | ||||||||||||||||||||||||||||||||||
| Employee stock purchase plan | 0.1 | 0.1 | 14 | — | — | — | 14 | ||||||||||||||||||||||||||||||||||
| Stock issuance from public offering | 4.6 | 4.6 | 1,248 | — | — | — | 1,252 | ||||||||||||||||||||||||||||||||||
| Shares issued to benefit plans | 0.3 | 0.3 | 119 | — | — | — | 120 | ||||||||||||||||||||||||||||||||||
| Deferred compensation and restricted stock | 0.3 | 0.3 | (77) | — | — | — | (77) | ||||||||||||||||||||||||||||||||||
| Cash dividends declared on common stock | — | — | — | (167) | — | — | (167) | ||||||||||||||||||||||||||||||||||
| Balance at March 31, 2025 | 256.1 | $ | 256.1 | $ | 17,475 | $ | 5,523 | $ | (934) | $ | 34 | $ | 22,354 |
See notes to consolidated financial statements.
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Notes to March 31, 2026 Consolidated Financial Statements (Unaudited)
1. Summary of Significant Accounting Policies
Terms Used in Notes to Consolidated Financial Statements
ASC - Accounting Standards Codification.
ASU - Accounting Standards Update.
FASB - The Financial Accounting Standards Board.
GAAP - U.S. generally accepted accounting principles.
IRC - Internal Revenue Code.
IRS - Internal Revenue Service.
Underwriting enterprises - Insurance companies, reinsurance companies and various other forms of risk-taking entities, including intermediaries of underwriting enterprises.
Nature of Operations and Basis of Presentation
Arthur J. Gallagher & Co. and its subsidiaries, collectively referred to herein as we, our, us, Gallagher or the Company, provide insurance and reinsurance brokerage, consulting and third-party claims settlement and administration services to both domestic and international entities. We have three reportable segments: brokerage, risk management and corporate. Our brokers, agents and administrators act as intermediaries between underwriting enterprises and our clients.
Our brokerage segment operations provide brokerage and consulting services to entities of all types, including commercial, nonprofit, public sector entities, and, to a lesser extent, individuals, in the areas of insurance and reinsurance placements, risk of loss management, and management of employer sponsored benefit programs. Our risk management segment operations provide contract claim settlement, claim administration, loss control services and risk management consulting for commercial, nonprofit, captive and public sector entities, and various other organizations that choose to self-insure property/casualty coverages or choose to use a third‑party claims management organization rather than the claim services provided by underwriting enterprises. The corporate segment reports the financial information related to our debt and other corporate costs, clean energy investments, external acquisition‑related expenses and the impact of foreign currency translation.
We do not assume insurance underwriting risk on a net basis, other than with respect to immaterial amounts necessary to provide minimum or regulatory capital to organize captives, pools, specialized underwriters or risk-retention groups. Rather, capital necessary for covering losses is provided by underwriting enterprises.
Interest income, premium finance revenues and other income are primarily generated from our premium financing operations, our invested cash and restricted cash we hold on behalf of our clients, as well as clean energy investments. In addition, our share of the net earnings related to partially owned entities that are accounted for using the equity method is included in other income.
We are a global insurance brokerage, risk management and consulting services firm, headquartered in Rolling Meadows, Illinois. We provide these services in approximately 130 countries around the world through our owned operations and a network of correspondent brokers and consultants. We have prepared the accompanying unaudited consolidated financial statements pursuant to the rules and regulations of the SEC. Certain information and footnote disclosures normally included in annual financial statements have been omitted pursuant to such rules and regulations. The unaudited consolidated financial statements included herein are, in the opinion of management, prepared on a basis consistent with our audited consolidated financial statements for the year ended December 31, 2025, and include all normal recurring adjustments necessary for a fair presentation of the information set forth herein. The quarterly results of operations are not necessarily indicative of the results of operations to be reported for subsequent quarters or the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements and the notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2025. In the preparation of our unaudited consolidated financial statements as of March 31, 2026, management evaluated all material subsequent events or transactions that occurred after the balance sheet date through the date on which the financial statements were issued, for potential recognition and/or disclosure therein.
Use of Estimates
The preparation of our unaudited consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts reported in the financial statements and accompanying notes.
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These accounting principles require us to make estimates and assumptions that affect the reported amounts of assets and liabilities and revenues and expenses, and the disclosure of contingent assets and liabilities at the date of our unaudited consolidated financial statements. We periodically evaluate our estimates and assumptions, including those relating to the valuation of goodwill and other intangible assets, right-of-use assets, investments, income taxes, revenue recognition, deferred costs, stock-based compensation, claims handling obligations, retirement plans, litigation and contingencies. We base our estimates on historical experience and various assumptions that we believe to be reasonable based on specific circumstances. Such estimates and assumptions could change in the future as more information becomes known, which could impact the amounts reported and disclosed in the notes herein.
2. Effect of New Accounting Pronouncements
Disaggregation of Income Statement Expenses
In November 2024, the FASB issued ASU 2024-03, Income Statement Reporting–Comprehensive Income–Expense Disaggregation Disclosures (Subtopic 220-40), Disaggregation of Income Statement Expenses. The standard update improves the disclosures about a public business entity’s expenses by requiring more detailed information about the types of expenses (including purchases of inventory, employee compensation, depreciation and amortization) included within income statement expense captions. The guidance will be effective for annual reporting periods beginning after December 15, 2026, and interim reporting periods beginning after December 15, 2027. Early adoption is permitted. The standard updates are to be applied prospectively with the option for retrospective application. We are currently evaluating the impact of adoption of the standard update on our financial statement disclosures.
Accounting for Internal-Use Software
In September 2025, the FASB issued ASU 2025-06, Intangibles-Goodwill and Other-Internal-Use Software (Subtopic 350-40): Targeted Improvements to the Accounting for Internal-Use Software, which amends the guidance in ASC 350-40. The amendments modernize the recognition and disclosure requirements for internal-use software costs, introducing a more judgment-based approach while removing the previous “development stage” model. The amendment in the ASU is effective for all entities for fiscal years beginning after December 15, 2027, and interim periods within those fiscal years, with early adoption permitted. Entities may apply the guidance using a prospective, retrospective or modified transition approach. We are currently evaluating the impact of adoption of the standard update on our financial statement disclosures.
