Arthur J. Gallagher & Co. ($AJG)

Good afternoon, and welcome to Arthur J. Gallagher & Company's quarterly investor meeting with management. [Operator Instructions] Today's call is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during this investor meeting, including answers given in response to questions, may constitute forward-looking statements within the meaning of the securities laws. The company undertakes no obligation to update these statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially. Please refer to the information concerning forward-looking statements and Risk Factors sections contained in the company's most recent earnings release and Form 10-K and 10-Q filings for more details on such risks and uncertainties. In addition, for reconciliations of the non-GAAP measures discussed during this meeting, please refer to our most recent earnings press release and other materials in the Investor Relations section of the company's website. It is now my pleasure to introduce J. Patrick Gallagher, Jr., Chairman and CEO of Arthur J. Gallagher & Company. Mr. Gallagher, you may begin.

Good afternoon, everyone, and thanks for joining our investor meeting today. These quarterly investor meetings provide an opportunity for the investment community to hear from our business leaders and get further insight into our operations outside of the hectic earnings season. For today's meeting, I'll start by covering Gallagher's strategy. current insurance market backdrop and our organic growth expectations for full year '26. And then I will end with some comments on how we're ahead and winning with AI. After me, you will hear from our business leaders. Each will speak for about 10 minutes, providing background information and insights into their various markets as well as discussing some of the exciting growth and operating initiatives, including AI, we have going on in Gallagher. They will also provide an indication of how they see organic growth for the first quarter. Then Doug Howell, our CFO, will pull the comments together, add some additional comments regarding AI and provide you with a more detailed first quarter and full year outlook. Our prepared remarks should last around an hour. After that, we will open the line to the group dialed in for questions and answers. I always like to start these meetings by outlining our value creation strategy which is based on 4 key initiatives: number one, grow organically. Number two, grow through mergers and acquisitions. Number three, increase our productivity, raise our quality; and number four, maintain and promote our culture. The consistency in our strategy is one that we're proud of. This strategy has been tested throughout economic cycles, interest rate cycles, employment cycles as well as insurance pricing cycles, and there are no plans to alter our strategy, stated today we are a 2-pronged growth company, organic and M&A, and I continue to see nearly limitless opportunities for both as we have very little market share. We are a profitable company, and I continue to see enormous opportunities to further improve our productivity and quality. And I'm confident in how I see our future because of our bedrock Gallagher culture. All that leads to a future of double-digit revenue and EBITDAC growth producing strong shareholder returns. Let me dive deeper into revenue growth, starting with organic. Gallagher has client capabilities in approximately 130 countries, over 71,000 employees with the ability to provide professional advice and solutions across insurance, reinsurance human capital and claims management. We have industry-leading talent, a recognized global brand, deep expertise across products and geographies with a consistent approach to sales and client service. As I look around the world, across industry verticals and product offerings, the future organic growth opportunity for Gallagher remains immense. Insurance is the oxygen of commerce, touching just about everything in our daily lives. It doesn't matter whether you're a restaurant owner or building a new warehouse or transporting goods across land, air or sea, you need insurance. And the market today is large and growing. The Swiss Re Institute estimates there's more than $7 trillion of annual insurance premiums globally with $4 trillion alone in non-life premiums and these global non-life premiums are growing each year due to economic expansion, increasing insurance demand and new coverages purchased by those that are already buy insurance as well as emerging risks and exposures. We touched less than 5% of that premium, leaving 95% of our oyster. That's why Gallagher has and will continue to grow in particularly in any environment. Today, the team will lay out why we believe we could compete, win and grow faster than the industry. Another way Gallagher is creating long-term value for shareholders is growing our total revenue through mergers and acquisitions. Since the beginning of 2020, we have acquired more than $6 billion of pro forma annualized revenues and the opportunity for future growth through M&A remains massive. That's because insurance distribution remains very, very fragmented around the globe. It's estimated that there are tens and tens of thousands of agencies and brokerage firms across our 5 major geographies, including 30,000 in the U.S. alone according to a leading consulting firm. Most of these firms are family-owned, have less than $25 million of annualized revenue and hold strong roots in their local communities. So when they sell to Gallagher, not only do we get revenue and profit, more importantly, we get new talented entrepreneurs in locations, niches or specialties where we can excel together. Our new merger partners get immediate access to Gallagher's suite of tools and capabilities. overnight, they get access to our niche experts. Our extensive client and carrier data, our AI and digital tools, our thought leadership library, a recognized brand and elevated service from our centers of excellence. This creates immediate value for their current clients, gives them a terrific story for prospects and provides more career opportunities for their employees. Health wins in our merger activity are the clients to get deeper insights and advice on top of better service. In 2025, we completed 33 mergers with over $3.5 billion of estimated annualized revenue. So far this year, we've completed 7 mergers, representing around $60 million of pro forma annualized revenues. We have an exciting global pipeline of opportunities with nearly 40 potential mergers representing around $250 million of annualized revenue. So our pipeline remains strong and full of tuck-in M&A opportunities around the globe that can contribute to our long-term strategic growth. The third piece of our shareholder value creation strategy is to increase our productivity and raise our quality. Over 2 decades ago, we set out to build our Gallagher Centers of Excellence, where today, we have over 7 that handle many of our back-office and client servicing tasks. We now have standardized processes and common systems that are industrial strength. Standardization is the foundation for reliable and consistent data that allows us to deploy quickly technology, digitalization and AI both to grow more and to service at lower costs. I'll get to AI in a minute. Okay. Moving to an overview of the insurance market. I'll provide a few observations from a global perspective and our business leaders will follow with more detail on what they see in their operations. Overall, we continue to view global PC insurance market is rational. Carriers are generating good returns driven by interest income and improving personal lines and commercial property underwriting results offset somewhat by certain casualty classes. They know what products and geographies are generating appropriate returns in areas that need to be re-underwritten or repriced to improve profitability. Conditions today seem a lot like the fourth quarter. Through the first 2 months of the first quarter, global renewal premium changes, which includes both rate and exposure continued to increase in the low single digits. Once again, property decreases are more than offset by increases across most casualty classes. Breaking this down by line of business, here's what we're seeing, property lines down 7%, casualty lines up 5% overall, including general liability, up 3%, commercial auto up 3% and umbrella up 7%, package is up 2%, D&O up about 1 point, workers' comp up 1%; and personal lines up 4%. It's important to note that renewal premium changes excluding property, are seeing renewal premium increases of 3% with higher increases in the U.S. markets. We continue to see significant differences in renewal premiums by client size, with property risks driving much of the downward pressure in premiums for our larger clients. Good accounts are still seeing some premium relief, however, accounts with poor loss experience are likely to see greater increases. As for the reinsurance market and 1/1 renewals, the strong 2025 underwriting results posted by reinsurers means capacity continues to be plentiful with opportunities for our clients to push on price and coverage. The property and specialty reinsurance market continues to see rate decreases in the teens with lower layers holding up better than the top end of the reinsurance towers. Pricing across casualty lines continued to be broadly stable as most reinsurers remain very cautious of U.S.-focused casualty risks with continued concerns over elevated loss trends and loss development. Outside the United States, increased capacity has driven pricing lower in some markets. Looking ahead to 4.1, our early indications suggest similar conditions with a bit more downward pricing on Japan-specific renewals. We believe it is likely carriers will continue to explore buying additional protection to further reduce earnings volatility or support growth throughout 2026. Today's market, combined with dynamic geopolitical risks, is the ideal market for us to show our expertise, product knowledge and data-driven capabilities. Our talented reinsurance team can help clients navigate market complexities while ensuring the best coverage for our clients. Moving to our view of economic conditions. Through mid-March, our daily revenue indications from audits, endorsements and cancellations are still in positive territory indicating continued solid business activity and no signs of a broad slowdown. In the U.S., the number of job openings is still ahead of the number of people looking for work, and health care costs continue to trend higher due to innovative medical treatments and prescription drug costs. This dynamic has employers continuing to look for cost-effective ways to support their human capital objectives. So we're just not seeing signs of economic weakness with these data points indicating the economic backdrop is still favorable for our business. This favorable macro backdrop, growing demand for insurance solutions and continued strong net new business spread within a similar rate environment provides further strength to our full year '26 organic outlook of 6% for our combined Brokerage and Risk Management segments. Doug will provide you with greater detail in his comments. Over the next hour or so, you'll hear from each of our business leaders. Let me give you some quick sound bites. Mike Pesch will tell you our Americas PC retail and specialty businesses are posting strong performance. Renewal premium increases continue business activities remain solid, and net new business remains favorable. Patrick Gallagher will tell you our international PC and London specialty operations are performing quite well. international retail renewal premium changes varied by geography and our London specialty business continues to show strong performance. Tom Gallagher will tell you that our reinsurance operations are, again, a great performer through 1/1/26 renewals and are well positioned for further growth through the remainder of this year. He'll also provide comments on our global M&A strategy. Then Bill Ziebell will walk you through our employee benefits and HR consulting business. He will highlight a stable macro backdrop and favorable net new business trends driven by continued demand for our services. Scott Hudson will tell you our third-party claims administration business, we're seeing good growth driven by our strong new business diversification and specialized products, technology innovations and continued ability to drive superior outcomes. And Doug Howell, our CFO, will bring it all together and tell you what we think this means financially for the first quarter and full year '26. And today, I want to conclude with the topic that is forefront of many recent publications and headlines, but nothing new to Gallagher, AI. You'll hear the team tell how we are rapidly deploying AI into our businesses and the benefit of AI to Gallagher. Here's what you should take away from today's meeting. First, we are spending nearly $1.5 billion a year on technology-related initiatives and a meaningful portion of that data and AI. Second, the deployment of AI is happening now. It's not just on the drawing board. We have hundreds of applications and use cases for AI and digitization right now inside Gallagher. Third, we are finding and will find more and more uses for AI. Each will help us grow, make us more cost-effective and in many cases, both. Fourth, for 2 decades, we have standardized our processes and centralized our data and analytics. Laying this foundation is absolutely mission critical for deploying AI and I believe we lead the industry in laying this foundation. Fifth, we have the data across thousands of carriers, capital providers, risk retention organizations and self-insured. Our data rules Supreme. We know our customers better than anyone or anything. And finally, AI is an existing exciting opportunity for brokers to get better, faster, smarter. It strengthens the role we play for our client. Remember what a broker does, we serve as advocates for our clients, no matter their size, industry or geography. We understand our clients' risks and negotiate the right coverage, terms and conditions at the best price. And most importantly, we advocate for our clients when a claim occurs, Gallagher has a long history of innovation and operational excellence. We are not complacent, and I'm confident it will be Gallagher that harnesses AI and we will be the winner. I'll stop now and turn it over to Mike Pesch, who's going to discuss our property casualty brokerage operations across the Americas. Mike?

