Arthur J. Gallagher & Co.

Previous wording

The discussion and analysis that follows relates to our financial condition and results of operations for the six-month period ended June 30, 2025. Readers should review this information in conjunction with the June 30, 2025 unaudited consolidated financial statements and notes included in Item 1 of Part I of this quarterly report on Form 10‑Q and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our annual report on Form 10-K for the year ending December 31, 2024.

Current wording

The discussion and analysis that follows relates to our financial condition and results of operations for the nine-month period ended September 30, 2025. Readers should review this information in conjunction with the September 30, 2025 unaudited consolidated financial statements and notes included in Item 1 of Part I of this quarterly report on Form 10‑Q and the audited consolidated financial statements and notes, and Management’s Discussion and Analysis of Financial Condition and Results of Operations, contained in our annual report on Form 10-K for the year ending December 31, 2024.

Previous wording

For Information on fiscal second quarter 2024 results and similar comparisons, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-Q for the fiscal three and six-month periods ended June 30, 2025.

Current wording

For Information on fiscal third quarter 2024 results and similar comparisons, see “Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Form 10-Q for the fiscal three and nine-month periods ended September 30, 2024.

Previous wording

•Acquisition integration costs, which include costs related to certain large acquisitions (including the acquisitions of Willis Re, Buck, Cadence Insurance, Eastern Insurance, My Plan Manager and Woodruff Sawyer), outside the scope of our usual tuck‑in strategy, not expected to occur on an ongoing basis in the future once we fully assimilate the applicable acquisition. These costs are typically associated with redundant workforce, compensation expense related to amortization of certain retention bonus arrangements, extra lease space, duplicate services and external costs incurred to assimilate the acquisition into our IT related systems.

Current wording

•Acquisition integration costs, which include costs related to certain large acquisitions (including the acquisitions of Willis Towers Watson plc treaty reinsurance brokerage operations (which we refer to as Willis Re), Buck, Cadence Insurance, Inc. (which we refer to as Cadence Insurance), Eastern Insurance Group, LLC (which we refer to as Eastern Insurance), My Plan Manager Group Pty Ltd (which we refer to as My Plan Manager), Woodruff-Sawyer and AssuredPartners), outside the scope of our usual tuck‑in strategy, not expected to occur on an ongoing basis in the future once we fully assimilate the applicable acquisition. These costs are typically associated with redundant workforce, compensation expense related to amortization of certain retention bonus arrangements, extra lease space, duplicate services and external costs incurred to assimilate the acquisition into our IT related systems.

Previous wording

•Transaction-related costs, which are associated with completed, future and terminated acquisitions. Costs primarily relate to the acquisitions of Willis Re, Buck, Cadence Insurance, Eastern Insurance and Woodruff Sawyer, which closed on April 10, 2025, and the pending acquisition of AssuredPartners. These include costs related to regulatory filings, legal and accounting services, insurance and incentive compensation.

Current wording

•Transaction-related costs, which are associated with completed, future and terminated acquisitions. Costs primarily relate to the acquisitions of Willis Re, Buck, Cadence Insurance, Eastern Insurance and Woodruff Sawyer, which closed on April 10, 2025, and AssuredPartners, which closed on August 18, 2025. These include costs related to

Previous wording

39 - amortization of intangible assets, and effective income tax rate impact, as applicable. Adjusted EPS is Adjusted Net Earnings divided by diluted weighted average shares outstanding. This measure provides a meaningful representation of our operating performance (and as such should not be used as a measure of our liquidity), and for the overall business is also presented to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability.

Current wording

•EPS, as adjusted and Net Earnings, as adjusted - Adjusted net earnings have been adjusted to exclude the after-tax impact of net gains on divestitures, acquisition integration costs, the impact of foreign currency translation, workforce related charges, lease termination related charges, acquisition related adjustments, transaction related costs, amortization of intangible assets, and effective income tax rate impact, as applicable. Adjusted EPS is Adjusted Net Earnings divided by diluted weighted average shares outstanding. This measure provides a meaningful representation of our operating performance (and as such should not be used as a measure of our liquidity), and for the overall business is also presented to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability.

Previous wording

Reconciliation of Non-GAAP Information Presented to GAAP Measures - This quarterly report on Form 10‑Q includes tabular reconciliations to the most comparable GAAP measures, as follows: for EBITDAC (on pages 51 and 58), for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share (on pages 44 and 45), for organic revenue measures (on pages 52 and 59), respectively, for the brokerage and risk management segments, for adjusted compensation and operating expenses and adjusted EBITDAC margin, (on pages 54 and 55) for the brokerage segment and (on pages 60 and 61) for the risk management segment.