3. Business Combinations
During the three-month period ended March 31, 2026, we acquired substantially all of the ownership interest or net assets, as applicable, of the following firms in exchange for our common stock and/or cash. These acquisitions have been accounted for using the acquisition method for recording business combinations (in millions, except share data):
| Name and Effective Date of Acquisition | Common Shares Issued | Common Shares Value | Cash Paid | Accrued Liability | Escrow Deposited | Recorded Earnout Payable | Total Recorded Purchase Price | Maximum Potential Earnout Payable | ||||||||||||||||||||||||||||||||||||||||||
| (000s) | ||||||||||||||||||||||||||||||||||||||||||||||||||
| Krose GmbH & Co KG February 25, 2026 (KGC) | 66 | $ | 15 | $ | 203 | $ | 2 | $ | — | $ | — | $ | 220 | $ | — | |||||||||||||||||||||||||||||||||||
| Eight other acquisitions completed in 2026 | — | — | 82 | 2 | 7 | 23 | 114 | 40 | ||||||||||||||||||||||||||||||||||||||||||
| 66 | $ | 15 | $ | 285 | $ | 4 | $ | 7 | $ | 23 | $ | 334 | $ | 40 |
Common shares issued in connection with acquisitions are valued at closing market prices as of the effective date of the applicable acquisition or on the days when the shares are issued, if purchase consideration is deferred. We record escrow deposits that are returned to us as a result of adjustments to net assets acquired as reductions of goodwill when the escrows are settled. The maximum potential earnout payables disclosed in the foregoing table represent the maximum amount of additional consideration that could be paid pursuant to the terms of the purchase agreement for the applicable acquisition. The amounts recorded as earnout payables, which are primarily based upon the estimated future operating results of the acquired entities over a two- to three-year period subsequent to the acquisition date, are measured at fair value as of the acquisition date and are included on that basis in the recorded purchase price consideration in the foregoing table. We will record subsequent changes in these estimated earnout obligations, including the accretion of discount, in our consolidated statement of earnings when incurred.
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The fair value of these earnout obligations is generally based on the present value of the expected future payments to be made to the sellers of the acquired entities in accordance with the provisions outlined in the respective purchase agreements, which is a Level 3 fair value measurement (discounted cash flow method of the income approach). In determining fair value, we estimated the acquired entity’s future performance using financial projections developed by management for the acquired entity and market participant assumptions that were derived for revenue growth and/or profitability. Revenue growth rates generally ranged from 5.0% to 15.0% for our 2026 acquisitions. We estimated future payments using the earnout formula and performance targets specified in each purchase agreement and the financial projections just described. We then discounted these payments to present value using a risk-adjusted rate that takes into consideration market-based rates of return that reflect the ability of the acquired entity to achieve the targets. The discount rate was 9.0% for all of our 2026 acquisitions. In some instances, the fair value of these earnout obligations can be based on other valuation methods including the Black-Scholes Option Pricing Method or Monte Carlo Simulation method. Changes in financial projections, market participant assumptions for revenue growth and/or profitability, or the risk-adjusted discount rate, would result in a change in the fair value of recorded earnout obligations.
During the three-month periods ended March 31, 2026 and 2025, we recognized $14 million and $13 million, respectively, of expense in our consolidated statement of earnings related to the accretion of the discount recorded for earnout obligations in connection with our acquisitions. In addition, during each of the three-month periods ended March 31, 2026 and 2025, we recognized $3 million of expense related to net adjustments in the estimated fair value of the liability for earnout obligations in connection with revised assumptions due to changes in interest rates, volatility and other assumptions and projections of future performance for 51 and 28 acquisitions, respectively. The aggregate amount of maximum earnout obligations related to acquisitions was $1,385 million as of March 31, 2026, of which $651 million was recorded in the consolidated balance sheet as of March 31, 2026, based on the estimated fair value of the expected future payments to be made, of which approximately $511 million can be settled in cash or stock at our option and $140 million must be settled in cash**.**
The following is a summary of the estimated fair values of the net assets acquired at the date of each acquisition made in the three-month period ended March 31, 2026 (in millions):
| KGC | Eight Other Acquisitions | Total | |||||||||||||||||||||||||||
| Cash and cash equivalents | $ | 4 | $ | 7 | $ | 11 | |||||||||||||||||||||||
| Fiduciary assets | 6 | 5 | 11 | ||||||||||||||||||||||||||
| Other current assets | 1 | — | 1 | ||||||||||||||||||||||||||
| Fixed assets | 3 | — | 3 | ||||||||||||||||||||||||||
| Noncurrent assets | — | 1 | 1 | ||||||||||||||||||||||||||
| Goodwill | 145 | 56 | 201 | ||||||||||||||||||||||||||
| Expiration lists | 102 | 60 | 162 | ||||||||||||||||||||||||||
| Non-compete agreements | 11 | 2 | 13 | ||||||||||||||||||||||||||
| Total assets acquired | 272 | 131 | 403 | ||||||||||||||||||||||||||
| Fiduciary liabilities | 6 | 5 | 11 | ||||||||||||||||||||||||||
| Current liabilities | 10 | 1 | 11 | ||||||||||||||||||||||||||
| Noncurrent liabilities | 36 | 11 | 47 | ||||||||||||||||||||||||||
| Total liabilities assumed | 52 | 17 | 69 | ||||||||||||||||||||||||||
| Total net assets acquired | $ | 220 | $ | 114 | $ | 334 |
Among other things, these acquisitions allow us to expand into desirable geographic locations, further extend our presence in the third-party claims administration, retail and wholesale insurance and reinsurance brokerage markets and increase the volume of general services currently provided. The excess of the purchase price over the estimated fair value of the tangible net assets acquired at the acquisition date was allocated to goodwill, expiration lists and non-compete agreements in the amounts of $201 million, $162 million and $13 million, respectively, within the brokerage and risk management segments.
Provisional estimates of fair value are established at the time of each acquisition and are subsequently reviewed and finalized within the first year of operations subsequent to the acquisition date to determine the necessity for adjustments. During this period, we may use independent third-party valuation specialists to assist us in finalizing the fair value of assets acquired and liabilities assumed. Fair value adjustments, if any, are most common to the values established for amortizable intangible assets, including expiration lists, non‑compete agreements and trade names, as well as for acquired software, and
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earnout liabilities, with the offset to goodwill, net of any income tax effect. On August 18, 2025, we acquired all of the issued and outstanding stock of Dolphin TopCo, Inc., the holding company of AssuredPartners for gross consideration of $13.8 billion. AssuredPartners was a leading U.S. insurance broker with client capabilities across commercial property/casualty, specialty, employee benefits and personal lines and had over 10,900 employees serving through offices located across the U.S., U.K. and Ireland. For details on the AssuredPartners, please refer to Note 3 in our Annual Report on Form 10-K for the year ended December 31, 2025. The allocation of the purchase price for AssuredPartners is preliminary, as we have not finalized the valuation of certain acquired identifiable intangible assets and net deferred tax balances. Accordingly, the goodwill recorded also represents a provisional estimate based on information available as of the acquisition date and updated through March 31, 2026. Provisional estimates of fair value were used by us to initially record the acquisition of the AssuredPartners as of the August 18, 2025 acquisition date. We are using independent third party valuation specialists to assist us in determining the fair value of assets acquired and liabilities assumed for this transaction. As of March 31, 2026, and as of the date of this filing, the specialists have not fully completed their analysis and thus these fair value estimates remain provisional. However, based on the work performed to date, in the three-month period ended March 31, 2026, we made adjustments to the amounts initially recorded for expiration lists and trade names. As a result of these adjustments, the amount allocated to expiration lists decreased by $222 million and the amount allocated to trade names increased by $2 million. These non-cash adjustments resulted in a net increase to goodwill of $220 million. The reason for the lower value allocated to expiration lists is due to receipt of additional information regarding average customer lives. These provisional fair value estimates will be subsequently reviewed and adjusted, if necessary, based on the results of the final valuation we expect to complete in second quarter 2026.