Thanks, Pat, and good afternoon, everyone. I'm Mike Pesch, the leader of our Americas property casualty business. Today, I plan to go over 4 topics. First, I'll provide an overview of our retail operations in the U.S. Canada, Latin America and the Caribbean as well as our North American specialty business. Second, I'll discuss current insurance market conditions. Third, I'll outline how we've implemented AI across the business. And fourth, I'll give you some early indications of how the first quarter 2026 is playing out thus far. Our retail P&C brokerage operations across the Americas totaled more than $4 billion of revenue as of the end of 2025. Our largest Americas operation is in the U.S., where our U.S. retail PC operations generated over $3.6 billion of revenue in 2025, when combined with AssuredPartners and Woodruff Sawyer, these revenues would increase to more than $4.5 billion on an annualized run rate basis. We placed over $25 billion of U.S. premium in 2025 and more than $35 billion of premium when you include AP. In the Latin America and the Caribbean, we generate around $200 million of revenue across 15 countries and have more than 1,700 employees. In Canada, we are a top 5 commercial lines broker with clients in all 10 provinces and 3 territories. Here, we generated nearly $300 million of annual revenue with approximately 1,500 employees. Within our Americas retail businesses, we serve and compete for commercial clients of all sizes, from large risk management clients to small commercial lines and also high net worth personal lines customers, to a lesser extent. With that said, most of our clients are middle market commercial clients that spend between $100,000 and $2.5 million on their annual insurance premiums. That translates into roughly $10,000 to $250,000 and of annual commission and fee revenue to Gallagher per middle market client. We find these middle-market clients very attractive businesses of this size typically have in complex insurance needs, yet they don't have a dedicated risk management professional on their staff, thus, they rely on our experts to identify and evaluate risk on their behalf and, of course, find the right markets to place their insurance coverage. Essentially, our experts become the client's risk management department, which embeds Gallagher inside their business. This knowledge-driven approach focusing on the most important drivers of our clients' total cost of risk is the foundation of our global client value proposition called CORE360. The risk management advice and solutions we provide to clients is bolstered by our various niche practice groups. These specialists have deep insights into the products and unique needs for the industry verticals. These industry-focused professionals work side by side with our producers in the field, ensuring we identify and address the unique needs and risk characteristics of our customers. We have a deep bench of niche specialists spanning property, cyber, technology, construction, energy, reinsurance, space and executive risk to name a few. Our industry experts often work together to support more complex risks. Take data centers, as an example, our breadth of expertise allows Gallagher to advise clients and prospects to the full cycle of a data center from site selection and construction through operational risk, power strategy and business interruption exposures. This exemplifies our coordinated approach to the complex and evolving risks surrounding data centers. After we place the coverage, we also have hundreds of professionals working with our clients to develop safety protocols and risk management programs while also assisting in claims resolution and advocating on behalf of our clients. So through our focused risk management advice, differentiated coverages and products and claims resolution advocates, I believe our complete offering is an advantage when competing against the tens of thousands of brokers across the Americas. Our decades of work and hundreds of millions of dollars of investments proved to be a differentiator in the business, whether you're a longtime Gallagher producer or a new merger partner all our offerings are available from day 1 to help service more, retain more and sell more business. Moving on to our Americas Specialty businesses, which collectively generated approximately $1.7 billion of revenue during '25. Within this business, the largest piece is our U.S. wholesale operations, known as Risk Placement Services, or RPS. RPS generated over $1 billion of revenue in '25. Founded in the late '90s, RPS is one of the largest wholesale brokers in the U.S. and includes our open brokerage programs, binding and MGU MGA businesses. Here, we are engaging with our 25,000-plus retail clients constantly providing data and analytics, innovative and differentiated products and access to markets and insurance solutions that align with their clients' needs. The remaining $700 million of revenue includes our other specialty operations, such as ARTEX, our alternative risk solutions, captive management and iOS administration services business. our affinity business, where we offer specialized insurance solutions for over 300 national associations and affinity groups. And finally, we have our pooling risk program administration or RPA, where we offer a wide range of services for risk pools, including public, private, face-based education, public entity and nonprofit customers. Moving on to my second topic, insurance market trends across the Americas. Starting with U.S. retail. Our customers continue to experience renewal premium increases, that's both rate and exposure combined across most lines of insurance. Overall, we're not seeing any significant changes in the pricing environment. So far in the first quarter, renewal premium change is up around 2%. There's been much discussion on property renewal premium moderation which is still felt mostly by our larger clients. Casualty lines, on the other hand, continue to show increases with more uniform increases by client size. That said, we are seeing in many cases where there are some potential price savings available. Clients are increasing their coverage levels. If I break this down by line of business, property is down 9%, with all other coverages in positive territory. Casualty is up 5%, which includes general liability up 6%; commercial auto up 2% and Umbrella up 7%. Package is up 3%. Workers' compensation is up around 1%, and D&O is up about 1 point and cyber is up 2%. Moving to Canada. Renewal premium changes showed decreases of around 4%, and properties around 9% and casualty is in the low single digits. Moving to the U.S. wholesale market environment. The first 2 months of the quarter, our data shows renewal premium increases of around 1% with open brokerage renewal premium down about a point and binding premiums up about 3%. Breaking this down further, property renewal premiums are down 10%. General liability is up around 3%. Umbrella is up 9%. Commercial auto is up 9% and Workers' compensation is down 2% and most other lines outside of D&O and cyber are up low single digits. So across the Americas, we continue to see rational carrier behavior with pricing differences driven by client loss experience. Good accounts will see some premium relief in property and other lines However, accounts with 4 experience are seeing greater increases. This is the ideal market for us to show our expertise, product knowledge and data-driven capabilities. Every client is different. Different risk appetites, different needs and varying budgets. Our job as brokers is to understand each of these aspects advising our clients on the right coverage at optimal pricing, all within their risk profile. This is a market where our producers can continue to shine, and I believe we have the most talented team in the industry. Following Pat's comments, I want to highlight a few examples of how we are utilizing AI within the Americas Property Casualty business. Our SmartMarket and Gallagher Drive platforms are already utilizing AI to help our producers and our service and support teams drive revenue growth and efficiencies. Take SmartMarket, where carriers can tag accounts in classes of business that they find attractive. This technology creates efficiencies in the renewal process. helping producers quickly match carrier appetite with client needs. Today, with carrier partners, we have implemented AI using our SmartMarket data in a few different ways. AI is used to combine our SmartMarket data with third-party information providing quotes across certain lines of business without the need for a submission. We are also utilizing AI with our 10 years of SmartMarket data to look at submission flow and hit rates, mapping opportunities with specific producers. Combining our SmartMarket technology in AI in a collaborative way, we are faster to market and more successful with our key trading partners. Another exciting way we are using AI to help improve our clients' risk profile with the input of their business details, our AI risk profile to provides a fast, consistent and quantifiable risk improvement plan for our clients. This is a critical differentiator to our sales teams. Not only are we understanding our customers' risk, but we're saving our customers' cost on claims and future premiums as they take actions to reduce their risks immediately. Within our wholesale binding operation, our teams leverage AI and automation for tasks such as submission optimization, which automatically rates our submissions and renewals, analyzes -- analyzing against specific account and client attributes. This information is in hand for our underwriters to better prioritize their efforts, which, in turn, improves bind to quote ratios and speed to market. We also have a tool to standardize policy application data and rating variables from multiple carriers into a single output, allowing our teams to have carrier quote indications across multiple carriers quickly ultimately improving our speed to market for our underwriters. And these are just a few of the exciting tools used within the specialty teams, AI combined with our tools and market knowledge allows our producers to focus their time on advising clients, structuring solutions and winning business. And finally, I'll conclude with some thoughts on the first quarter. Through the first 2 months, we are seeing continued renewal premium increases, positive net new business spread and no significant impact from the year-over-year changes in midterm policy adjustments including audits, policy endorsements and cancellations. So based on what we are seeing thus far, we think first quarter '26 organic will be around mid-single digits in Specialty and Americas retail P&C. Looking ahead, I remain excited about our long-term prospects. We have solutions, sales talent, data-driven insights and a client-first culture, which puts us in a position to consistently win. Okay. I'll stop now and turn it over to Patrick Gallagher, who will discuss the rest of our major property casualty retail operations as well as our London specialty. Patrick?

