Arthur J. Gallagher & Co. (AJG) Earnings Call Transcript & Summary

Good morning, 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.

Thank you. Good morning, everyone. Thanks for joining our investor meeting today. We think these investor meetings give the investment community a chance to hear from our business leaders and better understand what continues to drive Gallagher's growth and long-term value creation outside of the busy earnings season. And in some cases, it serves as a primer for our new investors. I'll start by discussing Gallagher's 4 strategic pillars and why we believe we are very well positioned to grow revenues and improve profitability in this market. Then I'll give an update on the insurance market and economic conditions after [indiscernible] to hear from our business leaders. They'll discuss their businesses, markets, including the trends, growth opportunities and operating initiatives, that continue to drive strong performance across Gallagher. They'll also give some specific examples of how they're using AI and discuss how they see the second quarter developing. Then Doug Hall, our CFO, will pull the comments together and provide a more detailed second 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 Q&A. One of the questions I hear most often is why Gallagher continues to grow across different market environments and outpaced the industry over time? The answer starts with our 4 strategies that have stayed consistent for decades in which we continue to create opportunity for growth and long-term value. Number one, grow organically; number two, growth through mergers and acquisitions; number three, increase our productivity and raise our quality; and number four, maintain and promote our culture. These have been tested through economic cycles, employment cycles, interest rate cycles and insurance pricing cycles and they continue to deliver excellent revenue growth and profit improvement year in and year out. We are a two-pronged growth company, organic and M&A, and I continue to like our position on both because we have very little market share and the industry is highly fragmented. Even after growing organically over $3 billion and acquiring more than $6 billion of annualized revenue since 2020, we still touch less than 5% of the global insurance market. And there are perhaps 60,000 smaller agents and brokers around the world who recognized or will recognize, they would serve their clients better by being together with us. Our future growth has practically speaking, no real limits. We're also highly profitable as a company, with EBITDAC margins up over nearly 800 basis points since January 2020, and I continue to see significant opportunities to improve productivity, raise quality and increase profitability. And we have a team-first execution-driven culture that recognizes growing revenue and profits enables us to invest in talent, technology and expertise necessary to exceed our clients' expectations. Put simply, this business is built to deliver double-digit annual revenue and EBITDAC growth and to turn that into long-term shareholder value. Let me take -- let me do a deeper dive into our first objective, growing organically and why I believe our combined Brokerage and Risk Management segments are still on track to deliver full year 2006 (sic) [ 2026 ] organic growth of about 6%. Gallagher has client capabilities in approximately 130 countries, more than 72,000 employees and the ability to provide advice and solutions across insurance, reinsurance, human capital and claims management. Insurance remains one of the most essential products in the global economy. It touches just about every business, every asset, every transaction in the economy, all of which have increasing risk and greater complexity. The Swiss Re Institute estimates that there are more than $7 trillion of annual insurance premiums globally, which includes $4 trillion in non-life premiums alone. That premium base continues to expand as economies grow, insurance demand increases and new risks create new coverage needs. We touch about $200 billion of premium a year. Frankly, global insurance premiums are growing annually more than we currently touch. What's contributing to that broader market growth is the ever-increasing size and complexity of risk meaning insurers need our expertise more and more every year. Examples like data centers, cyber, energy transition and involving liability risks increasingly require specialized expertise, better data and more sophisticated advice. Today, you'll hear from the team how we have industry-leading talent around the world, deep expertise across products and geographies in a consistent, successful approach to sales and service, all operating under an ever-increasing respected global brand. You'll hear those strengths are reinforced by the scale of our data, our centers of excellence and the technology and AI capabilities we continue to build across the organization. And you'll also hear about the diversity of our model with operations across PC, retail, wholesale, benefits, reinsurance and claims each with different growth drivers and sensitivity to market cycles. Our producer talent, niche expertise and global and diverse capabilities and client-first culture are the reasons Gallagher has grown organically in practically any environment. Turning to our second objective. Another way Gallagher creates long-term value and revenue growth is through mergers and acquisitions. The opportunity for M&A remains substantial because insurance distribution continues to be highly fragmented around the world. When firms join Gallagher, they get immediate access to our niche experts, client carrier insights, digital and AI tools, thought leadership, recognized brand and our elevated service from our centers of excellence. That creates immediate value for their clients and gives their producers more ways to win. It also strengthens Gallagher through the addition of talented producers, specialized expertise and local market relationships. So far this year, we've completed 15 mergers, representing around $115 million of estimated annualized revenue. Looking at our pipeline, we have nearly 40 term sheets signed or being prepared, representing around $600 million of annualized revenue. We remain disciplined on valuation and focused on culture fit, and we believe the same factors driving our organic growth, our talent, expertise, data and client solutions also continuing to strengthen our position as a preferred acquirer. The third objective of our strategy is to increase productivity and raise quality, and this has been a long-standing focus for Gallagher. More than 2 decades ago, we began building our centers of excellence, where today, over 18,000 colleagues handle many of our back office and client servicing activities through standardized processes and a common system, we've created a scalable, consistent operating model across the organization. That work is particularly important in the context of AI. What differentiates Gallagher is not simply that we are deploying AI today, that we've built the foundation for it over many years, standardized workflows, centralized data and a global operating model. That foundation allows us to move with speed and consistency as we embed AI across the business. The -- AI is not a future initiative for Gallagher, it's already integrated in how we operate, and we support our professionals and how we serve our clients. We are applying it in a practical workflow-driven ways across the brokerage claims, benefits, reinsurance and M&A with a consistent focus on improving speed, insight and execution. In our brokerage operations, AI is reducing the time required to analyze carrier quotes, summarize loss data and prepare client deliverables, allowing our teams to respond more quickly, make more informed placement decisions. In our digital platforms, AI is making proprietary data more actionable for producers and clients, improving how we evaluate options and deliver advice. Within Gallagher Bassett, AI is embedded directly into the claims workflow. It helps identify severity and litigation risk earlier, triage claims more effectively and improve consistency and decision-making. These capabilities allow for earlier intervention and better outcomes for clients while improving efficiency across the claims process. More broadly, these are not isolated use cases. They reflect how AI is becoming embedded in everyday workloads across Gallagher, improving workflow efficiency, enhancing producer productivity, strengthening placement outcomes and delivering better insights and results for clients. Similar benefits are being realized in reinsurance and M&A where AI is accelerating data extraction, analytics and aspects of diligence, while our professionals remain focused on judgment, relationships and execution. Importantly, AI makes our brokers, consultants and claims professionals more effective. It does not replace them as risks become more complex, clients continue to judgment, advice and advocacy and market access. We see AI strengthening those core capabilities, not substituting for them. The benefits from these investments are emerging in stages. We are already seeing gains in productivity and quality. Over time, these improvements support better responsiveness, stronger execution, higher retention and improved win rates ultimately contributing to stronger economics and organic growth. The bottom line is simple. AI is helping us grow, improve quality and operate more efficiently. We believe we'll continue to reinforce our advantages in scale, data, expertise and market relationships. And given the investments we've made in our people, technology and operating infrastructure, we are well positioned to continue creating value for our clients and shareholders over time. The fourth objective of our strategy is to maintain it from our culture. As we've grown, our culture is unchanged. Our focus is on our clients, our people and doing business the right way. We believe our culture is a meaningful differentiator. It helps us attract talent, integrate merger partners, retain clients and continue executing consistently across a growing global organization. It is also what enabled us 2 decades ago to embark on centralization and standardization as a journey, our teammates knew that this was better for our clients. They see the same thing coming out of AI. That culture has been key -- a key contributor to Gallagher's long-term success and remains an important part of our growth strategy going forward. Okay. Moving to an overview of the insurance market. Overall, we view the global PC insurance market as segmented. Carriers look to grow in lines and geographies where they are earning acceptable returns and remain disciplined where underwriting margins require further support. Property conditions continue to ease as capacities return, especially on larger accounts, while casualty remains firmer given ongoing pressure on loss costs and underwriting margins. For the first 2 months of the quarter, we saw the following in renewal premium changes by line of business: Property lines down 9%. Casualty lines up 5% overall, including general liability up 1%, commercial auto, up 4% and umbrella up 8%. D&O, cyber and other professional lines, up 2%; personal lines up 3% and workers' compensation about flat. Overall, property decreases are offset by increases across most casualty classes. Excluding property, renewal premium changes are up about 3%, with stronger increases in the U.S. than in international markets. We also continue to see meaningful differences by client size with large property risks driving most of the downward pressure overall. Across our renewal portfolio, premiums reflect underlying insurance conditions, but our revenue reflects the value of the advice, placement and advocacy we provide. Those don't move one for one, and that relationship varies by line of business and client mix. In some areas like property, we've seen premiums come down as rates normalize, in casualty and specialty lines, premium and revenue trends remain more aligned. And in our specialty business, where placements tend to be more complex, that alignment reflects the value of our niche expertise. Good accounts are still seeing some premium relief. However, accounts with poor loss experience are likely to see greater increases. In many cases where clients are seeing savings in property, they are opting back into coverage or increasing limits. As for reinsurance, capacity remains ample overall with market conditions vary in line by line of business. In this environment, the value of the broker becomes even more important. Clients are not simply looking for capacity, they need advice on how to structure coverage, evaluate trade-offs, access the right markets and make better risk decisions. That is where Gallagher's expertise, market relationships and data-driven capabilities help differentiate us and create opportunities to continue winning business. Moving now to our view on economic conditions. Through mid-June, our daily revenue indications from audits, endowments and cancellations are still in positive territory and continue to point to solid underlying business activity for our clients. 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. Overall, these indicators suggest the underlying market conditions that support our business remain intact and continue to support our growth expectations for 2026. All right, let me preview what you'll hear from each of our business leaders, then I'll turn it over to them. Mike will discuss our Americas PC retail and specialty businesses, and how scale, niche expertise, data and technology continue to help us win in a rational market. Patrick will discuss our international retail PC London specialty operations, where our global platform, digital ecosystem, and specialized expertise continue to support growth across international markets. Tom will discuss Gallagher Re and also as a separate topic, our global M&A strategy, including how our model continues to attract talent, merger partners and opportunities for growth. Bill will walk through our employee benefits and HR consulting operations, where employers continue to seek advice, cost discipline and talent solutions in an increasingly complex environment. Then Scott will discuss Gallagher Bassett and how scaled data, technology and AI capability enabled claims management are helping deliver superior outcomes for clients and supporting continued growth. Doug will bring it all together financially. Okay. I'll stop now, turn it over to Mike Pesch, who's going to discuss our PC brokerage operations across the Americas. Mike?