The fair value of the tangible assets and liabilities for each applicable acquisition at the acquisition date approximated their carrying values. In general, the fair value of expiration lists was established using the excess earnings method, which is an income approach based on estimated financial projections developed by management for each acquired entity using market participant assumptions. Revenue growth was 3.0% and attrition rates generally ranged from 5.0% to 10.0%, respectively, for our 2025 acquisitions for which valuations were performed in 2026. We estimate the fair value as the present value of the benefits anticipated from ownership of the subject expiration list in excess of returns required on the investment in contributory assets necessary to realize those benefits. The rate used to discount the net benefits was based on a risk-adjusted rate that takes into consideration market-based rates of return and reflects the risk of the asset relative to the acquired business. The discount rates generally ranged from 9.0% to 10.0% for our 2025 acquisitions for which valuations were performed in 2026. The fair value of non-compete agreements was established using the profit differential method, which is an income approach based on estimated financial projections developed by management for the acquired company using market participant assumptions and various non-compete scenarios.
Expiration lists, non-compete agreements and trade names related to our acquisitions are amortized using the straight-line method over their estimated useful lives (two to fifteen years for expiration lists, two to six years for non-compete agreements and two to fifteen years for trade names), while goodwill is not subject to amortization. We use the straight-line method to amortize these intangible assets because the pattern of their economic benefits cannot be reasonably determined with any certainty. We review all of our identifiable intangible assets for impairment periodically (at least annually) and whenever events or changes in business circumstances indicate that the carrying value of the assets may not be recoverable. In reviewing identifiable intangible assets, if the undiscounted future cash flows were less than the carrying amount of the respective (or underlying) asset, an indicator of impairment would exist and further analysis would be required to determine whether or not a loss would need to be charged against current period earnings as a component of amortization expense. Based on the results of impairment reviews during the three-month periods ended March 31, 2026 and 2025,we wrote off $1 million and $41 million, respectively, of amortizable assets related to the brokerage segment.
Of the $162 million of expiration lists and $13 million of non-compete agreements related to our acquisitions made during the three-month period ended March 31, 2026, $137 million and $13 million, respectively, are not expected to be deductible for income tax purposes. Accordingly, we recorded a deferred tax liability of $47 million and a corresponding amount of goodwill in the three-month period ended March 31, 2026, related to the nondeductible amortizable intangible assets.
Our unaudited consolidated financial statements for the three-month period ended March 31, 2026 include the operations of the entities acquired in the three-month period ended March 31, 2026 from their respective acquisition dates. The following is a summary of the unaudited pro forma historical results, as if these entities had been acquired at January 1, 2025 (in millions, except per share data):
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| Three-month period ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Total revenues | $ | 4,765 | $ | 3,740 | |||||||
| Net earnings attributable to controlling interests | 822 | 706 | |||||||||
| Basic net earnings per share | 3.20 | 2.77 | |||||||||
| Diluted net earnings per share | 3.16 | 2.72 |
The unaudited pro forma results above have been prepared for comparative purposes only and do not purport to be indicative of the results of operations which actually would have resulted had these acquisitions occurred at January 1, 2025, nor are they necessarily indicative of future operating results. Annualized revenues of entities acquired during the three-month period ended March 31, 2026 totaled approximately $59 million. For the three-month period ended March 31, 2026, total revenues, net pretax loss and net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables (EBITDAC) recorded in our unaudited consolidated statement of earnings related to our acquisitions made during the three-month period ended March 31, 2026 in the aggregate, were $7 million, $(3) million and nominal, respectively.
4. Contracts with Customers
Contract Assets and Liabilities/Contract Balances
Information about unbilled receivables, contract assets and contract liabilities from contracts with customers is as follows (in millions):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Unbilled receivables | $ | 2,753 | $ | 1,858 | |||||||
| Deferred contract costs | 220 | 338 | |||||||||
| Deferred revenue | 986 | 892 |
The unbilled receivables, which are included in accounts receivable in our consolidated balance sheet, primarily relate to our rights to consideration for work completed but not billed at the reporting date. These are transferred to the receivables when the client is billed. The deferred contract costs represent the costs we incur to fulfill a new or renewal contract with our clients prior to the effective date of the contract. These costs are expensed on the contract effective date. The deferred revenue in the consolidated balance sheet includes amounts that represent the remaining performance obligations under our contracts and amounts collected related to advanced billings and deposits received from customers that may or may not ultimately be recognized as revenues in the future. Deposits received from customers could be returned to the customers based on lesser actual transactional volume than originally billed volume.
Significant changes in the deferred revenue balances, which include foreign currency translation adjustments, during the period are as follows (in millions):
| Brokerage | Risk Management | Total | |||||||||||||||
| Deferred revenue at December 31, 2025 | $ | 693 | $ | 199 | $ | 892 | |||||||||||
| Incremental deferred revenue | 353 | 26 | 379 | ||||||||||||||
| Revenue recognized during the three-month period ended March 31, 2026 included in deferred revenue at December 31, 2025 | (248) | (24) | (272) | ||||||||||||||
| Net change in collected billings/deposits received from customers | (26) | 6 | (20) | ||||||||||||||
| Impact of change in foreign exchange rates | (1) | 1 | — | ||||||||||||||
| Deferred revenue recognized from business acquisitions | 7 | — | 7 | ||||||||||||||
| Deferred revenue at March 31, 2026 | $ | 778 | $ | 208 | $ | 986 |
Revenue recognized during the three-month period ended March 31, 2026 in the table above included revenue from 2025 acquisitions that would not be reflected in prior periods.
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Remaining Performance Obligations
Remaining performance obligations represent the portion of the contract price for which work has not been performed. As of March 31, 2026, the aggregate amount of the contract price allocated to remaining performance obligations was $986 million. The estimated revenue expected to be recognized in the future related to performance obligations that are unsatisfied (or partially unsatisfied) at the end of the reporting period is as follows (in millions):
| Brokerage | Risk Management | Total | |||||||||||||||
| 2026 (remaining nine months) | $ | 716 | $ | 119 | $ | 835 | |||||||||||
| 2027 | 56 | 42 | 98 | ||||||||||||||
| 2028 | 5 | 20 | 25 | ||||||||||||||
| 2029 | 1 | 10 | 11 | ||||||||||||||
| 2030 | — | 5 | 5 | ||||||||||||||
| Thereafter | — | 12 | 12 | ||||||||||||||
| Total | $ | 778 | $ | 208 | $ | 986 |
Deferred Contract Costs
We capitalize costs incurred to fulfill contracts as deferred contract costs which are included in other current assets in our consolidated balance sheet. Deferred contract costs were $220 million and $338 million as of March 31, 2026 and December 31, 2025, respectively. Capitalized fulfillment costs are amortized to expense on the contract effective date. The amount of amortization of the deferred contract costs was $409 million and $248 million for the three-month periods ended March 31, 2026 and 2025, respectively.
We have applied the practical expedient to recognize the incremental costs of obtaining contracts as an expense when incurred if the amortization period of the assets that we otherwise would have recognized is one year or less for our brokerage segment. These costs are included in compensation and operating expenses in our consolidated statement of earnings.