Thanks, Mike, and good afternoon, everyone. This is Patrick Gallagher, and my comments today will focus on our retail P&C units in the U.K., Australia and New Zealand, in addition to our London specialty business. Similar to Mike, I plan to cover 3 topics. First, I'll dimension each of these businesses. Second, I'll discuss the P&C insurance environment in each geography, and then I'll finish up with some comments on what we are seeing thus far in the first quarter. Starting with our international retail businesses. We operate in approximately 60 countries globally and have client capabilities in another 70 countries. Today, I'll focus on our large international retail operations in the U.K., Australia and New Zealand. Combined, these 3 geographies finished 2025 with around $1.6 billion in revenue, placing around $10 billion of premium on behalf of clients. Breaking these operations down further, we are 1 of the 5 largest retail brokers in the U.K., generating more than $1 billion of annual revenue across approximately 100 locations. In Australia, we are also a top 5 broker and in New Zealand, we are one of the leading commercial retail brokerage firms in the country. Combined, Australia and New Zealand generate approximately $600 million of revenue annually through 80 different locations. You heard Mike talk about our sweet spot within Americas Retail is the middle to upper middle market. Our retail customers in international geographies are similar in complexity to these clients. with a focus on the middle to upper middle market. We also provide brokerage services to large account risk management business as well as smaller commercial enterprises and high net worth personal lines clients to a lesser extent. So similar sizes of customers with similar insurance and risk management needs. Accordingly, our sales approach and tools mirror that of the Americas. That was built by design over the last decade. Today, we have truly unified global go-to-market playbook. Let me give you a few examples. First, CORE360, which Mike covered. While we introduced CORE360 around a decade ago as our U.S. go-to-market strategy, it forms the foundation of our risk management discussions with clients and prospects of any size anywhere around the world. Second, our niche practice groups that cut across industries and products. Many of them have been organized at the global level, allowing the clients across geographies to benefit from our deep knowledge and expertise. Examples of our global niches include energy, real estate, hospitality and marine. Third is our data and analytics platform. which showcases innovative technology such as Gallagher Drive, SmartMarket and Gallagher Go. Gallagher Drive provides prospects and clients insurance buying trends for other similar Gallagher clients from around the globe. Within Gallagher Drive, a client or prospect can see information for clients like me, reviewing lines of coverage purchased, limits ultimately being bound as well as potential catastrophe exposure and claims forecasts. The platform further it differentiates us versus the competition with producer utilization of drive continuing to increase. We also have SmartMarket, which has evolved into a global offering. The SmartMarket platform is utilized by most of our large trading partners across our various global retail platforms. And finally, our Gallagher Go mobile app, an application that makes reviewing and managing insurance coverage and easy stop for our clients. Here, a client can access their insurance account 24/7 order a certificate of insurance, managed locations, vehicles, drivers and other insurance-related content without the need to call their producer or servicer. While our retail operations utilize the same sales techniques, tools and data and analytics, they also rely heavily on our Gallagher Center of Excellence for large portions of their client servicing efforts, too. Within our center of excellence, we have spent nearly 2 decades standardizing our processes, which have resulted in significant productivity and quality gains for Gallagher. This standardization gives us very clean and structured client, industry and carrier data. The same data that enables Gallagher Drive, Gallagher Go and SmartMarket. Over the same period, we've unified our systems around the globe. This combination of standardized processes and central data models have equipped us to better harness the power of technology, implement AI and remain nimble for changes in client needs. Gallagher's early use of AI included policy checking and extracting information from carriers quotes to populate client proposals, which provided immediate efficiency gains. These efficiencies have allowed us to redeploy resources for sales enablement and prospecting, helping to drive further revenue growth. Mike just spoke about the success we're seeing utilizing AI within our SmartMarket platform. We're also embedding AI in our global digital products, Gallagher Go, Gallagher Drive and guide. AI combined with Gallagher Go differentiates us from our competitors, where we're not just offering point-specific tools. We are creating an ecosystem around our customers. Many competitors will give you a single tool for a single moment in the buying or servicing process. What we've built is a front door. Once a client comes in, they have access to a connected set of capabilities across their entire customer journey. It's one place where clients can access tools, guidance and capabilities that evolve with them over time. Our clients are increasingly asking how they can use AI within the context of our services and just as importantly, what risks are associated with that use. A key differentiator for us is how clearly we separate internal use of AI to service clients from how clients themselves use tools. Many competitors co-mingle the 2. We do not. Our focus is on what a broker should provide across the full customer journey, not just advice, but access to the right tools at the right time, all in one ecosystem. As we consider this, I want to throw out some stats on our digital platforms. In Gallagher Go, we have tens of thousands of U.S. and international retail clients already using the portal and adding over 1,000 more each month. And later this year, we are deploying to our benefits, U.S. small commercial personal lines and global reinsurance clients. Gallagher Go will be one of the primary digital channels that the clients will experience AI from Gallagher. Here, they can perform analytics, program information as well as detailed policy and contract comparisons. Gallagher Drive has another tens of thousands of dashboard views each month. And this is just today. In any market, the value of these comparative insights to prospects significantly increases our win rate. We've also seen an increase in retention rate when our current clients are presented with Drive. Over the next quarter, we're adding an AI platform on top of Drive. This AI will allow producers, customers to prompt with questions on coverages, limits and risk appetite to name a few. Gallagher's digital platforms will continue to differentiate us from our competitors and provide a true benefit to our clients prospects and merger partners, and our innovation does not stop here. We're embracing AI and digitization, and I'm confident our tools and capabilities will make us the winner. Now shifting to London Specialty. Our leading franchise has roots dating back to the mid-70s. Here, we tend to focus on larger commercial clients, supporting retail agents and brokers around the world placed specialty insurance solutions across 6 main trading divisions, aerospace, marine, financial lines, construction, energy and property. Our 1,300 colleagues generate more than $700 million of annual revenue and place more than $6 billion of premium annually. London specialty growth has been very strong in recent years, and we still have many exciting growth opportunities. Let me provide you with a few of our priorities. First, we continue to invest in and further deepen our niches and specialisms. We are constantly looking to expand our capabilities, market relationships and product offerings that align with client needs, including financial lines, cyber and energy. Second, we are looking to onboard and develop new talent. This includes seasoned producers that will add to our expertise across our 6 specialty trading units. We also continue to develop our own through our summer internship program and our graduate program, Gallagher Futures. Third is the utilization of SmartMarket. This important technology platform provides information to carriers, allowing us to trade more efficiently for the benefit of our clients. Specialty carriers are looking for ways to grow in classes of business they find attractive, so we believe there will continue to be a lot of carrier appetite into 2026 for a SmartMarket, Now moving to my comments on the insurance market. Let me discuss what we are seeing so far in the first 2 months of the first quarter, starting with retail. In the U.K., renewal premium changes both rate and exposure combined, are around 4%. If I break that down by coverage, property is up 5%, Commercial auto is up 2%, general liability up 5%, package is up 1%, D&O, cyber and other professional lines together up about 4%, and most other lines combined are up mid-single digits. Renewal premiums in Australia are up about 2%. Property lines are down mid-single digits, packages up high single digits. Most other casualty lines are up low single digits, while professional lines are flat. New Zealand's renewal premiums are down 3%. Property and commercial auto are down mid-single digits, while most other lines are flat to down slightly. The London specialty market still has ample capacity with renewal premiums for the first 2 months of the quarter flat to modestly lower from most lines. Within the London specialty market we continue to see pressure on North American cat exposed property risks and upstream energy. However, carriers overall are maintaining their underwriting discipline in our view. The competition we saw in early 2025 across D&O, professional liability, financial institutions and cyber have all moderated. Specialty cover for aviation and marine risks in areas of conflict are seeing substantial premium increases with the longer-term impact on the market unknown. Within aviation, we see short-term premium increases for clients with trapped planes or those continuing to operate in the area and marine war risk premiums have risen sharply for vessels that are stuck in the area, which is offset by less ship traffic. For our clients and prospects that require war cover, our teams are working together to quickly secure the cover at current terms and conditions and capacity in the market. Casualty rates for most areas have flattened off with the exception of U.S. exposed risks, showing modestly higher rates. Pulling it all together, I see both first quarter and full year 2026 for our U.K., Australia and New Zealand retail and our London specialty units combined in the mid-single digits. These businesses are continuing their solid performance from 2025, and I remain excited about 2026 and beyond. Okay. I'll stop now and turn it over to Tom Gallagher, who's going to discuss our reinsurance operations and global M&A strategy. Tom?

Thanks, Patrick, and good afternoon to everyone joining us on the call. Today, my comments will focus on 2 separate topics. First, our global reinsurance brokerage operation, Gallagher Re and then I'll pivot to discuss our global M&A strategy in more detail. Starting with an overview of Gallagher Re. Gallagher Re is the third largest reinsurance broker in the world and was formed through the combination of our 2013 start-up, Capsicum Re and the purchase of WTW's reinsurance business in December of '21. We finished 2025 with over $1.3 billion of revenue, much of which comes in the first half of the year given the timing of major reinsurance renewals. We strive to be the go-to reinsurance broker that can help advise clients globally regardless of location and size, utilizing our deep expertise and analytical capabilities. Our 3,200 reinsurance professionals provide advice, modeling, strategy and placement expertise on a wide range of offerings, including treaty reinsurance facultative reinsurance and other risk transfer products to nearly 1,000 underwriting enterprises around the globe. Within our Reinsurance business, we've seen growth both organically and more recently, we have driven additional growth via tuck-in acquisitions. Further investments in talent, including treaty and facultative capabilities continue to drive organic growth in double digits. We finished 2025 with 14% organic growth and have had a great start to the year in 2026. For mergers, we've closed 4 acquisitions in 2025 and 1 thus far in 26. And we see many attractive and exciting growth opportunities ahead. Let me provide you with some examples. First, we are broadening our product offerings to include solutions across life and health, marine and energy, program, cyber and property. We continue to grow our global facultative team. We are leaning into the strength of our global footprint. This includes growing our client base in existing geographies, while engaging with opportunities and winning new clients across Asia, Europe, Latin America and the Caribbean. We are investing heavily in new talent, targeting the same product growth areas and geographies. Here, we see the opportunity to add seasoned protection talent that brings experience and expertise in the reinsurance market, while also leveraging the Gallagher internship program to develop the next generation of reinsurance brokers across our global operations. We have been very active in sourcing additional capital to serve our clients' evolving needs by adding alternative forms of capacity, such as side cars adverse reserve development covers and cat bonds. We have integrated modern technology platform that was designed to power our next phase of growth. It allows us to fully harness our global footprint, proprietary data and market access to generate actionable insights of scale. We are using the power of Gallagher with our teams identifying and executing on cross-divisional opportunities. Working together is ingrained in our culture, we are well positioned to lever existing Gallagher relationships, whether through Gallagher Bassett, our retail business, our MGA and programs operations, and we are embracing AI to support our producers, our service teams and our clients. AI is not a new concept to Gallagher Re. Our teams have extensive list of current uses of AI as well as what is in development. Let me highlight a few examples. We use AI to automate work within our production and service teams, elevating the work that requires human judgment. We've deployed AI across data processing, benchmarking and repeatable analytical tasks bringing our employees to focus on structuring, advising and decision-making. Some examples include: we use AAD directly in our core platforms such as Workbench to automatically extract and structure quote information from documents and e-mails. This eliminates manual work, improve data quality and accelerates trading, ultimately giving brokers better market intelligence and more time to focus on advisory services and our analytics teams time to focus on higher value activity. AI, combined with our centralized global data model accelerates insights across geographies and lines of business. To give just one example, our cyber team uses an Agentic AI model to integrate proprietary loss data, policy wordings and threat intelligence into a risk analysis for our clients. This is a key differentiator for Gallagher Re and it is helping us win new clients and support our strong client retention. We also use AI to accelerate our presentation time line. AI generates a draft presentation using prior responses and content library and combines this with senior expert input on clients or prospects strategy. A quicker time line allows faster information into our clients or prospects hands, generating higher win rates and a clear differentiator versus our competitors. In Gallagher Re, AI reinforces our business model that cannot create distribution, trust or market access. AI increases the value of our assets that are hardest to replicate at scale such as our proprietary data, long-standing client relationships and global market access, which in turn lowers the cost of building new tools provides efficiencies within our sales and support teams and ultimately accelerates our revenue and EBITDAC growth. Next, let me provide some comments on the reinsurance market environment from January 1 renewals. A quiet wind seasoned health care is post strong underwriting results during 2025, resulting in adequate reinsurance capacity to support demand for our 1/1 programs. Within Property Reinsurance, we saw rate decreases in the teens for cat exposed property and more downward pricing pressure on the top of the reinsurance towers. In this environment, our clients use these savings to buy more cover whether on lower attachment points or aggregate cover. Within specialty lines, aircraft leasing losses were a focus for the larger and more complex programs with loss-effective programs able to renew this year with incumbents. Other programs that were not loss affected, we're able to see reduced pricing, offset in part by purchasing increased cover through lower attachment points or broadening coverage. The casualty reinsurance market continues to be cautious, reflecting concerns over prior year loss development and rising loss cost trends. Pricing was stable with terms and conditions broadly unchanged. We continue to see increases in available reinsurance capital driven by strong earnings in both insurance and reinsurance. In this market, carriers will explore by additional protection to further reduce earnings volatility or support growth throughout 2026. While early, our initial indications for 4/1 reinsurance renewals are suggesting broadly similar conditions as earlier in the year, with a bit more downward pricing pressure on Japan-specific renewals. The conflict in the Middle East could shift rates, but it's too early to tell the ultimate impact of these events. In the near term, it is unlikely the pricing trends will be impacted across the market as a whole. This dynamic geopolitical environment is one where a Gallagher Re team can show their unique value to our clients. We're working with our clients to clarify their potential exposures articulate possible loss estimates within their current cover. Our team is ensuring that clients with April renewals have war cover that is consistent with that of the 1/1 renewals and our team is supporting the overall insurance industry by providing unique solutions to specialty insurers for coverages such as shipping, energy, aviation, cyber, political risk, property to name a few. As we look to the rest of 2026, we remain bullish on our growth outlook for reinsurance. Our growth strategy is cross lines, across geographies and multifaceted, a growth strategy that will continue to outperform in any market. Okay. Now I'll shift to M&A across all of our units, clearly an important part of our shareholder value creation strategy. Gallagher has a long successful track record of tuck-in M&A, and there remains a massive opportunity to continue to grow through mergers. That growth shows up initially as acquired revenues and then the brands we buy help fuel future organic growth. According to one of the leading industry consulting firms, there is upwards of 30,000 insurance agencies and brokerage firms in the U.S. alone, and we think there could be another 30,000 or so across our major operating geographies. Most of these firms are smaller, family owned and operated. We believe Gallagher is a natural home for these entrepreneurs who are looking to add additional value to their current clients, accelerate growth in their business and help further advance their employees' careers. M&A for Gallagher is about being better together for the benefit of our clients. That 1 plus 1 could possibly equal more than 2 perhaps 3, 4 and even 5. Our merger partners bring us expertise, market insights, creative thinking and relationships. We get their brains and that makes Gallagher better. And Gallagher has many exciting tools and capabilities to offer our merger partners, including top-notch leading industry expertise through our various niche practice groups, access to our data and analytics platform, Gallagher Drive, increased breadth of risk management solutions, retail, wholesale, benefits, alternative markets and reinsurance. We have fantastic relationships with our insurance carrier partners, including unique product offerings and a more efficient back and middle office through our Gallagher Center of Excellence and a truly recognized brand name. We are merger partner's ultimate and final home. They won't have to ever change their name again. They won't be flipped. They won't have to stop investing in the business or make drastic expense cuts to pay rising debt costs. And if they got equity in the business, they noticed the exact same type as other employees and the management team here. No second, third or fourth class owners at Gallagher, we are all for 1 and 1 for all. Merger partners immediately get our operating playbook and knowledge, allowing them to bring more value to their clients from clients renewing through Gallagher submit to using Gallagher Drive clients like me to compare their insurance program against other Gallagher clients to the quick turnaround time of certificates of insurance and the accuracy of their insurance policies and many, many more. Our M&A teams are also using AI as a tool to help accelerate our growth by automating repetitive tasks while our experts handle the strategy and negotiation. Some examples include using AI to screen for potential merger targets, scraping company databases and cross referencing to public websites. We can use this tool to search for similar targets to those already acquired. We utilize an AI tool to help with the purchase agreement drafting and identification of errors or differences in legal language from commercial intent. And as we go through due diligence, AI also helps us review the data room to summarize and detailed documents. We're also developing AI tools to automate due diligence reports term sheets and preparing executive summary reports and using AI to review data rooms to indicate key issues for missing information. These examples are exciting. And there are many, many more projects in the pipeline. We believe AI can work for our M&A team, just as I outlined for Gallagher REIT. AI will accelerate our organic growth, acquisition growth, all while providing further cost efficiencies within our business. As an owner, you have a choice to make, get all of Gallagher's capabilities overnight by joining us. Otherwise, you could hope that your clients don't demand it or spend numerous years and lots of money and energy trying to build it. More and more owners are recognizing this decision, and it is why our M&A deal sheet and pipeline continue to be robust. So we are confident of our proven M&A strategy, and we'll continue to deliver excellent results and returns for our merger partners, our clients and our shareholders. Okay. I'll now turn it over to Bill Ziebell, who is going to discuss our benefits brokerage and HR consulting operations, known as Gallagher Benefit Services. Bill?