Current wording

Reconciliation of Non-GAAP Information Presented to GAAP Measures - This quarterly report on Form 10‑Q includes tabular reconciliations to the most comparable GAAP measures, as follows: for EBITDAC (on pages 52 and 59), for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share (on pages 45 and 46), for organic revenue measures (on pages 53 and 60), respectively, for the brokerage and risk management segments, for adjusted compensation and operating expenses and adjusted EBITDAC margin, (on pages 55 and 56) for the brokerage segment and (on pages 61 and 62) for the risk management segment.

Previous wording

We are engaged in providing insurance brokerage, reinsurance brokerage, consulting services, and third-party property/casualty claims settlement and administration services to entities and individuals around the world. In the six-month period ended June 30, 2025, we generated approximately 65% of our revenues for the combined brokerage and risk management segments domestically and 35% internationally, primarily in Australia, Canada, New Zealand and the U.K. We have three reportable segments: brokerage, risk management and corporate. The brokerage and risk management segments contributed approximately 88% and 12%, respectively, to revenues during the six-month period ended June 30, 2025. The corporate segment did not generate any significant revenues in the six-month period ended June 30, 2025. Our major sources of operating revenues are commissions, fees and supplemental and contingent revenues from brokerage operations and fees from risk management operations. Interest income is earned on cash, cash equivalents and fiduciary cash and revenues are generated from premium financing.

Current wording

We are engaged in providing insurance brokerage, reinsurance brokerage, consulting services, and third-party property/casualty claims settlement and administration services to entities and individuals around the world. In the nine-month period ended September 30, 2025, we generated approximately 67% of our revenues for the combined brokerage and risk management segments domestically and 33% internationally, primarily in Australia, Canada, New Zealand and the U.K. We have three reportable segments: brokerage, risk management and corporate. The brokerage and risk management segments contributed approximately 87% and 13%, respectively, to revenues during the nine-month period ended September 30, 2025. The corporate segment did not generate any significant revenues in the nine-month period ended

Previous wording

We use the Council of Insurance Agents and Brokers (which we refer to as CIAB) insurance pricing quarterly survey as an indicator of the insurance rate environment. The CIAB represents the leading domestic and international insurance brokers, who write approximately 85% of the commercial property/casualty premiums in the U.S. The second quarter 2025 survey had not been published as of the filing date of this report. The first quarter 2025 survey indicated that commercial property/casualty rates increased by 4.2% on average and we expect a similar trend to be noted when the CIAB's second quarter 2025 survey report is issued, which would indicate overall continued price firming.

Current wording

We use the Council of Insurance Agents and Brokers (which we refer to as CIAB) insurance pricing quarterly survey as an indicator of the insurance rate environment. The CIAB represents the leading domestic and international insurance brokers, who write approximately 85% of the commercial property/casualty premiums in the U.S. The third quarter 2025 survey had not been published as of the filing date of this report. The second quarter 2025 survey indicated that commercial property/casualty rates increased by 3.7% on average and we expect a similar trend to be noted when the CIAB's third quarter 2025 survey report is issued, which would indicate overall continued price firming.

Previous wording

We believe increases in property/casualty rates will continue for the remainder of 2025 due to rising loss costs, increased frequency of natural catastrophe and weather related losses, prior year reserve volatility and social inflation. We estimate global insured natural catastrophe losses were approximately $84 billion during the first half of 2025. Further global natural catastrophe loss activity from severe convective storms, hurricanes and earthquakes during the remainder of 2025 may cause insurance and/or reinsurance carriers to increase property pricing upon renewal. Additionally, elevated loss trends and continued profitability concerns within casualty coverages, could lead to a more difficult rate and conditions environment in certain lines. Based on our experience, insurance and reinsurance carriers are providing adequate capacity in the market for nearly all lines of coverage and appear to be making rational pricing decisions. Accordingly, we are seeing more carrier competition across property, and continued caution within casualty lines.

Current wording

We believe increases in property/casualty rates will continue for the remainder of 2025 due to rising loss costs, increased frequency of natural catastrophe and weather related losses, prior year reserve volatility and social inflation. We estimate global insured natural catastrophe losses were approximately $105 billion during the first nine months of 2025. There has been no significant hurricane related losses in 2025; however, further global natural catastrophe loss activity during the remainder of the year may cause insurance and/or reinsurance carriers to increase property pricing upon renewal. Additionally, elevated loss trends and continued profitability concerns within casualty coverages, could lead to a more difficult rate and conditions environment in certain lines. Based on our experience, insurance and reinsurance carriers are providing adequate capacity in the market for nearly all lines of coverage and appear to be making rational pricing decisions. Accordingly, we are seeing more carrier competition across property, and continued caution within casualty lines.