5. Intangible Assets
The carrying amount of goodwill at March 31, 2026 and December 31, 2025 allocated by domestic and foreign operations is as follows (in millions):
| Brokerage | Risk Management | Corporate | Total | ||||||||||||||||||||
| At March 31, 2026 | |||||||||||||||||||||||
| United States | $ | 15,668 | $ | 109 | $ | — | $ | 15,777 | |||||||||||||||
| United Kingdom | 3,468 | 139 | — | 3,607 | |||||||||||||||||||
| Canada | 624 | — | — | 624 | |||||||||||||||||||
| Australia | 632 | 247 | — | 879 | |||||||||||||||||||
| New Zealand | 225 | 9 | — | 234 | |||||||||||||||||||
| Other foreign | 1,807 | 13 | 17 | 1,837 | |||||||||||||||||||
| Total goodwill | $ | 22,424 | $ | 517 | $ | 17 | $ | 22,958 | |||||||||||||||
| At December 31, 2025 | |||||||||||||||||||||||
| United States | $ | 16,428 | $ | 109 | $ | — | $ | 16,537 | |||||||||||||||
| United Kingdom | 2,889 | 142 | — | 3,031 | |||||||||||||||||||
| Canada | 628 | — | — | 628 | |||||||||||||||||||
| Australia | 591 | 238 | — | 829 | |||||||||||||||||||
| New Zealand | 225 | 8 | — | 233 | |||||||||||||||||||
| Other foreign | 1,317 | — | 18 | 1,335 | |||||||||||||||||||
| Total goodwill | $ | 22,078 | $ | 497 | $ | 18 | $ | 22,593 |
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The changes in the carrying amount of goodwill for the three-month period ended March 31, 2026 are as follows (in millions):
| Brokerage | Risk Management | Corporate | Total | ||||||||||||||||||||
| Balance as of December 31, 2025 | $ | 22,078 | $ | 497 | $ | 18 | $ | 22,593 | |||||||||||||||
| Goodwill acquired during the period | 188 | 13 | — | 201 | |||||||||||||||||||
| Goodwill true-ups due to appraisals and other acquisition adjustments (see Note 3) | 180 | (1) | — | 179 | |||||||||||||||||||
| Foreign currency translation adjustments during the period | (22) | 8 | (1) | (15) | |||||||||||||||||||
| Balance as of March 31, 2026 | $ | 22,424 | $ | 517 | $ | 17 | $ | 22,958 |
Major classes of amortizable intangible assets at March 31, 2026 and December 31, 2025 consist of the following (in millions):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Expiration lists | $ | 15,840 | $ | 15,968 | |||||||
| Accumulated amortization - expiration lists | (5,556) | (5,357) | |||||||||
| 10,284 | 10,611 | ||||||||||
| Non-compete agreements | 138 | 125 | |||||||||
| Accumulated amortization - non-compete agreements | (102) | (98) | |||||||||
| 36 | 27 | ||||||||||
| Trade names | 103 | 160 | |||||||||
| Accumulated amortization - trade names | (57) | (114) | |||||||||
| 46 | 46 | ||||||||||
| Net amortizable assets | $ | 10,366 | $ | 10,684 |
Estimated aggregate amortization expense for each of the next five years and thereafter is as follows (in millions):
| 2026 (remaining nine months) | $ | 831 | |||
| 2027 | 1,080 | ||||
| 2028 | 1,037 | ||||
| 2029 | 978 | ||||
| 2030 | 920 | ||||
| Thereafter | 5,520 | ||||
| Total | $ | 10,366 |
6. Credit and Other Debt Agreements
The following is a summary of our corporate and other debt (in millions):
| March 31, 2026 | December 31, 2025 | ||||||||||
| Total Senior Notes | $ | 9,550 | $ | 9,550 | |||||||
| Total Note Purchase Agreements | 3,008 | 3,323 | |||||||||
| Credit Agreement | 285 | — | |||||||||
| Total Premium Financing Debt Facility | 156 | 226 | |||||||||
| Total corporate and other debt | 12,999 | 13,099 | |||||||||
| Less unamortized debt acquisition costs and discount | (126) | (129) | |||||||||
| Net corporate and other debt | $ | 12,873 | $ | 12,970 | |||||||
| The Senior Notes in the table above are registered by the Company with the Securities and Exchange Commission and are not guaranteed. |
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For details on the Credit and other debt agreements, please refer to Note 7 in our Annual Report on Form 10-K for the year ended December 31, 2025.
During February 2026, we used operating cash to fund the $140 million Series II note maturity that had a fixed rate of 4.85% that was due February 13, 2026 and $175 million Series I note maturity that had a fixed rate of 4.73% that was due February 27, 2026.
The Senior Notes, Note Purchase Agreements, the Credit Agreement and the Premium Financing Debt Facility contain various financial covenants that require us to maintain specified financial ratios. We were in compliance with these covenants at March 31, 2026.
7. Earnings Per Share
The following table sets forth the computation of basic and diluted net earnings per share (in millions, except per share data):
| Three-month period ended March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Net earnings attributable to controlling interests | $ | 822 | $ | 704 | |||||||
| Weighted average number of common shares outstanding | 257.1 | 254.8 | |||||||||
| Dilutive effect of stock options using the treasury stock method | 2.7 | 4.6 | |||||||||
| Weighted average number of common and common equivalent shares outstanding | 259.8 | 259.4 | |||||||||
| Basic net earnings per share | $ | 3.20 | $ | 2.76 | |||||||
| Diluted net earnings per share | $ | 3.16 | $ | 2.72 |
Anti-dilutive stock-based awards of 2.9 million and 0.4 million shares were outstanding at the three-month periods ended March 31, 2026 and 2025, respectively, which were excluded in the computation of the dilutive effect of stock-based awards for the three-month periods then ended. These stock‑based awards were excluded from the computation because the exercise prices on these stock‑based awards were greater than the average market price of our common shares during the respective period, and therefore, would be anti‑dilutive to earnings per share under the treasury stock method.
8. Stock Option Plans
On May 10, 2022, stockholders approved the Arthur J. Gallagher & Co. 2022 Long-Term Incentive Plan (which we refer to as the LTIP). For details on the LTIP, please refer to Note 8 in our Annual Report on Form 10-K for the year ended December 31, 2025.
As of March 31, 2026, 1.5 million shares were available for restricted stock, restricted stock units, and performance unit awards settled with stock.
Stock option grants and compensation expense (in millions):
| Three-month period ended March 31 | |||||||||||
| 2026 | 2025 | ||||||||||
| Grant date | March 1, 2026 | March 1, 2025 | |||||||||
| Stock options granted | 1.5 | 0.8 | |||||||||
| Stock option compensation expense | $ | 20 | $ | 18 |
Stock option grants vest ratable over three years and expire seven years from the date of grant, or earlier in the event of certain employment terminations. Options granted to executive officers are not subject to forfeiture upon departure after attaining age 62.
Fair value of stock options at the date of grant is estimated using the Black-Scholes model with the following weighted average assumptions:
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| Three-month period ended March 31 | |||||||||||
| 2026 | 2025 | ||||||||||
| Expected dividend yield | 1.2 | % | 0.8 | % | |||||||
| Expected risk-free interest rate | 3.6 | % | 4.1 | % | |||||||
| Volatility | 22.3 | % | 25.4 | % | |||||||
| Expected life (in years) | 5.5 | 5.5 |
The weighted average fair value per option for all options granted during the three-month periods ended March 31, 2026 and 2025, as determined on the grant date using the Black-Scholes option pricing model, was $54.96 and $98.27, respectively.
