By David Bull

June 5 - (The Insurer) - Arthur J Gallagher is “playing it right down the middle of the fairway” following a second request for information from the U.S. Department of Justice over its AssuredPartners $(AP)$ acquisition, which remains on course to close in the second half, said chairman and CEO Pat Gallagher.

On a call with investors on Wednesday, the executive was asked if there had been any signals from the regulator, which issued the request for additional information as part of the Hart-Scott-Rodino filing related to the $13.5 billion deal.

He noted that some of the workstreams related to the deal have been paused but others are continuing, including areas such as personnel and IT planning.

“When it comes to actually competing in the marketplace, niche strategies, that type of thing, leadership in various places, we had to stop those workstreams. And from that perspective, we’re simply putting our head down,” he commented.

On February 7, the Rolling Meadows, Illinois-based intermediary said it had received a request for additional information as part of a regulatory antitrust review into the acquisition, which led it to push back the expected close of the transaction from the first quarter to the second half of 2025.

“The request for information is very detailed. It's very large, and it requires work both on (the) Gallagher side and (the) AP side to finally certify the filing is a lot of work, and we're playing it right down the middle of the fairway. What you asked for is what you're going to get,” said Gallagher on Wednesday.

“That's your responsibility as the Department of Justice, and we're happy to comply. We don't expect that they'll find anything to quibble about, and then we'll close in the second half,” he continued.

Earlier on the call, the executive said that the company is expected to file its response to the Department of Justice request midway through the third quarter.

The broker’s chief financial officer Doug Howell said the delay is not adding pressure to producer retention at AP.

“From what we can tell … and hearing from them … I think their production staff is pretty excited about joining us,” he said, highlighting the Gallagher stock AP producers will receive in the deal.

“That’s real money to them now, it’s not a promise of the future,” he added.

He also reiterated that work is continuing in relation to integration planning despite the regulatory hold-up.

“I don’t think we’re going to lose much time in getting this integrated because of a slowdown in the actual regulatory approval,” he said.

Howell said the request for additional information will also help with the integration process and drive a “better offering for our customers”.

“They have the right to ask for all this information, and when we give it to them, I think they’re going to see that this thing is good for the customers,” he continued.

STRONG M&A PIPELINE

Pat Gallagher also commented on the company’s continued consolidation efforts outside the AP acquisition, noting that so far in the second quarter it has completed seven new mergers, representing almost $300 million of estimated annualised revenue.

He added that Gallagher’s M&A pipeline includes more than 30 term sheets signed or being prepared, representing around $400 million of annualised revenue.

“So the pipeline is very strong and full of M&A opportunities around the globe that could continue to contribute to our long-term strategic plans,” said the executive.

He described the company as a “great home” for entrepreneurs in the agencies and brokerage firms space in the U.S. and overseas.

“We get their brains and that makes Gallagher better, while they get access to our various niche practice groups, our data and analytics, a wide range of management solutions, unique product offerings and a recognised brand name and a more efficient back and middle office.

“M&A at Gallagher is about believing we can be better together for the benefit of our clients. That's the one plus one equals three, four or even five. So when firms merge with Gallagher, they understand that we are their final home. They won't be flipped, they have to change their name numerous times. They won't have to stop investing in the business in order to pay significant interest costs,” he commented.

ORGANIC OUTLOOK REITERATED

On the call, Gallagher management also reiterated their full-year organic growth expectations, which were laid out on the company’s first-quarter earnings call, with a slight slowdown in the second quarter offset by a pick-up in the second half of the year.

The brokerage outlook includes full-year 2025 organic growth of 6% to 8%, with 5.5% in the second, third and fourth quarters. The company’s risk management business is projected to deliver an unchanged 6% to 8% organic growth for the year.

Howell said the change to a slight slowdown in the second quarter – from 6% to 7% – reflected lower-than-expected property revenues.

Commenting on the pricing environment, Pat Gallagher said the primary global P&C insurance market “continues to behave rationally”.

Global casualty increases are up 8% year on year, with U.S. rates up 9%. In contrast, property lines renewal premiums have fallen around 5% in the second quarter.

Asked about the outlook for organic growth in 2026, Howell wouldn’t be drawn on a specific percentage rate but said: “Maybe next year feels a little bit like this year.”