Thanks, Pat, and good morning, everyone. I'm Mike Pesch, and I lead our Americas Property Casualty business. Today, I'll cover 4 topics. First, I'll provide an overview of our Americas retail and specialty operations in the U.S. Canada, Latin America and the Caribbean. I'll discuss current insurance market conditions, and then I'll outline how we've implemented AI across the business. Finally, I'll end with what we're seeing thus far in the second quarter. Our Americas retail PC brokerage operations generated over $3.5 billion of revenue in 2025. Our largest Americas retail operation is in the U.S., where our U.S. retail PC operations generated over $3 billion of revenue in 2025, including the recent acquisitions of AssuredPartners and Woodworth Sawyer, pro forma revenue would have exceeded $4.5 billion with roughly $35 billion of premium placed here in the U.S. In Latin America and the Caribbean, we generate around $200 million of revenue across 15 countries and have more than 2,000 employees. In Canada, we are a top 5 commercial lines broker with clients in all 10 providences and 3 territories. Here, we generate nearly $300 million of annual revenue with approximately 1,500 employees. In 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, though to a lesser extent. Most of our clients are middle market commercial clients who spend between $100,000 and $2.5 million on their annual insurance premiums. That translates into roughly $10,000 to $250,000 of annual commission and fee revenue to Gallagher per middle market client. These middle-market clients often have complex insurance needs, but limited in-house risk management resources. We are well positioned to serve them because we combine deep industry specialization and local relationships with the scale, data and resources of a global platform. That lets us bring tailored advice, broad market access and practical risk solutions to clients who may not have those capabilities in-house. As a result, clients rely on us to identify, evaluate and manage risk that embeds Gallagher more deeply in their operations, strengthen retention and creates more opportunities to grow with them over time. Gallagher Blueprint combines our knowledge and data-driven approach with AI to focus on the most important drivers of our clients' total cost of risk. In practical terms, that means helping clients evaluate coverage adequacy, improve loss control, manage claims, optimize program structure and decide when to retain risk, first transfer it. Those are the kinds of decisions that directly affect the clients' total cost of risk and make the broker relationship much more valuable than simply placing a policy. The risk management advice and solutions we provide are strengthened by our niche practice groups. These specialists understand the products, exposures and industry-specific needs that matter most. They work side-by-side with our producers in the field so we can identify and address each client's unique risks. We have a deep bench of niche specialists spanning property, cyber, technology, construction, energy, reinsurance, space and executive risks to name a few. Our industry experts often work together to support more complex risks. This niche strategy reflects more than 30 years of deliberate investments. We built it practice by practice. It gives our producers access to specialized expertise that is hard to replicate. That helps us solve more complex client problems, deepen relationships and support retention and cross-sell over time. Data centers are a good example of how that specialist model creates value. They are one of the fastest-growing and most complex risks in the market today, driven by AI, cloud computing and digital infrastructure demand. There are also large capital-intensive projects, often with insured values in the billions. These projects cut across property, construction, cyber, energy, business interruption and executive risk. Clients need coordinated advice and placement across a broad carrier base. Our advantage is that we can bring those specialists together backed by hundreds of professionals who help data center clients with risk management, safety protocols, claims resolution and claims advocacy. Speed of execution is critical in this market, and our scale, market relationships and data capabilities help us secure capacity efficiently and deliver solutions for our clients. Ultimately, our role is to help clients place and manage these risks more efficiently as they scale critical digital infrastructure, and it shows how Gallagher's scale specialty expertise and data capabilities help us solve complex client challenges in ways that are difficult to replicate. Claims advocacy is another real differentiator for Gallagher. When clients have lost, we bring expertise, market relationships and execution to the claims process that helps clients recover faster and stay focused on running their business. It also deepens relationships, supports retention and cross-sell and make the revenue stream more durable over time. And that value extends to carriers as well. When we bring a client to market, we help carriers understand the risk for the clients' operation, the loss control work already underway and the coverage structure that makes sense, better submissions, better data and better risk conversations help carriers deploy capacity more efficiently and make more informed underwriting decisions. That is an important part of why the broker model continues to matter on both sides of the transaction. It is another example of how our platform helps producers win business, serve clients more fully and deliver value when it matters most. Our decades of work and hundreds of millions of dollars of investments are differentiators in the business. Whether you're a longtime Gallagher producer or a new merger partner, these capabilities are available from day 1 to help service clients more effectively improve retention and drive new business production. Let me shift now to our Specialty business, which collectively generated approximately $1.5 billion of revenue during 2025, and with the addition of AP, our annualized run rate revenue is over $2 billion. Our specialty business includes our U.S. wholesale Affinity, risk program administration as well as alternative risk and capital management operations. Our U.S. wholesale operations, known as Risk Placement Services, or RPS, represent about half of the specialty revenues. RPS was founded in the late 1990s and has grown to one of the largest wholesale brokers in the U.S. It includes our open brokerage programs, binding and MGU, MGA businesses. We engage with over 25,000 retail clients providing data, analytics, differentiated products and access to specialty markets and insurance solutions that align with their client needs. The other half of our annual run rate revenue comes from our other specialty operations, such as our Affinity business, where we offer specialized insurance solutions for over 300 national associations and affinity groups. Our risk pooling business, where we offer a wide range of services to support public entities, education, faith-based organizations, nonprofits and other member-based groups, AP added strength here as well, particularly in public entity pooling. And Artex, our alternative risk solutions, captive management and ILS administration business. Artech is one of the largest captive managers globally and a leading player in the broader ILS market. Moving on to my second topic, insurance market trends across the Americas. Starting with U.S. retail. So far in the second quarter, renewal premium change that both rate and exposure combined, is down around 2%. While this reflects the premium change specifically, fees as well as stronger commission rates produced positive renewal revenues over the same period. There has 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, in many cases, where potential price savings are available, clients are increasing their coverage levels and redeploying those savings into higher limits and broader coverage. I'll break this down by line of business, property is down 11% with all coverages in positive territory, casualty is up 7%, which includes general liability of 4%; commercial auto, up 8% and umbrella, up 8%. Package is up 3%, workers' compensation is about flat. D&O is up about 1% and cyber is up 5%. Excluding property, renewal premium change was up approximately 4% over the last 2 months which is consistent with what we saw in the first quarter. In this market, we're seeing a further divergence between our renewal premiums and revenues on those same accounts as renewal revenues remain positive over the same period. Starting with property. This is where the disconnect is most visible today. As rates come down, renewal premiums are declining, but our revenue impact is more muted. That reflects strong retention, exposure growth and the work our teams are doing on placement and program structure. Many of the larger and cat-exposed accounts driving the headline changes are also likely fee-based which is another reason the revenue impact is different. In casualty, we're still seeing positive rate, so premium and revenue remain more aligned. At that rate -- as that rate environment moderates, revenue growth will increasingly reflect exposure and client activity rather than pricing alone. As we've discussed previously, many of the larger and cat-exposed property counts are driving the headline changes, but these accounts are often on fees. Moving to Canada. Renewal premium changes showed decreases of around 2%, property is down around 8% and casualty is down about 1%. Moving to the U.S. wholesale market environment. Through the first 2 months of the quarter, our open brokerage renewal premiums were down about 4% and binding premiums up about 2%. This is the kind of market where our expertise, product knowledge and data-driven insights matter most. Every client has a different risk appetite, a different set of needs and a different budget. Our role is to help clients navigate those trade-offs and find the right coverage at the right price for their risk profile. At our March Investor Day, I talked about how SmartMarket and Gallagher Drive are using AI across our workflows. Since then, we've continued to expand those capabilities across the business. We are applying AI in 3 practical ways. First, turning our proprietary data into more actionable insights for producers and clients; second, improving placement quality and carrier matching through tools like SmartMarket and Gallagher Drive; and third, helping our people deliver better client outcomes through faster analysis, stronger submissions and more informed risk advice. These tools are already embedded in our workflows. They help producers evaluate carrier options faster, compare pricing and coverage structures and prepare submissions more efficiently before going to market. The impact is straightforward, faster response times, better informed placement decisions and more consistent execution. Over time, that supports stronger retention and higher win rates. These capabilities continue to scale as adoption expands across our producer base. And finally, a brief update on what we are seeing in the second quarter. Through the first 2 months, the underlying trends remain constructive, renewal revenue increases continue. Net new business spread remains positive, and we have not seen a meaningful impact from midterm policy activity, including audits, endorsements and cancellations. Taken together, those indicators, along with continued strong client retention, support our confidence in the outlook. Based on what we are seeing thus far, we continue to expect mid-single-digit organic growth in total for our Americas Specialty and our Americas retail P&C businesses. Looking ahead, we remain confident in our long-term prospects. We have differentiated solutions, strong sales talent data-driven insights and a client-first culture that position us to continue delivering strong results. Those strengths are embedded across the business and supported by the scale, specialization and execution discipline that have consistently driven our performance. With that, I'll turn it over to Patrick Gallagher, our Chief Operating Officer, who will discuss the rest of our major property casualty retail operations as well as London Specialty. Patrick?