The following is a summary of our stock option activity and related information for 2026 (in millions, except exercise price and year data):
| Three-month period ended March 31, 2026 | |||||||||||||||||||||||
| Shares Under Option | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (in years) | Aggregate Intrinsic Value | ||||||||||||||||||||
| Beginning balance | 6.7 | $ | 177.48 | ||||||||||||||||||||
| Granted | 1.5 | 228.20 | |||||||||||||||||||||
| Exercised | (0.5) | 95.43 | |||||||||||||||||||||
| Forfeited or canceled | (0.1) | 187.95 | |||||||||||||||||||||
| Ending balance | 7.6 | $ | 192.31 | 4.07 | $ | 323 | |||||||||||||||||
| Exercisable at end of period | 3.1 | $ | 132.32 | 2.22 | $ | 259 | |||||||||||||||||
| Ending unvested and expected to vest | 4.1 | $ | 231.76 | 5.25 | $ | 61 |
Options with respect to 8.2 million shares (less any shares of restricted stock issued under the LTIP - see Note 10 to these unaudited consolidated financial statements) were available for grant under the LTIP at March 31, 2026.
The total intrinsic value of options exercised was $60 million and $162 million for the three-month periods ended March 31, 2026 and 2025, respectively. As of March 31, 2026, we had approximately $194 million of total unrecognized compensation expense related to nonvested options. We expect to recognize that cost over a weighted average period of approximately four years.
Options outstanding and exercisable at March 31, 2026 (in millions, except exercise price and year data):
| Options Outstanding | Options Exercisable | |||||||||||||||||||||||||||||||||||||||||||
| Range of Exercise Prices | Number Outstanding | Weighted Average Remaining Contractual Term (in years) | Weighted Average Exercise Price | Number Exercisable | Weighted Average Exercise Price | |||||||||||||||||||||||||||||||||||||||
| $ | 86.17 | — | $ | 86.17 | 0.7 | 0.95 | $ | 86.17 | 0.7 | $ | 86.17 | |||||||||||||||||||||||||||||||||
| 127.90 | — | 127.90 | 1.1 | 1.96 | 127.90 | 1.1 | 127.90 | |||||||||||||||||||||||||||||||||||||
| 156.85 | — | 156.85 | 0.7 | 2.84 | 156.85 | 0.4 | 156.85 | |||||||||||||||||||||||||||||||||||||
| 158.56 | — | 161.14 | 0.9 | 2.96 | 158.64 | 0.6 | 158.57 | |||||||||||||||||||||||||||||||||||||
| 177.09 | — | 202.13 | 1.0 | 3.96 | 177.71 | 0.3 | 177.09 | |||||||||||||||||||||||||||||||||||||
| 228.20 | — | 228.20 | 1.5 | 6.92 | 228.20 | — | — | |||||||||||||||||||||||||||||||||||||
| 238.88 | — | 243.54 | 0.9 | 4.92 | 243.54 | — | — | |||||||||||||||||||||||||||||||||||||
| 337.74 | — | 347.44 | 0.8 | 5.92 | 337.75 | — | — | |||||||||||||||||||||||||||||||||||||
| $ | 86.17 | — | $ | 347.44 | 7.6 | 4.07 | $ | 192.31 | 3.1 | $ | 132.32 |
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9. Deferred Compensation
We have a Deferred Equity Participation Plan (which we refer to as the DEPP), a non-qualified plan that provides distributions to certain key executives when they reach age 62 (or the one-year grant anniversary for participants over age 61) or upon later actual retirement, and distributions to certain production staff on a vesting schedule. For details on the DEPP, please refer to Note 9 in our Annual Report on Form 10-K for the year ended December 31, 2025.
Deferred equity participation plan activity (in millions):
| Three-month period ended March 31 | |||||||||||
| Awards and Compensation Expense | 2026 | 2025 | |||||||||
| DEPP awards approved and contributed to rabbi trust | $ | 25 | $ | 22 | |||||||
| DEPP compensation expense recognized | 5 | 4 | |||||||||
| DEPP distributions | $ | 14 | $ | 11 | |||||||
We also have a Deferred Cash Participation Plan (which we refer to as the DCPP), a non-qualified plan for certain key employees, other than executive officers, generally providing for vesting and/or distributions no sooner than five years from the award date. For details on the DCPP, please refer to Note 9 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Deferred cash participation plan activity (in millions):
| Three-month period ended March 31 | |||||||||||
| 2026 | 2025 | ||||||||||
| DCPP awards approved and contributed to rabbi trust | $ | 6 | $ | 8 | |||||||
| DCPP compensation expense recognized | 4 | 5 | |||||||||
| DCPP distributions | 11 | — |
At March 31, 2026 and December 31, 2025, we recorded $141 million (related to 1.8 million shares) and $81 million (related to 1.8 million shares), respectively, of unearned deferred compensation as a reduction of capital in excess of par value. Total intrinsic value of our unvested equity-based awards at March 31, 2026 and December 31, 2025 was $391 million and $475 million, respectively.
10. Restricted Stock and Performance Share Awards
Restricted Stock Awards
Under the LTIP (see Note 8), restricted stock or restricted stock units may be granted to officers, employees and non-employee directors subject to attainment of performance measures over an established performance period as determined by the compensation committee. Stock awards and related dividend equivalents are non-transferable and subject to forfeiture if employment is not maintained during the restriction period or performance measures are not attained. Restricted stock units may be settled in shares, cash, or a combination thereof; holders have no stockholder rights prior to settlement.
The maximum number of shares for restricted stock, restricted stock units and performance unit awards is 4.0 million. At March 31, 2026, 1.5 million shares remained available.
Restricted stock units activity under the LTIP (in millions):
| Three-month period ended March 31 | |||||||||||
| 2026 | 2025 | ||||||||||
| Restricted stock units granted | 0.5 | 0.3 | |||||||||
| Aggregate grant-date fair value | $ | 115 | $ | 94 | |||||||
| Compensation expense recognized | 26 | 13 | |||||||||
| Intrinsic value of unvested restricted stock units (end of period) | 441 | 531 | |||||||||
| Distributions | 54 | 111 |
In third quarter 2025 we granted employment inducement awards under NYSE Rule 303A.08 in connection with the AssuredPartners acquisition: (i) 341,700 restricted stock units ($100 million fair value) to former AssuredPartners
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employees with immediate vesting at closing, and (ii) 708,000 restricted stock units ($215 million fair value), vesting over a two to five year period commencing August 18, 2025 subject to employment with Gallagher.
Performance Share Awards
For details on how performance share awards are granted and distributed, please refer to Note 10 of our Form 10-K for the year ended December 31, 2025.