Thanks, Tom, and good afternoon, everyone. I am Bill Ziebell, and I lead our employee benefits and HR consulting business, Gallagher Benefit Services, also known as GBS. My comments today will cover 3 topics: First, I'll provide an overview of GBS. Second, I'll give you some insights into the health and benefit market and our client value proposition and our execution strategies. And I'll conclude with some observations from the first 2 months of the first quarter. GBS was started in the U.S. during the mid-70s and expanded internationally since 2010. First in the United Kingdom, Canada following in 2012, Australia in 2017, and New Zealand in 2025. Today, we have significant scale and expertise focused on an employer's most pressing needs. This includes talent, employee benefits and employee financial well-being. GBS was the fourth largest benefits broker and HR consultant in the world at the end of 2025 generating around $2.6 billion of annual revenue. And with the addition of AP, our run rate annualized revenue will grow to over $3 billion this year. The U.S. remains our largest geography and represents approximately 90% of annual revenues, inclusive of AP, while the remaining 10% or so is predominantly from the U.K., Canada and Australia. Our producers help businesses address their human capital needs by providing solutions and access to a wider range of employee benefits products. These products include traditional group insurance coverages such as medical, dental, vision, disability and life. We also have access to various voluntary products for employers to offer to their employees. In addition, we advise on employee benefit plan design, provide financial projections of benefit plan and can also suggest potential cost savings strategies. These offerings combined represent more than 2/3 of our annual run rate revenue. The remaining 1/3 of our revenue comes from retirement services, compensation advice executive life, HR consulting and other similar offerings that help employers address their human capital strategy outside of traditional health and benefit offerings. Many times, we are competing against local or regional benefit firms that don't have the product breadth and expertise that we have. With that said, we serve clients of all sizes, including large or jumbo accounts, where we provide an alternative to some of our bigger competitors. We also can leverage our multinational consulting business to help employers with operations outside of our core geographies. Before I dive into some of our growth initiatives, I want to spend some time talking about Gallagher People's strategy, our client value proposition. Gallagher People's strategy is the approach our benefits professionals take when developing a total rewards package for our clients. It's a complete strategy that employers can use to attract, engage and retain talent while simultaneously managing costs. When you consider offerings in the benefit space, there are many employee benefits and rewards outside of traditional compensation consulting and medical coverage. For example, employers can enhance financial well-being through defined contribution plans or offer physical and emotional health products to their employees. Our engagements and approach are not just about being a medical or health insurance broker, rather our bespoke and tailored approach for each client helps to tackle their most important HR and organizational challenges to achieve their human capital goals. When we consider overall opportunities for GBS, the macro environment is supportive of growth. And with that said, we are seeing more employers focus on strategies and offerings to retain their employees compared to strategies to attract new talent. And while talent remains a top priority for most organizations, managing rising medical cost is becoming increasingly important for employers. So as employers are looking for ways to support their human capital objectives, while also managing continued medical cost inflation, these are exactly the issues that our professionals are helping them navigate. Our work goes way beyond placing the insurance. We first understand the client and their employee population. How are their plan designs match with their demographics, with their peers. We then identified cost drivers and identified bespoke solutions for their needs. These solutions include narrow networks and preferred providers such as centers of excellence. Pharmacy costs are rising faster than overall medical, and we are very good at negotiating with PBMs to deliver savings for our clients. As we consider market conditions within the health space, we saw medical cost trends increasing throughout 2025 and expect that trend to continue in 2026. Fully insured renewals at our largest carriers are showing high single digits to upwards of 10% premium increases. And for stop loss, we are seeing average premium increases in the mid-teens and in some cases, north of 20%. These trends are driven by increased utilization, including the number of diagnostics and treatments. Health provider consolidation and hospital workforce shortages, cautious from Medicare and Medicaid to commercial plans, higher levels of chronic conditions and newer cell and gene therapies to name just a few. For pharmacy costs, we're expecting trends into the low double digits due to higher utilization of higher-cost drugs, including GLP-1s. So elevated health program price increases are likely here to stay for the near to intermediate term. But remember, our job is to help mitigate these increases through program design and various point solutions and services. Our continued investment in data and analytics has helped us roll out Gallagher Drive and add new products and services for our clients. Gallagher Drive continues to be a differentiator for our benefits team. This technology provides clients and prospects, insights on their benefits program and performance, allowing further support to recommended program design or coverage changes. Many times, our experts can find savings while maintaining or even enhancing coverage. Within GBS, our teams have embraced AI, allowing us to deliver faster insights, more personalized service and to build stronger client relationships. We have a multitude of various AI projects in development. Today, we are using AI to access third-party data enrichment to better understand risk when claims data is unavailable from the carrier, which improves our client retention and helps drive new business. We layer AI on to our clients' total rewards portals to better engage employees and provide additional new revenue opportunities to our talent business. And we use AI to more easily find targeted opportunities and better qualified prospects that meet the criteria. Within GBS, AI helps to provide quick valuable insights to our clients and prospects. It delivers efficiencies and improved accuracy within our client support and enhances our offering to potential merger partners and AI supports our employees at what they do best, and that is to act as a trusted adviser to our clients to help them achieve their human capital goals. We are also differentiating Gallagher from the competition by showcasing our expertise through webinars, thought leadership and various online and print content. Our recent webinars have covered topics like HR, compliance updates, pension plan derisking, weight loss drugs, employee retention among many others. These online events on top of the thought leadership pieces we are publishing on a regular basis, continue to drive ongoing engagement with our customers and prospects. Shifting to some comments on January and February. During the first 2 months of the first quarter, we saw a favorable net new business spread within our core U.S. Health and Benefits business and continued strong demand for our individual products in retirement consulting offerings with more muted demand for our consulting services. When I combine what we are seeing across our global business, first quarter organic is running in the mid-single digits, with full year 2026 organic still estimated at approximately 4%. Looking ahead, I believe we are positioned for continued growth. Our experts are delivering on our people strategy value proposition. And when combined with our thought leadership, expert insights, leading tools and products, we believe we can help clients navigate their most important HR and benefit needs. Okay. I'll stop now and turn it over to Scott Hudson, who's going to discuss our Risk Management segment or Gallagher Bassett. Scott?

