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Investing.com -- Arthur J. Gallagher & Co. (NYSE:AJG) shares fell 7.6% in after-hours trading Thursday after the insurance broker reported third-quarter earnings and revenue that missed analyst expectations, despite posting strong growth.
The company reported adjusted earnings per share of $2.32 for the third quarter, falling short of the $2.54 analyst consensus. Revenue came in at $3.33 billion, below the expected $3.44 billion. The significant stock drop reflects investor disappointment with the earnings miss despite the company’s continued expansion.
Despite the shortfall, Gallagher delivered 20% total revenue growth in its combined brokerage and risk management segments, marking its 19th consecutive quarter of double-digit top-line growth. Organic revenue grew 4.8%, while acquisitions contributed more than $450 million in incremental revenue.
"We had a terrific and very active third quarter!" said J. Patrick Gallagher, Jr., Chairman and CEO. "Net earnings margin was 13.8%, adjusted EBITDAC margin was 32.1%, and adjusted EBITDAC grew 22%."
The company’s brokerage segment reported $2.93 billion in revenue, up from $2.39 billion in the same quarter last year. Organic base commissions and fees increased by 3.9% YoY, while supplemental revenues saw organic growth of 36.4%. However, contingent revenues declined 13.3% on an organic basis.
Gallagher completed six acquisitions during the quarter, including the significant purchase of AssuredPartners for approximately $13.8 billion on August 18, which contributed to the company’s expanded footprint.
"Global insurance renewal premium changes remain in positive territory and we are not seeing indications of economic slowdown," Gallagher added. "Our two-pronged growth strategy – organic and M&A – continues to benefit from our leading niche experts, vast data and analytics offerings, extensive product expertise, outstanding service, and global reach."
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