Performance share award activity under the LTIP (in millions):
| Three-month period ended March 31 | |||||||||||
| 2026 | 2025 | ||||||||||
| Provisional performance share awards approved | 0.1 | 0.1 | |||||||||
| Aggregate approval-date fair value | $ | 24 | $ | 22 | |||||||
| Compensation expense recognized | 3 | 6 | |||||||||
| Intrinsic value of unvested performance share awards (end of period) | 73 | 113 | |||||||||
| Distributions | 24 | 36 |
11. Derivatives and Hedging Activity
We are exposed to market risks, including changes in foreign currency exchange rates and interest rates. To manage the risk related to these exposures, we enter into various derivative instruments that reduce these risks by creating offsetting exposures. We generally do not enter into derivative transactions for trading or speculative purposes.
Foreign Exchange Risk Management
We are exposed to foreign exchange risk when we earn revenues, pay expenses, or enter into monetary intercompany transfers denominated in a currency that differs from our functional currency, or other transactions that are denominated in a currency other than our functional currency. We use foreign exchange derivatives, typically forward contracts and options, to reduce our overall exposure to the effects of currency fluctuations on cash flows. These exposures are hedged, on average, for less than three years.
Interest Rate Risk Management
We enter into various long-term debt agreements. We use interest rate derivatives, typically swaps, to reduce our exposure to the effects of interest rate fluctuations on the forecasted interest rates for up to three years into the future.
We have not received or pledged any collateral related to derivative arrangements at March 31, 2026.
During the three-month periods ended March 31, 2026 and 2025, $3 million and $2 million of expense, respectively, related to the fair value of derivative investments, was reclassified from accumulated other comprehensive loss to the statement of earnings. During the three-month periods ended March 31, 2026 and 2025, no amounts related to foreign currency translation were reclassified from accumulated other comprehensive loss to statement of earnings.
The notional fair values of the derivatives outstanding at March 31, 2026 have not changed since the filing of the Annual Report on Form 10-K for the year ended December 31, 2025 and the related fair values have not changed materially.
We estimate that approximately $8 million of pretax gain currently included within accumulated other comprehensive income will be reclassified into earnings in the next twelve months.
12. Commitments, Contingencies and Off-Balance Sheet Arrangements
In connection with our investing and operating activities, we have entered into certain contractual obligations and commitments. Our future minimum cash payments, including interest, associated with our contractual obligations pursuant
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to the Senior Notes, Note Purchase Agreements, Credit Agreement, Premium Financing Debt Facility, operating leases and purchase obligations at March 31, 2026 were as follows (in millions):
| Payments Due by Period | ||||||||||||||||||||||||||||||||||||||||||||
| Contractual Obligations | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | Total | |||||||||||||||||||||||||||||||||||||
| Senior Notes | $ | — | $ | 750 | $ | — | $ | 750 | $ | — | $ | 8,050 | $ | 9,550 | ||||||||||||||||||||||||||||||
| Note Purchase Agreements | 325 | 478 | 200 | 350 | 466 | 1,189 | 3,008 | |||||||||||||||||||||||||||||||||||||
| Credit Agreement | 285 | — | — | — | — | — | 285 | |||||||||||||||||||||||||||||||||||||
| Premium Financing Debt Facility | 156 | — | — | — | — | — | 156 | |||||||||||||||||||||||||||||||||||||
| Interest on debt | 386 | 593 | 539 | 528 | 473 | 6,117 | 8,636 | |||||||||||||||||||||||||||||||||||||
| Total debt obligations | 1,152 | 1,821 | 739 | 1,628 | 939 | 15,356 | 21,635 | |||||||||||||||||||||||||||||||||||||
| Operating lease obligations | 120 | 148 | 113 | 88 | 77 | 191 | 737 | |||||||||||||||||||||||||||||||||||||
| Less sublease arrangements | (3) | (2) | (2) | (1) | — | — | (8) | |||||||||||||||||||||||||||||||||||||
| Outstanding purchase obligations | 233 | 246 | 94 | 66 | 34 | 65 | 738 | |||||||||||||||||||||||||||||||||||||
| Total contractual obligations | $ | 1,502 | $ | 2,213 | $ | 944 | $ | 1,781 | $ | 1,050 | $ | 15,612 | $ | 23,102 |
The amounts presented in the table above may not necessarily reflect our actual future cash funding requirements, because the actual timing of the future payments made may vary from the stated contractual obligation.
For details on the nature of Commitments, Contingencies and Off-Balance Sheet Arrangements please refer to Note 15 of our Annual Report on Form 10-K for the year ended December 31, 2025.
Off-Balance Sheet Commitments - Our total unrecorded commitments associated with outstanding letters of credit, financial guarantees and funding commitments as of March 31, 2026 were as follows (in millions):
| Amount of Commitment Expiration by Period | Total Amounts Committed | |||||||||||||||||||||||||||||||||||||||||||
| Off-Balance Sheet Commitments | 2026 | 2027 | 2028 | 2029 | 2030 | Thereafter | ||||||||||||||||||||||||||||||||||||||
| Letters of credit | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 14 | $ | 14 | ||||||||||||||||||||||||||||||
| Financial guarantees | — | — | — | — | — | 49 | 49 | |||||||||||||||||||||||||||||||||||||
| Total commitments | $ | — | $ | — | $ | — | $ | — | $ | — | $ | 63 | $ | 63 |
Litigation, Regulatory and Taxation Matters - We routinely are involved in legal proceedings, claims, disputes, regulatory matters and governmental inspections or investigations arising in the ordinary course of or incidental to our business, including E&O claims and those noted below in this section. We record accruals in the unaudited consolidated financial statements for pending litigation when we determine that an unfavorable outcome is probable and the amount of the loss can be reasonably estimated. For the matters we disclose that do not include an estimate of the amount of loss or range of losses, such an estimate is not possible or is immaterial, and we may be unable to estimate the possible loss or range of losses that could potentially result from the application of non-monetary remedies, unless disclosed below. We currently believe that the ultimate outcome of these proceedings, individually and in the aggregate, will not materially harm our financial position, results of operations or cash flows. However, legal proceedings and government investigations are subject to inherent uncertainties, and unfavorable rulings or other adverse events could occur, including the payment of substantial monetary damages or an injunction or other order prohibiting us from selling one or more products at all or in particular ways, precluding particular business practices or requiring other remedies, which may result in a material adverse impact on our business, results of operations or financial position.
As previously disclosed, our IRC 831(b) (or “micro-captive”) advisory services business has been under a promoter investigation by the IRS since 2013. Among other matters, the IRS is investigating whether we have been acting as a tax shelter promoter in connection with these operations. Additionally, the IRS is conducting a criminal investigation related to IRC 831(b) micro-captive underwriting enterprises. We have been advised that we are not a target of the criminal investigation. We are fully cooperating with both matters.
Contingent Liabilities - The contingent liabilities at March 31, 2026 are not material and have not changed materially since the filing of the Annual Report on Form 10-K for the year ended December 31, 2025.