Thanks, Bill, and good afternoon, everyone. I'm Scott Hudson, and I lead our third-party claims administration business, Gallagher Bassett. If you're familiar with our financial statement reporting, it's also known as the Risk Management segment. I'll cover 3 topics today. First, I'll provide an overview of Gallagher Bassett or GB for short. Then I'll give some insight into what we're seeing so far during the first quarter, and I'll finish with some comments on how the business is being positioned for the long term. On to the business overview. GB was formed in the 1960s by the Gallagher Brothers and Sterling Bassett and has grown to one of the world's largest P&C third-party claims administrators. GB finished 2025 with $1.6 billion of revenue of which approximately 80% of our revenues are generated in North America, and the remaining 20% is spread across Australia and to a lesser extent, EMEA. We have nearly 11,000 employees globally, and many of our claims managers work from home. Our business revolves around adjusting and paying claims on behalf of our clients. We don't take underwriting risk. In 2025, we closed well over 1 million P&C claims and paid out around $18 billion on behalf of our clients. Put into perspective, that level of annual claim payments would put us close to 1 of the 5 largest P&C insurance companies in the U.S. About 60% of our adjusting revenue is derived from servicing workers' compensation claims, around 1/3 comes from liability claims and approximately 7% relates to property. We have numerous specialty liability offerings, including medical malpractice, professional liability, environmental, product liability and cyber, to name a few. When it comes to property, we focus on specialty classes and complex claims. We're not large storm chasers or catastrophe loss adjusters. So across workers' compensation, our many liability lines and property were able to service most of our clients' P&C exposures. Lastly, my Plan Manager, our disability claims handling unit in Australia closed nearly 6 million claims in 2025. Moving on to our different business segments at GB, which we define by client type. First, we serve large commercial clients, think Fortune 1000 businesses. These clients have balance sheets that allow them to have large deductible programs or self-insure. They then outsource the claims resolution process to us. While this is our most mature and largest client segment, there's still significant potential for growth. Second, we serve public sector clients. This includes municipalities, state entities, federal governments and school districts. We have tremendous potential for growth in this segment as well. Third, we serve group captive or alternative market clients. These insurance entities utilize our services for their claims handling infrastructure. And once again, we see significant potential for growth in this segment. Our fourth and last client segment is insurance carriers. These are underwriting enterprises that choose to fully outsource our white label a portion of their claim handling operations. Outsourcing a portion of a carrier's claims can help address aging claim systems and adjuster recruitment, two of the major challenges carriers face today. Another compelling proposition for insurance carriers is our specialist runoff claims capabilities. It allows carriers to move a large group of legacy claims to our platform, a move that can result in better outcomes and reduced loss adjustment expenses as carriers wish to reduce or eliminate claims infrastructure that's no longer needed. With around 150 different carrier clients, even more when you include the Australian work comp schemes, this continues to be the fastest-growing portion of our business today. That said, carriers are a sizable and still largely untapped market for our services. Today, around 90% of U.S. claims are still handled by insurance carriers and the same is true outside the U.S. Customers choose us because of our deep expertise, consistent execution and outstanding service, which in turn leads to superior outcomes. A superior outcome could be mitigating a loss or avoiding a loss altogether, a quicker return to work, more efficient medical care delivery or greater employee satisfaction. We tailor our offerings to provide customized service and increased value for our clients. Our clients can each have different objectives for some it's brand protection, others customer loyalty or getting employees back to work sooner. We adapt and tailor our services accordingly with a clear execution plan. Our claims managers have access to proprietary tools and technology to guide decision making throughout the life of the claim, prepare analytical reports and provide easy access to claim status and financial information. Our RMIS platform, LUMINOS, has consistently been recognized as the best in our industry. The system has risk analytics and benchmarking tools built in, providing our insurance carrier clients with real-time claim insights by geography and industry, which ultimately assist them in making better underwriting decisions. We also have simple state-of-the-art processes and tools for exchanging vast amounts of data with clients, brokers and regulators. One of GB's greatest advantages remains the vast quantity of claim data we possess. We've introduced machine learning and other AI capabilities across our business to further improve risk and claims management performance. GB's objectives in using AI are as follows: first, use AI to enable our claims managers to make better, faster and more consistent decisions at critical points in the claim life cycle. This leads to optimal service, quality and financial outcomes for our clients. Second, use AI to support and automate as much work as possible so that claims managers can focus on tasks for which skilled professionals are uniquely suited, demonstrating empathy, forming constructive relationships and applying judgment in complex situations. And third, use AI to mine our skills, experience and data to further refine methods of reducing claim frequency itself, which is the best possible outcome for our clients. We have several AI assets in use in our business today, including a workers' compensation severity prediction model, a workers' compensation early intervention model and auto liability, severity prediction and reserve adequacy assessment model, a litigation prevention model with specific recommendations for preventing litigation, chatbots to assist users of LUMINOS. A claims summarized for both clients and claim managers, a document summarizer a fraud detection model that has already saved 1 client more than $100 million and voice and e-mail sentiment analysis. The uses of AI in our business are endless and will enable us to provide even better service better quality and better financial outcomes for our clients in the future. Our team, combined with AI will be a key ingredient to winning new business, retaining clients and ultimately driving strong, consistent organic growth. Moving to mergers and acquisitions. The TPA industry is much more consolidated than the fragmented brokerage market. So the opportunity set for mergers is narrower. With that said, throughout 2025 and early '26, we were successful in adding firms that expanded our offerings and deepened our expertise. In 2025, we closed on 2 acquisitions: first, our February 2025 acquisition of W.K. Webster, a marine and transit claims specialist, with operations across the U.S. in the U.K., Europe and Asia. It expands our footprint and adds to the services we're able to provide insurers and global self-insured companies. We also acquired 100% of safety professionals in 2025, an expert in safety consulting solutions in the construction and manufacturing sectors. Earlier this year, we closed on German-based Reckon Co, a global transport and marine claims specialists rec tucks in nicely to W.K. Webster and expands Gallagher Bassett's footprint in Europe. So M&A is used as a strategic tool for GB. Today, we have an active pipeline of potential merger partners across our major geographies. Moving on to some comments on first quarter 2026. Let me provide you with some data points on what we're seeing through early March. First, client retention remains very strong. We don't lose many customers due to our outstanding service, industry-leading tools and expertise. Second, we continue to see claim counts growing year-over-year due to both new business wins and to a lesser extent, growth from existing clients. And third, our new business pipeline remains very strong. Our diverse offerings and value proposition of superior outcomes are very important as prospects react to cost pressures across their businesses. Pulling it all together, we're excited about our opportunities in 2026. For the first quarter, we estimate organic growth of about 9%, reflecting the solid new business we spoke about late last year. We still see full year '26 organic around 7%. In terms of EBITDAC margin, we still estimate both our first quarter and full year '26 margin in the 21% to 22% range. Before I hand it over to Doug, I want to close with a few comments about how GB is being positioned for the long term. GB continues to invest in claims professionals and additional training for our seasoned professionals. We're adding new products and services organically and through M&A, including our enhanced marine and safety capabilities in order to cover even more of our existing and new clients' exposures. We're embracing new technology, including AI and machine learning that further enhances and improves the claims experience and financial outcomes. And our compassionate client-focused culture continues to drive high levels of climate and client satisfaction. So as you can tell, I am extremely excited about our near and long-term prospects and I believe the business is in fantastic shape. Okay. I'll stop now and turn it over to our CFO, Doug Howell. Doug?

Thanks, Scott, and thanks to everyone for joining the call this afternoon. Today, my comments will come in 2 main portions. First, I'll cover my typical 3 topics. I'll recap organic revenue and market commentary from each of our business leaders highlight some items from the CFO commentary document and then some comments on cash, M&A and capital management. I think that will take me about 6 or 7 minutes. Then for my second portion, Sara Walsh, our new IR leader, and I will do a virtual fireside chat on AI. While that might take an additional 10 to 12 minutes, I would hope it answers many of the questions you might have and shortens Q& a bit as we have a 6:15 p.m. Eastern time hard stop. So all right, to the business unit organic revenue recap. Mike, Patrick and Tom all provided you with strong outlooks on our global P&C retail, specialty and reinsurance brokerage operations. Across each of our business units, the teams continue to deliver strong new business production and excellent client retention with solid 1/1 renewals for our reinsurance team, too. Within our renewal premium data, we are seeing the first 2 months of '26 look a lot like where we ended '25. Property continues to see moderation and casualty rates continue steady increases. We also continue to see a bifurcation in renewal premiums by client size, with property prices down more for larger accounts than for midsized and smaller accounts. You also heard from the team that in many cases where clients see savings in their premiums, they redeploy those savings and opt in to buy more insurance. Then repeating what Pat said, we continue to see a solid underlying business activity as our data on first quarter audits, endorsements and cancellations continues to trend positively. As we consider all of this information, it feels like our global P&C units, including reinsurance combined might post first quarter organic somewhere around 5%. Then Bill walked you through our employee benefits and HR consulting business. He has seen favorable net new business spread within the core U.S. Health and Benefits business and continued strong demand for our individual life and retirement consulting. This offset slightly lower demand for our talent and communications consulting. Continued increases in medical costs and solid demand for our individual products and offerings will support strong organic growth in '26. Accordingly, we see first quarter organic around 4% within our global benefits operation. So when we combine P&C reinsurance and benefits, it's looking like first quarter brokerage segment organic will be in the 4.5% range and still supportive of a midpoint, 5.5% organic full year. That would be a fantastic quarter and full year. Now moving to the CFO commentary document that we posted on our Investor Relations website. Starting on Page 3. This provides you with the usual brokerage and risk management segment modeling helpers. Just a couple of changes from the end of the January document. First, FX. Relative to late January, the dollar has weakened a bit, mostly against the pound. So please take a look at the updated revenue impacts we have provided here for the remaining quarters and full year. And second, just an annual reminder to take a look at our quarterly brokerage segment noncash expenses and noncontrolling interest forecast for '26 as these amounts can vary by quarter. Flipping to Page 4. This page breaks down our organic performance by business that we've provided a couple of times before. We've gotten very good feedback in providing this. Some takeaways. First, our full year '26 organic estimate remains the same in total compared to what we estimated in January. Second, we've now added our first quarter '26 organic estimates by business in the pink column, which align with the outlook you heard from each of our business leaders today. Third and one last point. We've been asked to define what approximate means on this page. That means our best guess today within a range. For first quarter, the range around that estimate is very small given we have 2 months in the books already. But admittedly, March is a larger month. For full year, it could be 0.5 point or so on either side. As for the Risk Management segment, Scott just told you, first quarter organic is likely to be terrific, coming in around 9%. For full year '26, we're still expecting organic of approximately 7%. Turning to Page 5 in the Corporate segment, nothing significant here, no change to full year outlook and only some timing between quarters. Moving to the top of Page 6. Our interest income table only a few small tweaks from what we provided in January and one repeat from January. Please review the second line of this table for the amount of interest income we earned on funds we are holding to buy assured partners. Clearly, that has gone away, and you can see it won't repeat here again in '26. I'll talk more on the impact to EBITDAC margins when I get to Page 8. Staying on Page 6, but shifting down the page to rollover revenue table, we've updated for M&A that we've closed through yesterday, made a few tweaks on earlier closed M&A, and you'll clearly see that it excludes Assured Partners that I'll get to on the next page. So moving to Page 7. This is the same page we have provided several times before to show you the impact of AP rolling into our numbers. Recall at the end of January, we were a week away from wrapping up budgets. So the only update to the January version is a reclass between revenues and expense and a slight shift in quarterly seasonality. No change to full year EBITDAC estimates. Then please be careful here. For modeling, you can use the first and second quarter '26 columns as is. But for third and fourth quarter, you should only add the delta between the pink numbers and the blue '25 numbers. And it's important to read those footnotes. I'll repeat them again. They say the table reflects the midpoint of our estimate and does not include any revenue or expense synergies. The noncash figures shown on this page, which reflect depreciation and earnout payable are included within our estimates on Page 3. So please don't double count. And finally, we still see annualized run rate synergies of $160 million by the end of '26 and you'll read we're moving up our estimate by early '28 to be around $300 million. So this is a page of really good news. Moving on to Page 8, a table we first added in January to help you better understand items that impact the comparability of our Brokerage segment adjusted EBITDAC margins. We are told this is much more helpful than me doing a verbal bridge as I had done historically. I guess a picture paints a thousand words. I know it's noisy but it's so important for investors to see that for full year, we're expecting underlying margin expansion, and we're also expecting margin lift from rolling in AP and AP synergies. That gets clouded mostly by no longer earning interest income on funds. We held through August 18, '25 to buy AP, and it gets clouded a little bit from rolling in mergers that naturally run lower margins. It also really helps understand the significant difference between Gallagher seasonality and AP seasonality. But here's the punch line, and we've conveyed this before that headline margins will be going backwards in first and second quarter, but then flip the other way in third and fourth. That might fuel negative click date, but the real story is that our business is getting more profitable every day, both organically and through scale advantages from our acquisition strategy. Flipping to Page 9 to our tax credit carryforwards. Just a reminder that we have about $713 million of tax credit carryforwards and another $1 billion of future tax benefits related to our purchase of AP. This creates a nice cash flow sweetener to fund future M&A. For modeling purposes, just assume our cash taxes paid will be around 10% of EBITDAC for the foreseeable future, and that should get you close. Alright, moving to cash, capital management and M&A funding. When I look at available cash on hand, expected free cash flows and future investment-grade borrowings, over the next 2 years, we estimate close to $10 billion to fund M&A before using any stock. And also, please note, you can read our 10-K that we ended 2025 with a share repurchase authorization of $1.5 billion. Thus far in the first quarter, we have repurchased approximately $250 million of our shares. We believe our equity is woefully undervalued by the market. So this repurchase was opportunistic, but it's not in place of a growth through M&A strategy. Quarterly, we will continue to watch the market for M&A pricing versus our stock pricing. That said, when we look at our M&A pipeline now, it's strong, it's full of targets at attractive multiples, which does immediately create shareholder value through a nice arbitrage. And one last bit of good news on this part. Last week, we were upgraded by S&P to BBB+, another testament to our consistent two-pronged growth strategy and our continued profitability improvement. So that covers my typical prepared remarks. Now I'd like to spend 12 minutes or so on AI, but I first want to introduce Sara Walsh as our new Head of Investor Relations. Sara has been at Gallagher for nearly 20 years. She is also Treasurer and Vice President of Corporate Finance. Many of you have already met Sara over the years, but what most of you probably don't know is that Sara has been in the investor room with me and the management team, providing us all the numbers for all of our Investor Days and quarterly earnings calls for nearly a decade. So this role is a natural for Sara, given she's already so entrenched in our business and our financials, and so she'll do a terrific job leading our IR efforts. So welcome, Sara, and take it away.

Thanks, Doug. I look forward to working with all of you that I already know and also meeting those that I haven't met over the next month or so. So I'd like to get to our virtual fireside chat, covering 1 of the most prevalent topics in the insurance industry today, AI. Over the next hour, management each gave a minute or so of comments on AI within their businesses. But Doug, I'd like you to dig in more from your vantage point as a CFO.