Thanks, Mike, and good morning, everyone. I'm Patrick Gallagher, Chief Operating Officer. Today, I'll focus on our retail P&C units in the U.K., Australia and New Zealand along with our London specialty business. Let me cover 3 things. First, I'll give you an overview of these businesses and what differentiates Gallagher globally. Second, I'll talk about the insurance environment in each market. Then I'll finish with what we're seeing so far in the second quarter and how that supports our organic growth outlook. Starting with our international retail businesses. Today, our international retail operations in the U.K., Australia and New Zealand generate approximately $1.6 revenue and place over $12 billion of premium annually on behalf of clients. Our international retail operations are an important contributor to Gallagher's growth story and one of the clearest examples of how we have successfully scaled our model across geographies. Taken together, these businesses reflect the scale, reach and market positions we have built across some of the most important insurance markets globally. What is most important here is that we are not operating as a collection of separate local businesses. Over the last decade, we have built a more connected global platform that lets us leverage expertise, data, technology and client solutions across geographies. That is one of the things that differentiates Gallagher and supports our ability to continue growing across these markets. Our international retail clients look very similar and complexity to our Americas clients with a focus on the middle to upper middle market. We also provide brokerage services to large account risk management businesses. We also serve smaller commercial enterprises and high net worth personal lines clients though to a lesser extent. Despite operating across different markets, these clients often share many of the same insurance and risk management needs. So our sales approach and tools look a lot like the Americas. We built that by design over the last decade, and it is the foundation of our global go-to-market playbook. Rather than operating independently by geography, our teams leverage a common set of tools, expertise and capabilities around the world. Today, we have unified global go-to-market playbook. At its core, it brings a consistent approach to risk management, industry expertise, data-driven insights and client service across our international platform. First, CORE360 anchors our risk management discussions with clients and prospects of any size, anywhere around the world and it provides a common framework for how we identify, assess and address client risk. Second, our global niche practices cut across industries and products allowing clients across geographies to benefit from our deep knowledge and expertise. Examples of our global niches include energy, real estate, hospitality and marine. Third, our data and analytics platform helps us deliver more informed advice and create a more connected client experience through tools such as Gallagher Drive, SmartMarket and Gallagher Go. Gallagher Drive shows prospects and clients insurance buying trends for similar Gallagher clients from around the globe. Within Gallagher Drive, a client or prospect can see information for clients like me including coverage mix, limits, potential catastrophe exposure and claims forecasts. The platform further differentiates us versus the competition as producer adoption continues to grow. SmartMarket has evolved into a global offering used by most of our large carrier partners across our retail platforms, helping improve connectivity and efficiency across placement activity. For carriers that connectivity matters because it helps them see business that fits their appetite, understand where they can compete effectively and engage earlier with the risks that align with their underwriting strategy. For clients, it improves speed, market access and execution. That combination is one of the reasons our platform creates values for both sides of the market. And Gallagher Go gives clients a simple way to manage their insurance in one place. It provides a single digital experience and is becoming an increasingly important channel for how clients interact with Gallagher. While our retail operations use the same sales techniques, tools, data and analytics, they also rely heavily on our Gallagher Centers of Excellence for large portions of their client servicing work. Our centers of excellence are a good example of the operating advantages we have built over time. For nearly 2 decades, we have made our processes more connected and standardized. That has driven productivity and quality gains while also creating the data foundation behind many of the technology capabilities I mentioned earlier. That foundation along with a more unified technology infrastructure, led to supply technology and increasingly AI in practical ways across the workflows that matter most. We are focused on use cases that improve productivity, strengthen decision-making and create better outcomes for clients. That includes policy checking and quote data extraction as well as better submission quality and embedding AI into core tools like Gallagher Go, Drive and Guide. The key point is simple. We are using AI to take friction out of the workflow and create a more connected platform where data insights and tools work together across placement and servicing. When we take friction out of the workflow, our producers and service teams can spend more time on prospecting, onboarding new clients and serving existing ones, and that supports organic growth. In Gallagher Go, tens of thousands of retail clients are already using the portal with adoption continuing to build each month. We are expanding it later this year into benefits U.S. small commercial, personal lines and Global Reinsurance. Gallagher Drive is also seeing tens of thousands of dashboard views each month. And those comparative insights are helping us win new business and improve retention. This quarter, we built on that by layering in AI, so producers and clients can query coverages, limits and risk appetite more directly. The bottom line is that AI is already improving how we operate. But the real differentiator is the foundation behind it. Our standardized processes, global data model, centers of excellence niche expertise and connected digital tools. That is what allows us to deploy AI in practical ways across the workflows that matter most, while keeping our professionals at the center of the client relationship. Now shifting to London Specialty. Our London specialty platform has roots dating back to the mid-1970s. We focus primarily on larger commercial home clients, supporting retail agents and brokers around the world to place specialty insurance solutions across 6 main trading divisions. Aerospace, marine, financial lines, casualty, construction, energy and property. We have over 1,300 colleagues within our London Specialty Group, which generates more than $700 million of annual revenue and places more than $6 billion of premium annually. London specialty growth has been very strong in recent years, and we still have many attractive growth opportunities. There are 3 priorities there: First, we are continuing to deepen our specialty niches. We are constantly looking to expand capabilities, market relationships and product offerings that align with client needs, including financial lines, cyber and energy. Second, we are adding and developing talent, including seasoned producers who add to our expertise across our 6 specialty trading units. We also continue to develop our own talent through our Gallagher Futures graduate program. Third, we are focused on placement efficiency and the best route to market. That includes greater use of more efficient placement structures where they give us a better process and better economics than traditional facultative placements. Let me turn to the market and what we're seeing so far in the second quarter. Starting with retail. In the U.K., renewal premium changes including rate and exposure are down about 1%. Property is down 2%. Commercial auto is up 1%, general liability is flat. D&O and cyber together are up about 3%, and most other lines combined are about flat. Renewal premium changes in Australia are down also about 1%. Property lines are down 3%, package is up 9% and other casualty lines are down low single digits. In New Zealand, renewal premium changes remain under pressure in selected lines and are down about 6% in total. Property is down about 10%. Cyber is up 6% while most other lines are flat to down slightly. The London specialty market remains well capitalized and competitive with ample capacity and generally favorable conditions for most clients. Carrier appetite remains very strong. That benefits clients and creates opportunity for us, but it also keeps pressure on rates across many lines. We still see pressure in cat-exposed property and other complex risks. Carriers remain disciplined, especially around attachment points, terms and underwriting quality. In conflict-affected at regions, we are seeing meaningful increases in marine war risk pricing and to a lesser extent, in aviation tied to recent geopolitical developments. In some cases, that rate pressure is being offset by slower activity as geopolitical uncertainty delays investment, infrastructure and M&A decisions. The situation remains fluid and insurers are actively adjusting their underwriting approach. We are working closely with clients to secure coverage and navigate changing market conditions. This is exactly where specialty expertise matters. London remains the global hub for product creativity and development and the home for large and complex risks. In an environment shaped by conflict, political instability, climate change, inflation and higher insured exposures, we see continued opportunity for our London specialty team to deliver strong solutions for clients around the world. Pulling it all together, we continue to expect middle single-digit organic growth in the second quarter and full year 2026 for our U.K., Australia and New Zealand retail and London specialty units combined. These businesses are performing well, supported by strong client relationships, specialized capabilities and disciplined execution across attractive markets. I see meaningful opportunity ahead and we remain well positioned to continue delivering consistent growth and value over the long term. I'll now turn it over to Tom Gallagher to cover reinsurance and our global M&A strategy. Tom?