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13. Supplemental Disclosures of Cash Flow Information
| Three-month period ended March 31 | ||||||||||||||
| Supplemental disclosures of cash flow information (in millions): | 2026 | 2025 | ||||||||||||
| Interest paid | $ | 229 | $ | 133 | ||||||||||
| Income taxes paid, net | 72 | 67 |
The following is a reconciliation of our end of period cash, cash equivalents, restricted cash and fiduciary cash balances as presented in the consolidated statement of cash flows for the three-month periods ended March 31, 2026 and 2025 (in millions):
| March 31, | |||||||||||
| 2026 | 2025 | ||||||||||
| Cash and cash equivalents - non-restricted cash | $ | 1,173 | $ | 16,483 | |||||||
| Cash and cash equivalents - restricted cash | 240 | 209 | |||||||||
| Total cash and cash equivalents | 1,413 | 16,692 | |||||||||
| Fiduciary cash | 7,069 | 5,547 | |||||||||
| Total cash, cash equivalents, restricted cash and fiduciary cash | $ | 8,482 | $ | 22,239 |
Total cash and cash equivalents, restricted cash and fiduciary cash at March 31, 2026 and March 31, 2025, include $3,272 million and $17,045 million, respectively, of income earning money market accounts. The decrease in cash invested in money market accounts between years is primarily due to the proceeds received from the AssuredPartners Financing ($13.5 billion) and proceeds received in January 2025 from the exercise by the underwriters of the overallotment provision related to the follow-on-common stock offering ($1.3 billion) which was used to fund the acquisition of AssuredPartners that closed on August 18, 2025. Please refer to Note 3 of our Form 10-K for the year ended December 31, 2025 for more information regarding the AssuredPartners Financing. The dividend income on money market accounts was recorded in interest income, premium finance and other income in our consolidated statement of earnings, which decreased $161 million during the three-month period ended March 31, 2026 to $86 million for the period ended March 31, 2026 compared to $247 million for the period ended March 31, 2025.
We have a qualified contributory savings and thrift 401(k) plan covering the majority of our domestic employees. For eligible employees who have met the plan’s age and service requirements to receive matching contributions, we historically have matched 100% of pretax and Roth elective deferrals up to a maximum of 5.0% of eligible compensation, subject to federal limits on plan contributions and not in excess of the maximum amount deductible for federal income tax purposes. Beginning in 2021, the amount matched by the Company will be discretionary and annually determined by management. Employees must be employed and eligible for the plan on the last day of the plan year to receive a matching contribution, subject to certain exceptions enumerated in the plan document. Matching contributions are subject to a five-year graduated vesting schedule and can be funded in cash or the common stock of the Company. We expensed (net of plan forfeitures) $40 million and $30 million related to the plan in the three-month periods ended March 31, 2026 and 2025, respectively. During 2025, our management authorized the 5.0% employer matching contribution on eligible compensation to the 401(k) plan for the 2025 plan year to be funded with our common stock, which was funded in February 2026. During 2024, our management authorized the 5.0% employer matching contribution on eligible compensation to the 401(k) plan for the 2024 plan year to be funded with our common stock, which was funded in February 2025.
14. Accumulated Other Comprehensive Loss
The after-tax components of our accumulated other comprehensive loss attributable to controlling interests consist of the following (in millions):
| Pension Liability | Foreign Currency Translation | Fair Value of Derivative Investments | Accumulated Comprehensive Loss | ||||||||||||||||||||
| Balance as of December 31, 2025 | $ | (23) | $ | (602) | $ | 100 | $ | (525) | |||||||||||||||
| Net change in period | — | (20) | (21) | (41) | |||||||||||||||||||
| Balance as of March 31, 2026 | $ | (23) | $ | (622) | $ | 79 | $ | (566) |
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The foreign currency translation during the three-month period ended March 31, 2026 relates to the net impact of changes in the value of the local currencies relative to the U.S. dollar for our operations in Australia, Canada, the Caribbean, India, New Zealand, the U.K. and other non-U.S. locations. The reporting currency for our financial statements is the U.S. dollar. Certain of our assets, liabilities, expenses and revenues are denominated in currencies other than the U.S. dollar, primarily the Australian dollar, British pound, Canadian dollar and New Zealand dollar. To prepare our unaudited consolidated financial statements, we must translate those assets, liabilities, expenses and revenues into U.S. dollars at the applicable exchange rates. Assets and liabilities of non-U.S. dollar functional currency operations are translated into U.S. dollars at end-of-period exchange rates while revenues, expenses and cash flows are translated at average monthly exchange rates over the period. Equity is translated at historical exchange rates and the resulting cumulative translation adjustments are included as a component of accumulated other comprehensive loss in the consolidated balance sheet. The net change in the foreign currency translation during the three-month period ended March 31, 2026 primarily relates to goodwill (see Note 5 for the impact on goodwill) and amortizable intangible assets held by operations with a non-U.S. dollar functional currency. See Note 11 for more information regarding derivative instruments.
15. Segment Information
We have three reportable segments: brokerage, risk management and corporate.
The brokerage segment is primarily comprised of our retail and wholesale insurance and reinsurance brokerage operations. The brokerage segment (which comprises our retail property/casualty, wholesale, reinsurance, benefits and captive operations) generates revenues through commissions paid by underwriting enterprises and through fees charged to our clients. Our brokers, agents and administrators act as intermediaries between underwriting enterprises and our clients and we do not assume net underwriting risks.
The risk management segment provides contract claim settlement and administration services for commercial, nonprofit, captive and public sector entities, and various organizations that choose to self-insure some or all of their property/casualty coverages and for underwriting enterprises that choose to outsource some or all of their property/casualty claims departments. These operations also provide claims management, loss control consulting and insurance property appraisal services. Revenues are principally generated on a negotiated per-claim or per-service fee basis. Our risk management segment also provides risk management consulting services that are recognized as the services are delivered.
Revenues in the corporate segment consists of other income related to the run-off of clean energy and legacy investments. In addition, the corporate segment reports the financial information related to our debt, external acquisition-related expenses, other corporate costs and the impact of foreign currency remeasurements.
Allocations of interest income and certain expenses are based on reasonable assumptions and estimates primarily using revenue, headcount and other information. We allocate the provision for income taxes to the brokerage and risk management segments using the local country statutory rates. Reported operating results by segment would change if different methods were applied.
Our Chief Operating Decision Maker (which we refer to as CODM), who is our Chairman and Chief Executive Officer, analyzes and evaluates the operating performance of the three reportable segments presented below. We have disclosed for each reportable segment the significant expense categories that are reviewed by the CODM and there are no additional significant expenses within the expense categories presented in the tables below. The key areas of focus by the CODM for allocation of resources are revenues from each reportable segment, as well as their compensation and operating expenses.