Sure. Happy to.

Okay. Let's start simple. How much is Gallagher spending a year on AI.

All right. Well, you heard Pat say, our technology-related budget is about $1.5 billion a year. It's a little hard to unscramble that into exact buckets because AI is happening centrally, and also a lot is decentralized too. but a decent guess of direct AI-related digitization, cost to feed AI, our data and training AI to do our processes leads me to estimate we're spending about 10% of that $1.5 billion on AI-related costs. And to date, really AI has not required a separate outsized investment cycle. I think that our normal rate spend is sufficient to fund our AI efforts for the foreseeable future, too.

Okay. So Doug, where would you say Gallagher is in adopting AI?

Well, we believe we're well ahead, particularly in the middle market and perhaps even overall. It's important to remember that 90% of the time or more, our competition is the 60,000 mid- to smaller-sized brokers around the world. They just can't invest into AI like we are. More importantly, we believe this head start is going to compound with time. But here's some by the numbers. We have 40,000 employees already using AI. They were doing about 1.6 million self-serve AI prompts a month, and that's just to illustrate that self-used is broadened across our workforce. We also have a robust AI training program. We're already rolling that out to tens of thousands of Gallagher employees. And we've also been able to deploy AI quickly because since 2004, you've heard us constantly talk about standardization and essential data strategy. While we're never going to be done with that journey, we are so far along with standardizing, centralizing, automating and having that single global data strategy that we've been able to quickly deploy AI at scale. So when I look at some other numbers for specific broad-based use cases, not the $1.6 million self cases. You heard the team over the last hour, but some more numbers. There are dozens that are broad-based and full end use another 2x that number in launch phase and another 5x in the treatment, and we'll build it phase.

Thanks, Doug. So I guess, what platform is Gallagher using? And why do we choose it?

All right. First, let's remember, we are using not building large language model AI platforms that are built by other developers. We're using it, not building it. But we have built our own common user interface and internal AI that lays on top of 1 of the 3 household LLM names in AI. That has a lot of benefits. It allows us to ring-fence our data in from becoming available to the outside world and it protects our process IP. It also is very important for data security. But then we are also plugging into that to our user interface layer, bespoke small language models for the unique parts of our business. It also means we're not tied to a single vendor. We could easily deploy multiple large language models or lean into one over another if they evolve at a different pace. And it also helps us avoid retraining our folks on -- regardless of which model we use or switch to use. Our strategy of owning and building the user interface layer with a robust security and governance frameworks, lets us remain flexible at the underlying bottled player.

Okay. So now, I guess a more meaty question. Can you help provide some context around the size of our global revenues, let's say, from personal lines and what I'll call micro commercial assume micro here means under $10,000 of annual premiums. And can you help reconcile, I think what Mike Pesch had said back in September of '23 at our IR day, he then indicated that our personal lines revenues had made up about 3% of the U.S. retail revenues at the time.

Sure. But let me work backwards on that. Mike 3% back in 2023 was U.S. only and also included high net worth E&S personal lines placements and other highly complex personal lines, let's say, yachts and boats, et cetera, that are that are very complex to ensure. But let me frame it a different way today in the context of AI disintermediation. We generate global revenues from our personal lines of micro commercial Standard Lines clients of about $500 million of revenues, maybe at a margin of around 35%. So call that 3% of our global revenues. But it's important, please everybody listen, that's not the right number to use here. When you peel that apart and we see less than half of that at risk of AI disintermediation. So arguably, $200 million of revenue exposed, call that 1% to 2% of our global revenues.

Okay. So walk me there. How do you get to $200 million?

Well, obviously, we have so much data on our customers. So we sliced and diced it. We went through all of our personal lines and those micro commercial clients details for each of our businesses. There's a huge portion of that are in markets inherently harder to just intermediate. They're specialized or E&S markets. Another large portion is in a complex industry. It could be in a high-risk area, have poor loss experience. And then we looked at those that buy 2 or more policies, but the total is below $10,000. Each of those situations, plus then there's another half dozen of smaller other reasons, quickly whittles away the exposure and leads us to conclude a very small risk for AI disintermediation. So when we talk about disintermediation, we sum it up by saying it's concentrated a small subset of low complexity, small commercial and personal line policies. Another way of understanding it, the more complex threats, the more valuable the advisory relationship becomes. That's where 98% to 99% of our revenue is concentrated. Our business is advisory-led. It takes on complex issues and it's relationship-driven. AI will strengthen that model rather than disrupt it. And one last slot. Frankly, even most of that $200 million that's left over is arguably not even at risk because customers could probably buy their insurance directly if they are -- if they want it, but they don't because they understand the additional value they get going to using a broker.

Okay. So not to dwell on that 1% to 2% of Gallagher's business, but why don't these clients buy direct now?

All right. That might be a little bit longer answer, and I'm not going to repeat what we've already said and everybody has said on this call that evolve the value you bring to the relationship. So maybe we should look at it from the customer standpoint. To start, we know insurance premiums comprise about 2% to 3% of our micro and small and mid-market customers annual expenses. We earn on average, let's say, 10% of these premiums. That means a broker gets about 0.25%, 25 basis points of their annual expense -- of our customers' annual expense budget. So our customers are smart. They know that they're much better served to focus on the other 99% of their expenses. And more importantly, they know that making a mistake to save 25 basis points of their cost, could cost them 1,000x that amount or even bankrupt them. So they know that they get all of our expertise, access to markets and we negotiate the risk pricing. And when the -- most importantly, where their advocate when they have to make a claim. We represent them. We are the trusted adviser. And finally, they do know what we make. We disclose that. It's no mystery and they know that we're a bargain.

Thanks, Doug. Most of your commentary so far seems to be focused on Gallagher's moat. So give me some examples on where Gallagher is on the offense using AI.

Okay. Well, this will take me a minute or so. Let me pick a few examples of what the business leaders covered earlier but give you some numbers to show why this -- by using AI to better enable us as exciting. All right. I'll start with how we're using AI to quicken our turnaround of insurance quotes. Last year, the US P&C retail team generated about 55,000 quote letters for our clients in one vertical. They have compiled the critical information from multiple carrier quotes. This used to take us about 45 minutes for each letter. Now our teams using AI. We're down to about 30 minutes a letter, creating about 35% efficiency on this one single process. We had similar success in GBS. You heard Bill talk about this. We're doing about 30,000 marketing spreadsheets a year when we pulled out all that critical information from the carrier quotes. So it used to take us about 40 minutes and now this process with the addition of AI is down to 20 minutes. That's -- we've cut that in half or 50% efficiency. In GBS, we're also using AI to help populate our agency management system by extracting details from statements of benefits coverage. We have a lot of -- 55,000 of these this year before AI, it takes about 60 minutes, and now we're down to about 45 minutes. So we picked up 25% there. Within our brokerage division, we're using AI to summarize our clients and process loss runs for proposals and quotes to the carriers. We've got about 60,000 of these loss runs were reviewing a year, and it previously took us about 150 minutes to manually summarize each document, AI has given us about a 60% efficiency in that. We're down to about 100 minutes on it. And in GB, you heard Scott talk about this a lot. Our claims managers receive about 90,000 critical and other time-sensitive e-mails for things like policy limit demands or summons and complaints. The average turnaround time to respond to these e-mails used to be around 3 days. AI is now drafting real-time responses and enhance the accuracy of output. Well, these are just a few that the guys talked about today and I picked out. We continue to find more and more uses of AI, but you can see that there's substantial productivity improvements there. All of that will help us grow faster, save costs, in many cases, do both.

Those are really great examples, Doug. So can you help translate those operational gains into future cost savings for Gallagher?

Yes. Listen, let me do this, but I'll do it this way. And this probably undersay -- let me talk about the financial gains on this or the green money probably understates the qualitative or Blue money savings to. But alright, let's dimension our cost. Let's say Gallagher will post about $17 billion of revenue this year. This is for illustration and allows me to do some easy math, and this is not a forecast. About 1/3 of that is already EBITDAC profit. About 20% goes to our production layer, about 15% goes to our customer support layer and about 15% goes to our back office layer. So that's where the $17 billion goes. So perhaps between AI, other technology and further use of low-cost labor locations, maybe we could see 5% savings in our production layer cost, maybe another 10% to 15% of the support layer cost and perhaps 20% to 30% of our back office layer. And that might take us 3 to 5 years to fully realize those levels.

Thanks, Doug. So where did you get those percentages?

Well, using some of the early metrics that we're seeing that I just discussed above, combined, and this is the most important thing, but what we've already learned from our time and effort metrics over the last 2 decades, and our experience of lifting and shifting work to our centers of excellence. So I'd say those percentages are an educated guess.

Well, I guess it seems like a lot of costs are coming out. So do you worry about how that impacts our employees or Gallagher's bedrock culture.

No, actually. We know because of our lift and shift to lower-cost location, it actually creates better quality jobs. The AI opportunity is to eliminate repetitive work and better support our folks. And then also from a workplace planning standpoint, just realize normal attrition already gives us flexibility. Think about it this way. Around the world, excluding our Centers of Excellence, last year, we had to rehire filling open positions just from -- that arose from normal attrition, about 5,000 people comprising about $500 million of compensation costs. So over the next 2 to 3, 4 years, our normal attrition, even with modest hiring, could easily allow us to realize this productivity benefit without having to lay anybody off. So our view is that AI will help us upgrade work and expand capacity, all while remaining consistent with the Gallagher culture.

Thanks, Doug. So far, we've heard so many mentions the Gallagher centralized and standardized processes. Both you and Pat have touted Gallagher's data is a competitive advantage and why it is required for AI? So why is this so meaningful?

All right. That's all -- that's a great question. Data does run Supreme, real Supreme for us. And it's -- all this is interrelated and underpinned by the basics of insurance. You can't profitably underwrite and price risk without deeply knowing the risk. So because of our centralization and standardization, what we know are all the questions that thousands of carriers ask to underwrite risk. We also know more about a customer than is publicly available. We also know about risks that never get a quote from a carrier. If they are in a captive, are self-insured in pools, recycles, risk retention groups, et cetera. We also know new business start-ups, spin-offs, put downs, et cetera, that have no history or have changed history. And we know when a customer's business has or will change long before it ever gets submitted for underwriting. And don't forget, we even know the details and have tons of data on prospects that don't end up being clients yet. So because of our centralized data on all of these customers, carriers, insurance policies and prospects, all of the details, we have a competitive advantage. AI is only as powerful as the quality and accessibility of the underlying data. We believe our data foundation is a real differentiator.

Thanks, Doug. So one more for you. How does Gallagher's centers of excellence play into this AI story?

That's another great question. They are hand in glove. It is a competitive advantage that we have 17,000 employees in our centers of excellence. The vast majority are knowledge-based employees that have been deeply trained in thousands of narrow technical verticals. It is this knowledge-based workforce who are already building our small language models and having early success using Agentic AI. In other words, we have the Army that can quickly train, train and retrain AI.

Okay. So we need to wrap up and get to Q&A. Do you have any last comments?