Previous wording

The combination of economic growth and inflation is increasing insurable values, while a solid labor market with low unemployment is likely contributing to increases in client insured exposures. Additionally, we have yet to see any meaningful changes in our customers’ business activity from the prospect of tariffs.

Current wording

The combination of economic growth and inflation is increasing insurable values, while a resilient labor market with low unemployment is likely contributing to increases in client insured exposures. Additionally, we have yet to see any meaningful changes in our customers’ business activity from the prospect of tariffs.

Previous wording

On July 4, 2025, the One Big Beautiful Bill Act (which we refer to as OBBBA) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing its impact on our consolidated financial statements, but we do not believe there will be a material adverse impact on our consolidated statement of earnings from OBBBA.

Current wording

On July 4, 2025, the One Big Beautiful Bill Act (which we refer to as OBBBA) was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. The application of the OBBBA is not currently expected to have a material impact on our financial statements for 2025.

Previous wording

Summary of Financial Results - Six-Month Periods Ended June 30, 2025 and 2024

Current wording

Summary of Financial Results - Nine-Month Periods Ended September 30, 2025 and 2024

Previous wording

The following provides information that management believes is helpful when comparing revenues before reimbursements, net earnings, EBITDAC and diluted net earnings per share for the three and six-month periods ended June 30, 2025 with the same periods in 2024. In addition, these tables provide reconciliations to the most comparable GAAP measures for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share. Reconciliations of EBITDAC for the brokerage and risk management segments are provided on pages 51 and 58, respectively, of this filing.

Current wording

The following provides information that management believes is helpful when comparing revenues before reimbursements, net earnings, EBITDAC and diluted net earnings per share for the three and nine-month periods ended September 30, 2025 with the same periods in 2024. In addition, these tables provide reconciliations to the most comparable GAAP measures for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share. Reconciliations of EBITDAC for the brokerage and risk management segments are provided on pages 52 and 59, respectively, of this filing.

Previous wording

For the three-month period ended June 30, 2025, the pretax impact of the brokerage segment adjustments totals $279.9 million, mostly due to non-cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $71.2 million relating to these items. For the three-month period ended June 30, 2025, the pretax impact of the risk management segment adjustments totals $13.6 million, with a corresponding adjustment to the provision for income taxes of $3.7 million relating to these items. For the three-month period ended June 30, 2025, the pretax impact of the corporate segment adjustments totals $29.0 million, with a corresponding adjustment to the benefit for income taxes of $4.7 million. A detailed reconciliation of the 2025 provision (benefit) for income taxes is shown on page 46.

Current wording

For the three-month period ended September 30, 2025, the pretax impact of the brokerage segment adjustments totals $376.8 million, mostly due to non-cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $96.1 million relating to these items. For the three-month period ended September 30, 2025, the pretax impact of the risk management segment adjustments totals $9.3 million, with a corresponding adjustment to the provision for income taxes of $2.6 million relating to these items. For the three-month period ended September 30, 2025, the pretax impact of the corporate segment adjustments totals $57.8 million, with a corresponding adjustment to the benefit for income taxes of $13.9 million relating to these items. A detailed reconciliation of the 2025 provision (benefit) for income taxes is shown on page 47.

Previous wording

For the Six-Month Periods Ended June 30 Reported GAAP to Adjusted Non-GAAP Reconciliation:

Current wording

For the Nine-Month Periods Ended September 30 Reported GAAP to Adjusted Non-GAAP Reconciliation:

Previous wording

*For the six-month period ended June 30, 2025, the pretax impact of the brokerage segment adjustments totals $571.9 million, mostly due to non-cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $144.9 million relating to these items. For the six-month period ended June 30, 2025, the pretax impact of the risk management segment adjustments totals $24.3 million, with a corresponding adjustment to the provision for income taxes of $6.6 million relating to these items. For the six-month period ended June 30, 2025, the pretax impact of the corporate segment adjustments totals $52.1 million, with a corresponding adjustment to the benefit for income taxes of $7.8 million. A detailed reconciliation of the 2025 provision (benefit) for income taxes is shown on page 47.