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Financial information relating to our segments for the three-month periods ended March 31, 2026 and 2025 as follows (in millions):
| Three-Month Period Ended March 31, 2026 | Brokerage | Risk Management | Corporate | Total | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Commissions | $ | 3,123 | $ | — | $ | — | $ | 3,123 | ||||||||||||||||||
| Fees | 792 | 420 | — | 1,212 | ||||||||||||||||||||||
| Supplemental revenues | 180 | — | — | 180 | ||||||||||||||||||||||
| Contingent revenues | 115 | — | — | 115 | ||||||||||||||||||||||
| Interest income, premium finance revenues and other income (loss) | 83 | 8 | (5) | 86 | ||||||||||||||||||||||
| Revenues before reimbursements | 4,293 | 428 | (5) | 4,716 | ||||||||||||||||||||||
| Reimbursements | — | 42 | — | 42 | ||||||||||||||||||||||
| Total revenues | 4,293 | 470 | (5) | 4,758 | ||||||||||||||||||||||
| Compensation | 2,211 | 264 | 41 | 2,516 | ||||||||||||||||||||||
| Operating | 520 | 78 | 45 | 643 | ||||||||||||||||||||||
| Reimbursements | — | 42 | — | 42 | ||||||||||||||||||||||
| Interest | — | — | 158 | 158 | ||||||||||||||||||||||
| Depreciation | 49 | 10 | 2 | 61 | ||||||||||||||||||||||
| Amortization | 271 | 7 | — | 278 | ||||||||||||||||||||||
| Change in estimated acquisition earnout payables | 16 | 1 | — | 17 | ||||||||||||||||||||||
| Total expenses | 3,067 | 402 | 246 | 3,715 | ||||||||||||||||||||||
| Earnings (loss) before income taxes | 1,226 | 68 | (251) | 1043 | ||||||||||||||||||||||
| Provision (benefit) for income taxes | 313 | 18 | (111) | 220 | ||||||||||||||||||||||
| Net earnings (loss) | 913 | 50 | (140) | 823 | ||||||||||||||||||||||
| Net earnings attributable to noncontrolling interests | 1 | — | — | 1 | ||||||||||||||||||||||
| Net earnings (loss) attributable to controlling interests | $ | 912 | $ | 50 | $ | (140) | $ | 822 | ||||||||||||||||||
| Net foreign exchange (loss) gain | $ | 2 | $ | (6) | $ | — | $ | (4) | ||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| United States | $ | 2,955 | $ | 367 | $ | (5) | $ | 3,317 | ||||||||||||||||||
| United Kingdom | 745 | 30 | — | 775 | ||||||||||||||||||||||
| Australia | 79 | 67 | — | 146 | ||||||||||||||||||||||
| Canada | 91 | 2 | — | 93 | ||||||||||||||||||||||
| New Zealand | 42 | — | — | 42 | ||||||||||||||||||||||
| Other foreign | 381 | 4 | — | 385 | ||||||||||||||||||||||
| Total revenues | $ | 4,293 | $ | 470 | $ | (5) | $ | 4,758 | ||||||||||||||||||
| At March 31, 2026 | ||||||||||||||||||||||||||
| Identifiable assets: | ||||||||||||||||||||||||||
| United States | $ | 48,944 | $ | 1,272 | $ | 2,043 | $ | 52,259 | ||||||||||||||||||
| United Kingdom | 13,279 | 432 | — | 13,711 | ||||||||||||||||||||||
| Australia | 1,738 | 476 | — | 2,214 | ||||||||||||||||||||||
| Canada | 1,452 | 8 | — | 1,460 | ||||||||||||||||||||||
| New Zealand | 706 | 8 | — | 714 | ||||||||||||||||||||||
| Other foreign | 7,760 | 40 | 143 | 7,943 | ||||||||||||||||||||||
| Total identifiable assets | $ | 73,879 | $ | 2,236 | $ | 2,186 | $ | 78,301 | ||||||||||||||||||
| Goodwill - net | $ | 22,424 | $ | 517 | $ | 17 | $ | 22,958 | ||||||||||||||||||
| Amortizable intangible assets - net | 10,154 | 212 | — | 10,366 |
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| Three-Month Period Ended March 31, 2025 | Brokerage | Risk Management | Corporate | Total | ||||||||||||||||||||||
| Revenues: | ||||||||||||||||||||||||||
| Commissions | $ | 2,249 | $ | — | $ | — | $ | 2,249 | ||||||||||||||||||
| Fees | 620 | 365 | — | 985 | ||||||||||||||||||||||
| Supplemental revenues | 114 | — | — | 114 | ||||||||||||||||||||||
| Contingent revenues | 93 | — | — | 93 | ||||||||||||||||||||||
| Interest income, premium finance revenues and other income | 238 | 9 | — | 247 | ||||||||||||||||||||||
| Revenues before reimbursements | 3,314 | 374 | — | 3,688 | ||||||||||||||||||||||
| Reimbursements | — | 39 | — | 39 | ||||||||||||||||||||||
| Total revenues | 3,314 | 413 | — | 3,727 | ||||||||||||||||||||||
| Compensation | 1,617 | 231 | 49 | 1,897 | ||||||||||||||||||||||
| Operating | 346 | 71 | 73 | 490 | ||||||||||||||||||||||
| Reimbursements | — | 39 | — | 39 | ||||||||||||||||||||||
| Interest | — | — | 158 | 158 | ||||||||||||||||||||||
| Depreciation | 33 | 10 | 2 | 45 | ||||||||||||||||||||||
| Amortization | 204 | 6 | — | 210 | ||||||||||||||||||||||
| Change in estimated acquisition earnout payables | 15 | — | — | 15 | ||||||||||||||||||||||
| Total expenses | 2,215 | 357 | 282 | 2,854 | ||||||||||||||||||||||
| Earnings (loss) before income taxes | 1,099 | 56 | (282) | 873 | ||||||||||||||||||||||
| Provision (benefit) for income taxes | 283 | 15 | (134) | 164 | ||||||||||||||||||||||
| Net earnings (loss) | 816 | 41 | (148) | 709 | ||||||||||||||||||||||
| Net earnings attributable to noncontrolling interests | 5 | — | — | 5 | ||||||||||||||||||||||
| Net earnings (loss) attributable to controlling interests | $ | 811 | $ | 41 | $ | (148) | $ | 704 | ||||||||||||||||||
| Net foreign exchange gain | $ | 1 | $ | — | $ | 24 | $ | 25 | ||||||||||||||||||
| Revenues: | — | |||||||||||||||||||||||||
| United States | $ | 2,131 | $ | 332 | $ | — | $ | 2,463 | ||||||||||||||||||
| United Kingdom | 675 | 22 | — | 697 | ||||||||||||||||||||||
| Australia | 69 | 56 | — | 125 | ||||||||||||||||||||||
| Canada | 99 | 2 | — | 101 | ||||||||||||||||||||||
| New Zealand | 40 | — | — | 40 | ||||||||||||||||||||||
| Other foreign | 300 | 1 | — | 301 | ||||||||||||||||||||||
| Total revenues | $ | 3,314 | $ | 413 | $ | — | $ | 3,727 | ||||||||||||||||||
| At March 31, 2025 | ||||||||||||||||||||||||||
| Identifiable assets: | ||||||||||||||||||||||||||
| United States | $ | 22,461 | $ | 1,130 | $ | 17,551 | $ | 41,142 | ||||||||||||||||||
| United Kingdom | 20,826 | 427 | 10 | 21,263 | ||||||||||||||||||||||
| Australia | 1,583 | 380 | — | 1,963 | ||||||||||||||||||||||
| Canada | 1,685 | 4 | — | 1,689 | ||||||||||||||||||||||
| New Zealand | 659 | 13 | — | 672 | ||||||||||||||||||||||
| Other foreign | 7,214 | 28 | 125 | 7,367 | ||||||||||||||||||||||
| Total identifiable assets | $ | 54,428 | $ | 1,982 | $ | 17,686 | $ | 74,096 | ||||||||||||||||||
| Goodwill - net | $ | 12,277 | $ | 419 | $ | 19 | $ | 12,715 | ||||||||||||||||||
| Amortizable intangible assets - net | 4,335 | 197 | — | 4,532 |
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