Thanks, Patrick, and good morning, everyone. I'm Tom Gallagher, and today, I'll cover 2 topics: First, our global reinsurance brokerage operation, Gallagher Re then I'll spend a few minutes on our global M&A strategy. Let me start with Gallagher Re. Gallagher 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 Treaty Reinsurance business in December of 2021. We finished 2025 with more than $1 billion of revenue, much of which comes in the first half of the year, given the timing of major reinsurance renewals. We provide advice, modeling, strategy and placement expertise across treaty, facultative and other risk transfer solutions globally. As [ risks ] gets more complex and capital solutions get more specialized, clients rely on us to manage volatility, access capital and optimize program structure. Within our Reinsurance business, we've grown organically by investing in talent, capabilities and client relationships. We've continued to invest in talent across treaty and facultative and that is driving strong organic growth. We finished 2025 with 14% organic growth, and we've had a strong start to 2026. And we still see a good opportunity ahead. A few examples. First, we are broadening our product offerings, including solutions across life and health, marine and energy programs, cyber and property. We're investing in talent across key product areas and geographies. That includes expanding our global facultative capabilities, adding seasoned producers and developing the next generation of reinsurance talent. We're leaning into our global footprint by growing existing client relationships and winning new business across all of our regions. We also helped source additional capital for our clients through alternative forms of capacity, including sidecars, adverse reserve development covers and cat bonds. Our integrated technology platform helps us harness our global footprint, proprietary data and market access to generate actionable insights at scale. We are using the power of Gallagher to create cross-divisional opportunities with Gallagher Bassett, our retail business, Artech, specialty and our benefits team, and we are embracing AI to support our producers, service teams and clients. We are using AI and practical waves today to improve speed quality and insight across Gallagher Re. For example, we use AI in core platforms such as Workbench to extract and structure quote information from documents and e-mails. This improved data quality, accelerates workflows and gives brokers faster access to usable market intelligence. We are also using AI with our data and analytics capabilities to generate better insight from proprietary data, helping teams compare trends across geographies and lines of business and bring sharper insights to clients. The important point is that AI does not replace judgment, relationships, trust or market access. Instead, it makes our brokers better by giving them faster access to cleaner data sharper analytics and more usable market intelligence. That strengthens the capabilities that have always differentiated Gallagher Re. Our people, data, relationships and platform, all this helps us operate with more speed, consistency and scale. The 4/1, 5/1 and 6/1 renewals reflected many of the same themes we saw at 1/1, abundant capacity, meaningful risk-adjusted rate reductions in property and specialty lines and broadly stable casualty pricing. In Japan, property cat renewals saw somewhat more downward pricing pressure, and this accelerated further in the Florida property cat market. The conflict in the Middle East has increased uncertainty, but it has not changed the overall reinsurance market dynamic to date. And we do not currently expect it to alter broad pricing trends across the market. Where it does matter is in the exposure analysis, coverage review and structuring solutions for clients with more directly affected portfolios. As we look towards the upcoming 7/1 renewals, the broad backdrop appears consistent with what we have been seeing previously, ample capacity, continued competition in many lines and client demand for thoughtful structuring and advisory support. In that environment, we're helping clients clarify exposures, stress test coverage response and assess how current programs may perform under different scenarios. We promote the right program structure and price, including the use of alternative forms of capital through bonds and sidecars. We review war-related cover and wording where relevant and position upcoming renewals consistently. And we structured tailored solutions for clients in specialty areas such as shipping, energy, aviation, cyber and political risk. From the carrier perspective, the value of the broker model is also clear in this environment. Reinsurers and capital providers need high-quality data, clear exposure analysis and well-structured opportunities where they can deploy capital with confidence. Our role is to help clients articulate the risk, evaluate alternative structures and bring the right opportunities to the right markets. The reinsurance market remains well capitalized. Capacity is abundant and conditions are increasingly favorable for well-structured buyers. At the same time, client demand remained strong, driven by underlying exposure growth and the need for more sophisticated risk transfer and capital solutions. More importantly, this market is creating opportunities for clients to do more than simply reduce spend, they can refine program structure and targeted protection and improved portfolio resilience while capacity is abundant. Importantly, our growth is not dependent upon rate. Rate can move up or down, but clients still need advice and volatility, capital structure coverage and market access. Our growth was driven by many different factors, including our ability to attract talent, expand advisory capabilities, win new business, source additional capital and help clients navigate increasingly complex risk and capital decisions. Those drivers have supported strong organic growth across a variety of market environments, and we believe they position us well going forward. As we look to the rest of 2026, we remain bullish on our growth outlook. For reinsurance, our growth strategy is across lines, across geographies and multifaceted, a growth strategy that will continue to outperform in any market. Now let me turn to M&A across our businesses. Alongside organic growth, M&A has long been an important part of Gallagher's strategy. Doug will cover capital allocation and discipline. But strategically, M&A remains central to how we add talent capabilities and client reach over time. We have a long track record of tuck-in acquisitions, and we continue to see substantial opportunity ahead. The market remains highly fragmented with roughly 30,000 agencies and brokerage firms in the U.S. alone, plus substantial opportunity of another 30,000 or so across our other major operating geographies. Most of these firms are smaller and privately owned. Gallagher is a strong long-term home for these entrepreneurs who want to do more for their clients grow faster and create more opportunity for their teams. At Gallagher, M&A brings together entrepreneurial spirit, local relationships and specialized expertise with our scale and culture. Our merger partners bring expertise, market insight, entrepreneurial thinking and strong client relationships, and these additions make Gallagher better. Gallagher brings a broad set of capabilities to help our merger partners serve clients and grow, including specialized expertise through our various niche practice groups, access to our data and analytics capabilities, including Gallagher Drive, broader risk management capabilities across retail, wholesale, benefits, alternative markets and reinsurance, deep carrier relationships and differentiated product offerings and scalable operational support through our Gallagher Centers of Excellence. We also offer something many other owners care deeply about, permanence. Gallagher is a long-term home. Partners are not joining a business to be resold. And if they receive equity, it is the same equity held by everyone in our organization. Merger partners also gained immediate access to our operating playbook, which helps them bring more value to clients from day 1. That can show up in practical ways for clients, including access to tools like Gallagher submit that can streamline renewal workflows. Use of Gallagher Drive capabilities, including clients like me and benchmark programs against comparable clients. Faster certificate of insurance turnaround times and improved policy accuracy through more scalable service operations and a wide range of additional resources that smaller firms cannot build on their own. We see a similar benefit in M&A where AI can help us move faster through screening document review and parts of diligence, while our people remain focused on judgment, negotiation and integration. For example, we're using AI to support target screening and review large sets of diligence materials more quickly, helping our teams identify patterns, surface issues and focus their time where judgment matters most. As in Gallagher, AI is helping us improve productivity and consistency, but it does not replace judgment, relationships and cultural assessment that matters most in successful M&A. Across both reinsurance and M&A, AI is helping us improve productivity, quality and responsiveness. More importantly, we're applying it in real workflows across the business to support our team, serve clients better and strengthen an already differentiated model. For many owners, the choice comes down to whether they want to build these capabilities independent over time with no guarantees that clients will wait or gain immediate access to Gallagher's scale, expertise and capabilities through our platform. More owners are recognizing that trade-off, and it is one reason our M&A deal sheet and pipeline remain robust. So we remain confident that our proven M&A strategy will continue to create value for our merger partners, our clients and our shareholders. With that, I'll turn it over to Bill Ziebell to discuss our benefits brokerage and HR consulting operations, known as Gallagher Benefit Services. Bill?