All right. I'll see if I can get this down quick. Yes. I hope that every listener, I hope you take away from our cumulative -- we spent about an extra half hour on this today across everybody in my comments that we have embraced AI, and we have proved we are not late to the party. We've discussed the following: AI can accelerate analysis, accelerate revenue growth and create efficiency, but it does not negotiate tailored covered advocate claims, assume professional liability or even take responsibility for risk decisions. Those elements remain inherently human and are central to the value we provide as brokers. Again, I'm confident that we have the domain knowledge, and we have access to the markets. We already put in the hard work to standardize and centralize, that gives us the know-how and critical data, and we have an army to train and continue to implement AI. And then from a financial perspective, we expect AI benefits to first accrue through productivity, efficiency and workload expansion, which will positively impact our margins over time. The revenue benefits are more gradual and come through improved responsive, higher win rates and even stronger client retention more than offsetting any disruption, in my view. And finally, I'm confident we're well ahead of our competitor set and that AI is integrating naturally into Gallagher. It's going to help us grow organically, grow faster through mergers and acquisitions, rapidly improve our productivity and quality while reducing our cost, and all of this will bolster our already rock-solid client-first culture. So those are a lot of words for you all to digest today. Operator, if we could move to Q&A, we'll see if we can get a -- get that done here in the next half hour or so.

[Operator Instructions] And the first question comes from the line of Yaron Kinar with Mizuho.

This is Sadik on behalf of our Yaron. Our first question is if you could provide any color on what percentage of the company's revenues are tied to client headcount?

So that would probably be in our benefits business, Bill. I don't -- by the way, everybody we're scattered around the world today. So Bill, if you're still on, I think it's a pretty small portion, we typically work on a fee, but go ahead, Bill.

Yes. Let me try to break some things down for you there. First of all, we're going to finish about over $3 billion this year. Majority of that is in the employee benefit space about $540 million will be in the financial business lines and about $200 million is in the talent space. So the head count -- if you think about the talent business, mostly project-based and they are susceptible, obviously, to downturns in economic situations. But that's all about outcomes. It's not really focused on any head count whatsoever. The financial space is very similar. That is going to be very much assets under management, project based for actuaries, that kind of a thing. And that -- again, we don't see any real sensitivity to head count in that space. Now going over to the benefit side, that's about a little over $2 billion globally for us with majority of that in the U.S. And there is some connection to head count in that business throughout. That being said, the small group by definition and state is definitely going to more of a PEPM, per employee per month as opposed to a percent of revenue. And that is roughly about $250 million when I include AssuredPartners. Then you have another similar number up to about $300 million that is going to be -- in terms of 300 employees, I'm sorry, that is also very much tied as a commission to a premium. When we started getting into the middle market self-funding and above all the way to jumbo, the compensation is more negotiated on the front end. And it's not a linear progression on that. The larger the client, a lot of the revenues we earn is more negotiated on the front of this end as I said. And the difference between, let's say, as an example, a 2,000 employee group and an 1,800 employee group isn't much different. And so if, in fact, any of those companies were going to have a downturn of employee population. In the short run, that revenue wouldn't change because the scope of the work is still unchanged on that. And our segment is over 1,000 employees and above is our largest segment in terms of total revenues. So the tied to head count is more on the smaller side. Now revenue downturn on the economics, every employer is going to come back and talk about our fee and so forth. But it wouldn't be a direct impact immediately for the mid and larger clients. So I hope I answered your question.

Yes. That's super helpful. And just a follow-up. Do you have additionally any color on what percent of the company's revenues are hourly. And if you guys are doing anything to move these revenues to outcome based? And if so, what percent do you think a percent of revenues will be outcome based within 5 years?

Doug, do you want me to handle that for GBS.

Yes. I don't know -- I don't think you do a lot of hourly work. So go ahead.

Yes. It's something like 8% of our revenue is hourly, 8%. And so -- and a lot of those, they are under contracts, and it's more about the work, not the head count per se as well. So again, 8% of our total revenue is hourly fees. Everything else is more of a project revenue or that kind of thing or commission. So it's not significant for us.

The next question comes from the line of Alex Scott with Barclays.

First one I wanted to ask is just for an update on AssuredPartners and noticed that the revenue looks like you ticked down a little bit in your estimates, but there's an offset from expenses. And it's just interesting getting color on that.

All right. This is Doug, I'll answer that. The way co-brokerage expenses are accounted for -- at Gallagher were net. So if we share a commission with co-broker, we would deduct that from the revenues, and we would not call that an expense AssuredPartners when we went through the budget, they're grossing that up, so we just grossed it back down. So it's geography. It has no -- you'll see the EBITDAC hasn't changed other than the little seasonality in the business, too.

Got it. I had a feeling it might be a nuance to it. So that's helpful to understand. For the next one, I'd be interested just at a high level. When I look at what your expecting for 1Q and then the full year is, I guess, a few of the segments where you're coming in lower in 1Q. And I'd just be interested at a high level, like what is it that you expect to reverse in sort of the final 3 quarters of the year? Like what are the key things you'd point to that you're expecting to get better in your full year? Is it seasonality or...

Just for clarification, you're talking about on Page sorry. Page 4, the CFO commentary that the first quarter numbers are running lower than where we see the annual numbers. Is that what your question is?

Yes. And I'm just interested in my confidence level around that...

No, I got it. No, I just wanted to make sure I understand the question. Yes. Listen, there's kind of a story -- a different story on each of these. But we had some pretty hard compares. Like if I look at the Americas, I know off top, Canada had a terrific first quarter last year. And this year, it's -- the had some onetime revenues because remember, this includes some of our onetime revenue type clients. There's a program up there that had some repricing in it this year. When you -- otherwise, when you look at it, I wouldn't overly react to a slightly less work. Reinsurance stands out probably as the big one, we had a 21% quarter last year. First quarter, we knew that wasn't going to repeat. So that's probably one that's there. Reinsurance is going to see some uplift this year in later parts of the year because of customers buying more cover. So those are a couple of the stories in there, but this is the first time we put out the first quarter. So as a matter of fact, if you levelize reinsurance last year and you levelize for reinsurance this year. If you just take that noise out there, you'll find that our organic growth in the quarter is about the same this quarter -- this first quarter as it was last year, first quarter other than reinsurance.

Our next question comes from Elyse Greenspan with Wells Fargo.

My first question was also on the Q1 brokerage guidance. So the 4.5%. I was hoping that you could break that down between like the core, I guess, baseline organic as well as what you expect with supplementals and contingents in the quarter?

For purposes of doing these estimates, we haven't assumed an outsized contingent or supplemental quarter on that. We have a pretty good line of sight into it now. We do have a few more weeks to collect to see how our estimates for last year, but really don't have -- I wouldn't say that we're assuming that number to be any bigger or that organic to be anything different than our base commissions and fees. It could be some upside surprise there, but I don't think so where we are in the quarter.

And then my second question was on AP and RPS, like I had assumed I think you guys discussed this last quarter, right, that if AP brings wholesale business do you guys write that's, I think, included within organic. So have you guys started to see that? Or is that something that perhaps is also a tailwind to organic growth in the later stages of this year?

It could be. Maybe I'll have Mike talk about what he's seeing coming out of the cross-sell between retail and wholesale coming into the hotel market. Still early days, but Mike, are you still out there?

Yes, I'm here. Can you hear me all right?

Yes, we can.

Okay. Good. All right, Elyse. So yes, the first part of this process is making sure that we've socialized with our new colleagues at AP that we have wholesalers that we trade with. And we've also socialized extensively that RPS is priority #1. And so the good news is, I think we told you this maybe last year that AP was starting this journey, they hadn't mandated it, but they were starting on that journey. So we are now about 6 months in, and we're already starting to see some really good work together and collaboratively where now we have all of their information into our data lake and it's in Gallagher Drive. So our colleagues within RPS can do specific outreach to our new AP colleagues, and I'm actually sitting in Chicago, where we have all of our groups from our specialty group and our retail group. Tomorrow, they will be spending extensive time together to continue to socialize and build those relationships. So the direct answer to your question is yes, I anticipate that RPS will not only get their fair share, but they'll get a significant chunk of that business that is currently being traded outside of those 5 approved wholesalers. And then we don't share all of our strategies and tactics, but we have some specific strategies that we've deployed over the last several months around what we want to go into, either an RPS binding facility or to RPS open wholesale brokerage that we are executing on right now. So I do believe that will be a big help for RPS throughout 2026.

And our next question comes from the line of Tracy Benguigui with Wolfe Research.

On the topic of AI disruption, is the real outcome potential hybrid model where AI enhances the revenue prospects and efficiencies you're talking about rather than just intermediation. So I'm wondering if you foresee any pressure on broker commissions and fees as a consequence especially in a soft market where carriers may want to squeeze commissions.

Well, listen, I think the value that we bring to the model, I think it should be the other way around. I think that our customers understand exactly the value that we bring, and we're happy with the way the carriers are paying us now I would not feel that pressure or accept it, in my opinion.

Okay. Got it. And Doug, you mentioned that your M&A pipeline is strong. Your targets are attractive. Has the sector of AI disintermediation brokers made any of the private small ones we're willing to sell? Or are you talking about your typical like 10x for tuck-ins and 12 to 13x as you go upmarket?

Yes, I don't see us at 13x on deals. I think that we're down in single digits on some businesses, I think, really for one right down in the middle of the fairway, the number is around 10x. I think that the realization we're going to have to take a look at their book of business on if there is a risk of disintermediation there. We'll also have to take a look -- we always take a look at 1 trick ponies that if they've got one very large client wouldn't have to put it through an idea of what's going to happen with AI on that, if there's any risk there. So our eyes are wide open. It's early days on it. I think that, like I said, our 60,000 competitors out there. I don't know how much they're opening their eyes to AI right now. I think -- this is new. So it could cause folks to say they need investment dollars. This is more -- this is a reason to join Gallagher. So it could increase our pipeline considerably. And then they're going to get a fair price for their business with us. And if they want to take our stock, they have the opportunity to write it back up.

And the next question comes from the line of David Motemaden with Evercore ISI. Okay. And the next question comes from the line of Mark Hughes with Truist Securities.

On the property line, I asked this question, maybe last call, where do you see it in terms of the incremental trend that's obviously down, but has it stabilized at a low level? Or do you think it's going to step down further from here?

That's a great question. I think our customers are going to get some more pricing breaks as we come into that -- into the second quarter. I think they are starting to do more opt in and buying more coverage, though, too. I think that first year was kind of a benefit. I think second year, it that our message that risk is growing, your exposure is growing, starting to resonate. So property lines, you heard Pat say that probably is down around 7%. Q4 was maybe 5% down, 6% down, something like that. So it's not like the bottom is falling out of it. And you saw that bifurcation. I mentioned between larger accounts and smaller midsize.

Yes. And then I don't know if Scott Hudson is still on, but talking about liability claims that you all are closing. Noticing anything there on inflation, social inflation and liability claims now versus 6 or 12 months ago?

Mark, this is Scott. I wouldn't say anything noticeably different. I mean there's still upward pressure, but not necessarily different than it would have been 12 months ago or 24 months ago.

[Operator Instructions] The next question comes from the line of Rob Cox with Goldman Sachs.

I was just wondering, so in the claims administration business, could you give us a sense of what portion of the claims are lower complexity? And do you think you can significantly streamline some of those claims with AI? And then just related, you guys provided a lot of details on both businesses and how you're leveraging AI. But how would you stack rank or benchmark the impact of AI on risk management versus the brokerage business, high level?

Doug, do you want me to take that? I can start with the -- the question on the low complexity claims. I think there's -- I'm going to be clear on one thing. There's a significant number of our claims are low complexity. However, a significant portion of our revenue is due to the more complex claims. And I think we are -- every single day, whether it's AI or just general automation, we're looking for opportunities to limit the amount of time we spend on very, very simple claims. It can be a medical-only claim in work comp. It can be a simple fender vendor on the auto side. It can be a one of our clients, a cart in a retail parking lot, dense a car. So those we are constantly looking for ways to kind of simplify the amount of time and energy that we put into those things. But interestingly, I don't think that will dramatically impact our revenue because we don't get paid necessarily a significant amount of money for those. I think the question, Doug, in terms of a comparison -- and maybe you can ask the question again about comparing it to the brokerage business. I'm not sure the maybe what you're trying to get at in terms of kind of the risk management versus the brokerage business and AI's applicability.