Current wording

*For the nine-month period ended September 30, 2025, the pretax impact of the brokerage segment adjustments totals $948.7 million, mostly due to non-cash period expenses related to intangible amortization, with a corresponding adjustment to the provision for income taxes of $241.0 million relating to these items. For the nine-month period ended September 30, 2025, the pretax impact of the risk management segment adjustments totals $33.6 million, with a corresponding adjustment to the provision for income taxes of $9.2 million relating to these items. For the nine-month period ended September 30, 2025, the pretax impact of the corporate segment adjustments totals $109.9 million, with a corresponding adjustment to the benefit for income taxes of $21.7 million relating to these items. A detailed reconciliation of the 2025 provision (benefit) for income taxes is shown on page 48.

Previous wording

*For the three-month period ended June 30, 2024, the pretax impact of the brokerage segment adjustments totals $301.7 million, with a corresponding adjustment to the provision for income taxes of $78.9 million relating to these items. For the three-month period ended June 30, 2024, the pretax impact of the risk management segment adjustments totals $0.9 million, with a corresponding adjustment to the provision for income taxes of $0.2 million relating to these items. For the three-month period ended June 30, 2024, the pretax impact of the corporate segment adjustments totals $2.8 million, with a corresponding adjustment to the benefit for income taxes of $0.5 million. A detailed reconciliation of the 2024 provision (benefit) for income taxes is shown on page 46.

Current wording

*For the nine-month period ended September 30, 2024, the pretax impact of the brokerage segment adjustments totals $738.4 million, with a corresponding adjustment to the provision for income taxes of $195.1 million relating to these items. For the nine-month period ended September 30, 2024, the pretax impact of the risk management segment adjustments totals $15.8 million, with a corresponding adjustment to the provision for income taxes of $4.3 million relating to these items. For the nine-month period ended September 30, 2024, the pretax impact of the corporate segment adjustments totals $14.9 million, with a corresponding adjustment to the benefit for income taxes of $0.2 million relating to these items. A detailed reconciliation of the 2024 provision (benefit) for income taxes is shown on page 48.

Previous wording

47 - with its subsidiaries, “AssuredPartners”) for gross consideration of $13.45 billion. The transaction is subject to customary regulatory approvals. On March 7, 2025, we received a request for additional information as part of the Hart-Scott-Rodino filing. We have responded to the request and expect that the transaction will close in the third quarter of 2025. AssuredPartners is a leading U.S. insurance broker with client capabilities across commercial property/casualty, specialty, employee benefits and personal lines with operations in the U.K. and Ireland. We raised $8.5 billion of cash in our December 11, 2024 follow-on common stock offering and borrowed $5.0 billion of cash in our December 19, 2024 senior notes issuance (which we refer to, together with the follow-on common stock offering, as the AssuredPartners Financing) to fund the transaction. On January 7, 2025, we received an additional $1.28 billion of cash due to the exercise by the underwriters of the overallotment provision related to the follow-on common stock offering.

Current wording

On August 18, 2025, we acquired all of the issued and outstanding stock of Dolphin Topco, Inc., the holding company of AssuredPartners, Inc., a Delaware corporation (together with its subsidiaries, “AssuredPartners”) for gross consideration of $13.8 billion. AssuredPartners is a leading U.S. insurance broker with client capabilities across commercial property/casualty, specialty, employee benefits and personal lines with operations in the U.K. and Ireland. We raised $8.5 billion of cash in our December 11, 2024 follow-on common stock offering and borrowed $5.0 billion of cash in our December 19, 2024 senior notes issuance (which we refer to, together with the follow-on common stock offering, as the AssuredPartners Financing) to fund the transaction. On January 7, 2025, we received an additional $1.3 billion of cash due to the exercise by the underwriters of the overallotment provision related to the follow-on common stock offering. AssuredPartners had over 10,900 employees serving through offices located across the U.S., U.K. and Ireland.

Previous wording

The brokerage segment accounted for 88% of our revenues during the six-month period ended June 30, 2025. Our brokerage segment is primarily comprised of retail, wholesale and reinsurance brokerage operations. Our brokerage segment generates revenues by:

Current wording

The brokerage segment accounted for 87% of our revenues during the nine-month period ended September 30, 2025. Our brokerage segment is primarily comprised of retail, wholesale and reinsurance brokerage operations. Our brokerage segment generates revenues by:

Previous wording

Financial information relating to our brokerage segment results for the three and six-month periods ended June 30, 2025 compared to the same periods in 2024, is as follows (in millions, except per share, percentages and workforce data)

Current wording

Financial information relating to our brokerage segment results for the three and nine-month periods ended September 30, 2025 compared to the same periods in 2024, is as follows (in millions, except per share, percentages and workforce data).