Thanks, Tom, and good morning, everyone. I am Bill Ziebell, Chief Executive Officer, Employee Benefits Consulting and Brokerage and I lead our Employee Benefits and HR consulting business, Gallagher Benefit Services, also known as GBS. My comments today will cover 3 topics. I'll provide a quick overview of GBS. I'll discuss how we help clients manage benefits and human capital challenges, then I'll close with what we've seen so far in the second quarter. GBS was established in the mid-1970s and has grown into a global business focused on helping employers address their most pressing workforce and benefit-related needs. GBS was the fourth largest benefit broker in HR consults in the world at the end of 2025, generating around $2.5 billion of annual revenue and with the addition of AssuredPartners, our annualized run rate revenue was over $3 billion. The U.S. remains our largest geography and represents approximately 90% of annual revenues while the remaining 10% is predominantly from the U.K., Canada and Australia. Our producers provide solutions across a wide range of employee benefits products to help businesses address their human capital needs. About 2/3s of our annual run rate revenue comes from health and benefits offerings. That includes traditional group insurance coverages like medical, dental, vision, disability and life as well as benefit plan design, financial projections and cost saving strategies. 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. We often compete against local or regional benefit firms that do not 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 a differentiated alternative to some of our larger competitors. This breadth allows us to address a wider range of client needs, deepen existing relationships and create additional opportunities to grow alongside our clients over time. We also can leverage our multinational consulting business to help employers with operations outside of our core geographies. Before I get into some of our growth initiatives, I want to spend a moment on Gallagher People's strategy, our client value proposition. This is how we help clients think about total rewards programs that attract, engage and retain talent while managing costs. When you look across the benefits landscape, the opportunity goes well beyond traditional compensation consulting and medical coverage. Employers can support financial well-being through retirement and savings programs. They can also support physical and emotional well-being through a broader range of health and workplace solutions. So our role is not simply to place medical or health insurance. Our tailored approach helps clients address their most important HR and organizational challenges as they manage their broader workforce goals. This consultative approach helps differentiate Gallagher in the marketplace and strengthens our role as a long-term adviser to clients. When we consider growth opportunities for GBS, overall, the macro environment is supportive of growth. More recently, we are seeing more employers focused on strategies and offerings to retain their employees compared to strategies to attract new talent. And while talent remains top priority for most organizations, managing rising medical costs becoming increasingly important for employers. As employers look for ways to support their human capital objectives, while managing ongoing medical cost inflation, these are exactly the issues our professionals are helping them navigate. Our work goes well beyond placing insurance. We start by understanding the client and their employee population, and we look at plan design, workforce demographics and the key cost drivers. From there, we develop solutions that fit their needs. These solutions can include [ narrow ] networks, preferred provider arrangements such as centers of excellence and pharmacy strategies. Pharmacy costs are rising faster than medical and our teams are skilled at working with PBMs to identify savings and opportunities for our clients. As we consider market conditions within the health space, we saw medical cost trends right throughout 2025, and we expect that pressure to continue in 2026. Fully insured renewals at our largest carriers are showing high single digits to roughly 10% premium increases. In Stop Loss, we are seeing average premium increases in the mid-teens in some cases, above 20%. These trends are driven by increased utilization, including the number of diagnostics and treatments, health provider consolidation and hospital workforce shortages and higher utilization of higher-cost drugs, including GLP-1. So elevated health program cost pressure is likely to remain with us in the near to intermediate term. Our job is to help clients mitigate that pressure through plan design, targeted solutions and advisory support. As health care costs continue to rise, employers increasingly rely on these capabilities to help balance employee outcomes with affordability. That complexity matters. Employers are managing medical inflation, pharmacy cost pressure, workforce retention and regulation at the same time. The more complex decisions become, the more they rely on advice, analytics and execution. Our continued investment in data and analytics has supported the rollout of Gallagher Drive and other new products and services for clients. Gallagher Drive remains a differentiator for our benefits team because it gives clients some prospects a clear insight into the benefits program and performance, helping support plan design and coverage decisions. In many cases, our teams can identify savings while maintaining or even improving coverage. These insights help clients make better decisions while reinforcing the value of Gallagher's data analytics and advisory capabilities. We are also using AI in practical ways across GBS. It is helping us move faster, generate better insights and deliver a more personalized experience for our clients and employees. That includes Avante, where we can give employees more tailored guidance while giving employers better visibility and to benefit utilization, cost drivers and overall planned performance. And when you pair that with Gallagher Drive, it gives our teams better information to help clients make smarter benefit decisions and strengthen the advice we deliver. We also differentiate Gallagher by sharing our expertise through webinars and thought leadership on topics such as HR compliance, pension derisking, weight loss drugs and broader workforce retention-related issues. Along with our ongoing thought leadership efforts, these activities continue to deepen engagement with clients and prospects while reinforcing Gallagher's expertise across a wide range of workforce and benefits issues. Shifting to some comments on April and May. Recall the first quarter is our largest yet during the first 2 months of the second quarter, we saw favorable net new business spread within our core U.S. Health and Benefits business and continued strong demand for our individual products and retirement consulting offerings with more muted demand for our consulting services. When I combine what we are seeing across our global business, second quarter organic growth of approximately 3% and full 2026 organic growth of 4% are tracking in line with our expectations. Looking ahead, I believe we are well positioned for continued growth our expertise, tools and client approach continue to differentiate us, and we believe that positions us well to help the clients navigate their most important HR and benefits challenges. I'll stop there and turn it over to Scott Hudson, who will discuss our Risk Management segment, Gallagher Bassett. Scott?