Yes, just I mean say the question again, maybe I'll plunge on that.

Yes. Just overall, curious if you see more opportunities, sizing the opportunities and risks, how would you kind of plot those for each of the businesses?

All right. Well, listen, I think the value-add creation on the risk management side, just us stamping out fraud, having nurse case managers being able to really get at that. Remember, just like on the brokerage side is that the fees that we take out on the risk management side and what we charge for the insurance placement and claim advocacy side are such a small part of the overall cost of insurance. So when Scott handles a low complexity claim when he has tools that go through understanding fraudulent claim practices it's a savings of the claim amount that where the value is, the actual cost to do that, whether it's done by a person or whether it's done by AI or Agenetic AI, I think they're still going to have to -- somebody's got to be able to figure out the AI to do it, and we have the domain knowledge. So I would say that Gallagher Bassett they might be a little bit ahead on Agentic AI when they can get the -- their -- maybe their first notice of loss talking to Agentic AI talking to the carrier. If they're servicing for a front-end carrier or for self-insured, they might be able to deploy that a little faster. But it's not going to dramatically change the revenues. And in the brokerage side, the tools that we're putting together will really, really improve the accuracy and quality of the service layer. And it's going to really, really have a big impact on our support layer costs that I talked to you before about. So it depends on where you want to look at the advantages Gallagher Bassett might be a little bit out in front when it turns to Agentic AI, I think, in process improvement, the broader corporate side and then also in just some of our -- what we're doing on some of the small language models might help us a lot on the back office.

And the next question comes from the line of David Motemaden with Evercore ISI.

Doug, thanks for that detail on the $500 million of revenues in Personal Lines and standard micro commercial lines with premiums under $10,000 I'm wondering, is there a way to think about exposure to similar business with under $10,000 in premiums and employee benefits? And I'm wondering your view on the disintermediation risk in that part of the business.

Yes. Bill provided some of that information. We took a look at it. And the issue is this, is that the buyer is not necessarily the insured in this case, the buyer is a human resource executive or a CFO or a business owner. To be real honest, they are so underprepared and underqualified to think about disintermediating a broker on those purchases that I just -- I see it as an even lower risk than on lower personal lines, auto or personal line or small micro commercial lines. So Bill has gone to this business, but it's going to be very hard to disintermediate that on the benefit side. So I'd be surprised if it's much of anything.

Got it. Okay. That's helpful. And then I was wondering, just on just on claims advocacy, I think that's a really interesting point that you brought up. And I'm wondering if you could just -- maybe just talk about how often Gallagher gets involved on the claims side on behalf of the clients, particularly on the small end of the spectrum.

Yes, Mike, that's in your wheelhouse, Talk about our claim advocacy group, it's 1,000 heads strong. Talk about that for a second.

Yes, I'd be happy to. So the -- a number of years ago, we organized all of our claims and loss control people into a central unit across the Americas, across the country. And these folks -- these are not claims processors. These are claim advocates, ex nurse case managers, things of that nature, attorneys that help our clients navigate through those claims. And it can be an account of any size. So clearly, we're spending a lot of time with customers that have many claims per year. But if a smaller client has a difficult claim as a tornado has a hailstorm, those sort of things, our advocates get involved with that customer to help get that claim closed after doing AP. So we had about in legacy Gallagher about 350 of those individuals around the country. AP gave us another 300. So we have roughly 600 to 700 of those folks around the country that are helping our clients when they have claims, navigate through. And by the way, someone mentioned the claims, there is no simple claim when you're the claimant. For anyone that's been in an auto accident, you know it can be pretty complex. And so imagine that on a commercial business that has a claim that could potentially shut down their business. They need an advocate to walk them through how to not only just file the claim, but to navigate the nuances of the legal contract, which is the policy to make sure they get proper coverage. And we have all of those claim advocates on behalf of our customers servicing those customers, and then we have loss control engineers. These are folks on top of the insurance company engineers that go out and help our clients make their place of work safer for not only insurance purposes, but for their employees. And so the combination of those 2 is a powerful punch and we were excited to have AP join us to more -- to basically double that group of professionals.

David, this is Pat. I think that you struck right on the key that doesn't seem to have discussed at AI at all. I'm just going to tell you that what Mike said is right on. Every time I've had a claim over 50 years that has any nuance at all, the client throws up their hands and says, please help. And it's just elaborate of difficult questions. There's all kinds of things that have to get done to get a claim right and most clients regardless of size, just can't deal with it.

And the next question comes from the line of Meyer Shields with KBW.

Great. And I really appreciate all of the detail that you've provided tonight. I had a question on the large account space. I'm wondering whether there's any -- I understand that Gallagher has a ton of information that's proprietary, but is there any program design that these larger clients that themselves have resources can use AI for. So Gallagher is obviously integral in terms of understanding the appetite for risk, but maybe some of that program design goes back to the client.

Well, maybe I don't know, Patrick, if you want to take that one or Mike, you can talk about the towers that we put together and how programs are started assuming what you're talking about. I don't know if you're still on Patrick.

Yes, I'm on. I mean the need for data, the need for us to be able to say to risk managers, clients like you buy something of this limit for this price in this geography, I think it helps them choose what they're going to do. Now are there opportunities for the risk management community at large accounts to be doing some of that themselves, sure, but they don't have the proprietary data that we have on a myriad of clients that are just like them. So I was in a reinsurance meeting today. We're really talking about comparing a large carriers portfolio with another large carriers portfolio or our entire portfolio. They need the insights from the rest of the market. That's what Gallagher has within Gallagher Drive and within our clean data set is we can basically show them the entire marketplace. Yes, there are going to be competing models, which we do with them on PMLs and foreseeable losses and stuff like that. But we -- with risk managers, they just really want to consume the data from everywhere. I think we're in a great position to use Gallagher Drive especially to talk them through what clients like them are buying.

And the next question comes from the line of Katie Sakys with Autonomous Research.

Great to hear the top end on AssuredPartners synergies has increased a little bit there. Can you update us on year-to-date progress on synergies and where you anticipate there may be execution risk? And then more broadly, what's driving the slightly higher $300 billion all-in synergy view? Does that reflect like a pull forward? Or is that a further increase to revenues? Or is it a further increase the expense synergy side?

All right. This is Doug. I'll speed data on that real quick and just say listen, every place that we turn, we see opportunities to be better together. No question about that. The very little of that upside, first of all, is revenue synergies. It's mostly continued cost synergies, all right? So we're seeing the opportunity for consolidating real estate. We're seeing it on contract negotiation. The reality is a lot of our enterprise licenses, the incremental cost enroll those folks, the AP associates onto that is pretty small relative to what they had to buy on their own. I think the execution risk on it is small. And I think that what -- the only gating factor on achieving this is we are being thoughtful on how we convert each location's agency management system. And that will be -- that's kind of the long pole in the tent that will take us over the next 18 months to 2 years. We're well on the way of having everything taken care of in the back-office, treasury, Sarbanes-Oxley compliance, real estate, expense management, procurement, those things are really doing well. And I think getting the folks onto the common agency management system will allow them to use our productivity tools much better. So I see low excretion risk in getting to that number. And I think that every time we look, we see an opportunity to be better together when they put it that way.

If I can squeeze in one more really quickly. Thinking about all the color you gave on the billion dollars of remaining buyback authorization, your $1.5 billion budget for tech and analytics and ongoing M&A efforts. Can you tell us how you're thinking about prioritizing those today versus the next year or 2? And if the macro or the insurance cycle turned, what would make you tilt that mix more defensively?

All right. So the IT spend is just embedded. That's just what's coming through our normal budget process, and we don't have an outsized single winner take-all type strategy in there, in the IT. So that's just embedded cost in our structure. So I think that we've got plenty of money in there to continue to invest. I think that on the M&A front, we're looking at deals. I think some sellers are sitting on the sidelines, but I think we'll see them kind of in the summer and the fall, we typically have a kind of a slow first quarter. And then balancing it with share buybacks. We think our stock has a lot of value right now and we're just not going to chase multiples on M&A. And if that means that we have excess cash, we'll use it to buy our shares back.

And our final question comes from the line of Mike Zaremski with BMO Capital Markets.

My first question, Doug, kudos for giving us your best estimate on kind of how AI could impact, I guess, productivity and expenses over the next few plus years. Just curious if I use your math, you're getting -- I'm getting to a substantial 6-plus point improvement, all things held equal in EBITDAC margins. What's your best guess of kind of how -- will the whole industry kind of be a fast follower and Gallagher only keeps a proportion of this? Or how are you guys thinking about that internally?

Well, let's bifurcate the industry and to those that -- listen, I just don't see that -- you won't see in our 60,000 smaller agents and brokers. So the private ones, the smaller ones, they just don't have the money to put into these type of investments to really drive that on it. So I would say it's I think it's probably a better question for the other larger global brokers on what they're doing and what they're seeing coming out of this. We already have a pretty darn good margin and 6 points, yes, that's how the math might work. The real question is, can we toggle some of that into an accelerated organic growth? And that's that always that trade-off is if we see an opportunity because we really didn't get to it today, but we will have another time when we're about out of time. How was AI going to enable us to sell more, win more and retain more. There's some exciting stuff we're working on, on that too, that we didn't get to today. So the answer is yes, the math might see another 600 basis point improvement, maybe 2/3 of that is probably more realistic when you take a look at it, just by looking at what you see for some inflation keeping folks around that might be a little bit higher compensation costs. So I wouldn't put 600 basis points on the bank, but that's how the math might work.

Okay. Great. And really quickly lastly, I guess [indiscernible] on the queue is that a number of questions have come into just asking to further clarify why organic growth should be a bit better in the back half of the year. And I think you answered most of it, but maybe be willing to just offer your views if property is part of the culprit in terms of the decel, what are your -- what's embedded in your view on property pricing in the last 3, 4 plus of the year?

All right. You really broke up on us on that question. I think I understood about why -- what's our confidence level for the rest of the year? Listen, we're having some really successful new business pipeline growth right now. We're seeing a lot of opportunities maybe in our marine business, the or rate premiums as goods move around the world. We're seeing some opportunities there. The reinsurance business, people are really starting to wait in now and starting to spend more on insurance. I think that we've done a really good job in many case of getting a raise on our fee accounts. So there's -- and then there's also just a few outliers that had super strong organic in the first quarter last year. They're making a slightly difficult compare. I mentioned Canada on and reinsurance. If you levelize that out, it kind of looks like what we talked about here in the first quarter. And we're talking about 6% in the next 2 quarters, something like that. And in the fourth quarter, we'll bring it home that gets the average down to about 5.5% as a midpoint. So there's a story on each line item. But if you really think about Canada as an example, and you think about reinsurance as an example, it kind of gets you to a pretty consistent growth pattern throughout the year.

Well, I think that's all the questions for today. It's time to wrap up. Doug, are you good with that?

Yes. I think we're.

Good. Well then, I'd just like to thank everybody for joining us this afternoon. Really appreciate it, and great questions, and thanks for those. As you heard from the team today, I think Gallagher continues to execute and is incredibly well positioned for continued long-term growth. And we look forward to speaking more with you about that during our first quarter earnings call, which will happen in April. Thanks again for being with us. Thanks for the thoughtful questions, and have a great evening. Take care.

Thank you, everyone.

And thank you, ladies and gentlemen. That does conclude today's conference call. You may disconnect your lines at this time.