Thanks, Bill, and good morning, 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 start with an overview of Gallagher Bassett, or GB, for short, including key elements of our strategy. Then I'll touch on what we're seeing in the business, along with the drivers behind our strong organic growth and I'll finish with some comments on how we're positioning the business for the long term. Throughout my remarks, I'll touch on a few themes that we believe are key to our long-term success. The breadth and scale of our operation, our focus on delivering superior outcomes for clients and the investments we're making in data and technology, including AI-enabled claims management. Gallagher Bassett was formed in the 1960s and has grown into one of the largest third-party claims administrators in the world. Our core business is straightforward. We adjust and manage claims on behalf of our clients. We don't take underwriting risks. In 2025, we closed more than 1 million P&C claims and paid approximately $18 billion in losses on behalf of our clients. For context, that annual -- that level of annual claims payment would place us near the top 5 P&C insurers in the United States. We have over 11,000 employees globally, supporting one of the largest and most diversified claims operations in our industry. And we finished 2025 with approximately $1.6 billion of revenue. Moving to key elements of our strategy. We're focused on serving 4 types of clients. 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. This is our most mature and largest client segment. Second, we serve clients in the public sector. This includes municipalities, state entities, federal governments and school districts. Third, we serve group captive or alternative market clients. These insurance entities utilize our services for their claims handling infrastructure. 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 claims -- carriers claims can help address aging claims systems and adjusted recruitment, two of the major challenges facing carriers today. Carriers are a sizable and still largely untapped market for our services. Today, around 90% of U.S. claims are still handled by carriers. The same is true outside the U.S. However, we believe that dynamic is starting to shift as carriers look for more flexible, capital-light operating models, particularly given cost pressures and the need to modernize their claim infrastructure. Our goal is to serve these clients wherever they operate in the world. North America currently represents about 80% of our revenue, with most of the remainder coming from Australia and to a smaller share from EMEA. We expect North America to remain a strong driver of our growth, while international markets provide meaningful longer-term opportunity as we expand our capabilities and global reach. Our product -- our broad product set across workers' compensation, liability and property allows us to address many of our clients' P&C exposures. Within liability, most of our volume comes from auto and general liability claims with additional expertise in specialty areas such as cyber, environmental, marine, medical malpractice, professional liability and product liability. Within property, we focus on specialty classes and complex claims rather than large storm or catastrophe adjusting. In terms of our revenue mix, roughly 60% of our adjusting revenue comes from workers' compensation claims, about 1/3 from liability and approximately 7% from property. Through our acquisition of MyPlan Manager a few years ago, we also expanded in disability claims management in Australia. Today, we're the largest provider in that market and closed nearly 6 million claims in 2025. Customers choose us for our deep expertise, outstanding service and consistent execution all of which help us deliver superior outcomes. Those outcomes may include mitigating or preventing losses, improving medical delivery, helping employees return to work sooner shortening claim duration or increasing climate satisfaction. Our clients also have different objectives for their claim programs, whether protecting their brand strengthening customer loyalty or helping employees return to work sooner. We tailor our services to those objectives, delivering customized solutions and ultimately greater value. Our claim 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 Rimas 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 our biggest advantages is the amount and depth of the claims data we have. And that advantage only grows as AI becomes more capable. Our objective for using AI help claim managers make better, faster and more consistent decisions at key points in the claim life cycle. Support and automate as much work as possible, so claim managers can focus on what skilled professionals do best, showing empathy, building constructive relationships and exercising judgment in complex situations, use our expertise, experience and data to further reduce claim frequency and to significantly improve IT productivity and shorten technology delivery time lines. We already have several AI capabilities in use across the business, including workers' compensation, severity, prediction and early intervention models, auto liability, severity prediction and reserve adequacy assessment models, a litigation prevention model, a claims summarization tool for both clients and claim managers, a fraud detection model, and voice and e-mail sentiment analyzers. In early May, we showcased our technology and AI solutions at RIMS Risk World 2026, the largest -- the world's largest annual risk management event. The overwhelmingly positive response confirmed that our investments are on the right track. Among the solutions that drew the most attention was GB Navigator, our recently launched platform for claims professionals with embedded AI tools. Our newly developed system for nurse case managers also powered by embedded AI and Luminos, which I mentioned previously, our risk management information system. What matters most, however, is whether these solutions are delivering better claim outcomes for our clients, and they are: One clear example is our fraud detection model, which has already saved a single client in excess of $100 million. The opportunities to apply technology, including AI across our business are endless. They will help us deliver better service, higher quality and stronger financial outcomes for our clients. Combined with the strength of our team, technology, including AI will be a key driver of new business, client retention and consistent organic growth. The last element of our strategy I'd like to highlight is M&A. The TPA industry is already more consolidated than brokerage. So there are fewer merger opportunities. That said, M&A is becoming a more important part of GB's strategy. We're not focused on scale roll-ups. Instead, we're looking for targeted acquisitions that add specialty capabilities or expand our reach geographically. In 2025, we completed 2 acquisitions. The first was W.K. Webster, a marine and transit claims specialist acquired in February, with operations across the U.S., U.K., Europe and Asia, W.K. Webster expanded our global footprint and broadened the services we can provide to insurers and global self-insured companies. We also acquired safety professionals in 2025, an expert in safety consulting solutions in the construction and manufacturing sectors. In 2026, we closed on another 2 acquisitions: German-based [indiscernible] Co, a global transport and marine claims specialist and Maze Brown solicitors, a U.K.-based firm that specializes in shipping and maritime legal services. Both acquisitions tuck in nicely to our marine specialty teams and [indiscernible] us a presence in Mainland Europe. And today, we have an active pipeline of potential merger partners across all of our major geographies and businesses. As we look at the business today, momentum remains strong, supported by several factors driving our organic growth. First, client tension remains strong. We continue to win new business across all client segments and geographies, and our pipelines are very healthy. Claim volumes are increasing, driven by both new business wins and growth within existing clients. and client cost pressures remain elevated, which continues to reinforce demand for high-quality claims management that delivers measurable outcomes. When combined with our continued investments in technology and productivity, these trends give us confidence in strong organic growth and solid EBITDA margins for 2026. For the second quarter, we expect organic growth of 11% driven by several large new business wins we talked about late last year. For the full year 2026, we now expect organic growth of approximately 8%. We continue to estimate EBITDA margins in the 21% to 22% range for both the second quarter and full year. Longer term, we anticipate margin expansion driven by scale efficiencies and continued productivity improvements. To wrap up, I'll briefly touch on how we're positioning GB for the long term. We're investing in developing new claims professionals as well as training our experienced professionals. We're expanding and continually improving our products and services. We're investing in technology, including AI to deliver even better service and outcomes, and we're committed to preserving and investing in our unique culture. Together, these priorities, our scale -- together, these priorities, our scale and our current momentum position GB for sustained growth, margin expansion and long-term value creation. Okay. I'll stop now and turn it over to our CFO, Doug Howell. Doug?

Thanks, Scott, and hello, everyone. Today, I'll recap what you heard from each of our business leaders. I'll highlight some items from the CFO commentary document I'll provide some comments on cash, M&A and capital management. And then I'll summarize some comments on AI that you've heard from the team and then we'll move to Q&A. All right. Let me recap what you heard from our business leaders. Demand for our services is strong, and client retention and new business are both excellent. At the same time, the teams are using data, analytics and technology in ways that are clearly improving the outcome for our clients. The market background is reasonably consistent with what we expected to see develop here in the first -- at the end of the first quarter. Property remains competitive. Casualty remains firm and pricing still varies by account size, complexity and loss profile. Larger property accounts are seeing more downward pressure on the property side, while middle market and smaller accounts remains steadier. So overall, the market backdrop continues to support healthy underlying growth. Mike and Patrick highlighted compelling practical uses of our centers of excellence, technology and AI around the world, better workflows, better placement outcomes and better client service to name a few, but there was also a broader point there on differentiation. In the middle market, especially our brokers and account teams are showing clients tools, data and benchmarking at the point of sale that smaller brokers simply do not have. That matters in winning new business and keeping it. This is the broker value proposition in action. We're using our expertise, our data and our carrier relationships and also our claims advocacy teams and our centers of excellence, all together to help clients make better decisions and not just buy a policy. Tom said much of the same thing in reinsurance. In this bifurcated reinsurance market with property down casualty firm, our judgment, market access and trust bolstered by benefits from technology and AI are improving the speed data handling and benchmarking and presentation work that we do for our clients. Phil's comments pointed to a solid demand and benefits in HR consulting, but the real message is that the complexity keeps rising. Medical cost trend is an issue for employers, plan design, cost sharing, pharmacy and workforce support are not getting any easier. That is supporting demand, not just for brokerage, but for HR outsourcing, consulting and broader advisory work with technology helping us deliver it more efficiently at better scale. And then, Scott, you just heard discussed our Gallagher Bassett is also giving us an additive growth profile. Claims complexity is increasing. International opportunities are growing, and the work is less tied to the insurance pricing cycle than the brokerage revenue. GB is using AI inside claim workflows to improve triage, identify severity and litigation risk earlier and drive better responsiveness and outcomes. So Gallagher Bassett is not just performing well, it gives us deep insight into claim advocacy, and is also an important growth diversification advantage for Gallagher. So when you pull all that together, PC retail, wholesale and specialty brokerage, then benefits, reinsurance and risk management, our outlook remains strong and a very important point. These businesses don't all move the same way at the same time. That diversification helps deliver performance across pricing cycle and adds to the consistency of our growth. So as I look out, we still expect second quarter organic growth for the Brokerage segment at about 5% and full year '26 of approximately 5.5% for risk management. Some of the new business wins and international growth have increased our organic growth expectations to 11% in the second quarter with an estimated 8% for full year '26. So let me shift now to the CFO commentary document that we posted on our website. Let's start on Page 3, which really includes our usual modeling helpers. Only 1 call out here for you to update your models. FX moved a bit over the last 6 weeks. Turning to Page 4. This page recaps our organic growth outlook you just heard from the operating leaders. Each of our businesses have continued the momentum we saw in the first quarter. Now being 2 months into the second quarter, I had further confidence in the second quarter organic of about 5%. Flipping over to Page 5. Here is where we summarize our investment income and rollover revenues. Please be sure to reflect in your model the interest income, as it's shown here, as it makes clear that prior year interest income earned on the funds held to buy AssuredPartners does not repeat. Moving down, we've updated the rollover revenues for brokerage and risk management to include acquisitions closed through yesterday so please use these figures when you're updating their models. And remember, these amounts do not include AP. You'll see that now when we flip to Page 6, AssuredPartners information. I want to spend a minute or so here. Three points as you consider how to use this page within your model. First, remember that forecasted numbers we provide in this table are at the midpoint of our estimates. As we convert locations onto our systems or gain deeper insights into their old system, there could be some small movements between quarters and some additional small netting like we've seen in the last few quarters. That's just geography. Second, the footnote reminds you that the noncash figures shown on this page, which reflect depreciation and earn-out payable, are included within our estimates on Page 3. So please don't double count that. Third, this table does not include any revenue or expense synergies. So those would be incremental to the numbers you see here, and you'll need to model those separately. When you review the numbers on the page, you'll see our second quarter and full year '26 outlook for AssuredPartners EBITDAC is unchanged. But the integration's story continues to improve. Since closing 10 months ago, we've made terrific progress on integration. Nearly all back-office systems and processes are fully implemented and up and running. Vendor and real estate consolidations are ahead of plan and here in the second half of '26 through mid-'27, we'll get the vast majority of the roughly 300 branches onto our agency management systems. That progress is also showing up in the synergy outlook. You'll see that in the footnote. We are now -- we now expect annualized run rate synergies of up to $325 million by early '28, up from $300 million that we had forecasted when we last spoke in April. And even more impressive, $325 million is well above the $160 million we originally estimated when we announced the deal in December of '24. That kind of synergy progression says a lot about Gallagher's acquisition strategy, our integration pipeline and our ability to create more value from these deals over time. Let's now flip to Page 7, the Brokerage segment EBITDAC margin bridge. There is no new news here from what we spoke about in April. Our margin expectations are unchanged. More importantly, this page helps you dig out 3 things: First, the first few lines show that the 2025 headline margin is highly distorted because last year, we had interest income that we earned from cash we are holding to buy AssuredPartners; second and perhaps most importantly, the line near the bottom shows our productivity and quality efforts should again deliver another year of terrific underlying margin expansion; and third, in between those lines, there are some other puts and takes, but we're starting to get additional margin lift from rolling in AP and AP synergies. Longer term, we still have a long runway of margin expansion from organic growth and scale advantages from M&A. Our platforms are industrial strength and can handle billions more of revenue with little incremental costs. So now let's turn to Page 8 to the Corporate segment. The updates here. First, the interest and banking line is updated now to include interest expense on incremental borrowings, primarily related to another $170 million of share repurchases, incremental M&A and debt retirement. Second, the corporate line. That's updated now for 2 noncash items: an unrealized FX loss of about $6 million in the second quarter and a few million dollars less of permanent tax benefits from the exercise of shares under employee option plan. Again, both of these are really noncash, but they do impact EPS. Third, the lower right box gives detail on our cash taxes. At March 31, we had $165 million of tax credit carryforwards and another $11 billion of tax deductible amortization expense related to our acquisition strategy that will deduct in the future. Together, credits and amortization are worth about $3.4 billion of future cash tax savings. This means our cash taxes paid will be around 10% of EBITDAC for the foreseeable future. Model that and you'll get close. But the real punchline that will get you -- that you'll see is that these tax items create a nice cash flow sweetener to fund future M&A. That continues to be an important story. Moving now to CAS capital management and M&A funding. When I look at our available cash on hand, expected free cash flows and future investment-grade borrowings, we estimated to make close to $10 billion of capacity to fund M&A over the next 2 years before using any stock. Our M&A pipeline remains strong and its hold targets at attractive multiples, which still creates immediate shareholder value through a nice arbitrage. Also to note in the first quarter, we repurchased approximately $310 million of our shares. Thus far in the second quarter, we've repurchased another $170 million. We continue to believe our equity is undervalued by the market, so this repurchase was opportunistic, but our priorities remain unchanged. We're going to continue to invest in organic growth. We're going to remain active in mergers and acquisitions, staying consistent in our approach and disciplined in our pricing, and we'll deploy excess capital in a way that maximizes long-term shareholder value. Let me make a few comments on AI, and then we'll get to Q&A. First, I'm most enthusiastic today as what I see as the opportunity from AI. As I was 22 years ago, when I first went to India and hired -- and we hired our first 6 employees. We are now 18,000 strong in a dozen lower-cost locations around the world. Second, what you heard this morning is real. It's already in the works. AI is embedded into standardized workflows. It's using our common data and to improving the operating infrastructure speed that we built over many years. Third, we're funding it inside our normal technology budget. And fourth, the benefits come in stages, productivity and quality first, then margins and over time revenue lift through better service retention and win rates. And finally, as I said in our March IR day, I do believe on the cost side, over the next few years, we can see about 5% savings in our producer and field sales layer cost, maybe 10% to 15% in our service layer costs and 20% to 30% in our back-office layer cost. Now of course, some of that will be reinvested to meet changing customer demand our investment needs in an ever-evolving insurance market landscape, but it still could be a substantial improvement in our profitability. Okay. Those are my comments. So let's go now to Q&A. But we're going to do this at this time. We're going to try this in 2 parts. First, we've listened over the last 6 weeks and distilled a lot of common questions into 8 or 10 question so that Sarah Walsh, our IR leader, will pre-address for about 5 minutes, then we'll get to those on the line for other questions. So Sarah, fire away on the Q&A.

Great. Thanks, Doug. First question here is for you, Pat. Let me start with the bigger picture. So what do you think investors are still missing about what drives Gallagher's growth?

Well, thanks, Sara. When I take a look at it, I think that there's an under-appreciation in the marketplace of the consistency of our execution. That's probably more than anything else. In our business, new business matters having boots on the ground, bringing customers in makes a difference. Retention matters, diversification matters. And I think some people just focus too much on the cycle. I've heard so many investors just say, well, cycles softing, here we go, we're out of bookers and they're not looking at the actual growth that we're delivering to our shareholders. And if you have a broad book and strong producers, we're producer client-oriented and you keep winning, you're going to grow through these various cycles. I think we've showed that historically.

Great. Thanks. And it's Mike, on that same point, so what gives Gallagher and Edge and winning new business for, I guess, taking market share?

Yes, Sara, we're a great large account broker. In fact, I think I've shared with this group in the past that it's our fastest-growing segment. But remember, time, we compete against a smaller broker. And in the middle market, the tools, the data, the analytics are a real advantage. And we can walk into a meeting with better benchmarking, better structure ideas better claims advocacy than a smaller broker usually can. So that's what helps us win business and keep taking market share.

And Patrick. So when you and Mike have talked about Gallagher having an advantage here. So what do you mean by that?

I mean we have an advantage given our scale, data and process. I think we've spent a lot of years standardizing our workflows and centralizing our data, as Doug talked about, which already puts us ahead. A lot of firms can test tools but fewer can deploy them broadly and safely. Now if you already have common systems, common data and repeatable workflows, it's so much easier to deploy AI, which will add a lot of distance to our lead.

Great. Thanks, Patrick. Bill, some investors are asking whether AI could eventually pressure the benefits growth if it slows down employment or changes the workforce mix. Why do you think the benefits business remains resilient there?

Thanks, sir. I appreciate that. I guess the way I look at it, I don't think it is a simple unemployment story. It's really more about role changing. People will change the types of jobs they're looking for and doing. In other words, whether people are fully employed or underemployed, it's probably they still receive health, welfare and retirement benefits. And as that happens, the need for advice does not diminish, it actually increases. Benefits will become even more of a reason people work. So employers still need help with benefit affordability, plan design, financial well-being, communications and retention and that plays directly into our advisory analytics and brokerage capabilities. So I wouldn't think about this business as purely linear to headcount. If anything, the advice requirement can increase, if organizations redesign their workforces which is why we think the employee benefit business remains durable and supportive of organic growth over time.

Great. Thanks. So Mike, back to you. One other topic that we continue to hear about on growth is data. As AI-driven build-out accelerates there, what do you think about that market for Gallagher?

Well, look, I think this is a great market for us. In fact, we just picked up a very large win just last week. But I would frame it as part of a broader complex risk opportunity. It's not 1 vertical that changes the whole company. Data centers bring large values, technical risks, cyber exposure and complex placements. That plays perfectly into our strength. So yes, it is a positive area, but I wouldn't overstate it financially, we're going to get our fair share of wins.

Great. So I guess, where do you think we help the most?

Well, really, I would -- three places. So risk analysis, the program to design upfront, the placement across the right markets and then, of course, claims advocacy. And remember, I've shared with this group, we have over 400 claims advocates across the country. So these are complex risks and our clients tend to value a broker that can support the full program.

Great. So I'll throw it back to you, Pat. Why are you not worried about AI having a disruptive impact on our organic. And why are you so confident it helps the model instead of versus?

Well, everywhere I look, the world is just getting more complex. And that, I think, is what drives advisory-based business, and that's where we are. I mean we already know AI can improve analysis, workflow, but it doesn't replace judgment, trusted advice or market access and insight. So a client buying a complicated casualty tower or dealing with a tough claim still wants an advocate in the middle. And that's why CAS is a real enhancer to the broker model, not a detriment.

And Patrick, on the carrier side. Why doesn't AI lead to more disintermediation? Why is the broker relationship still valuable to carriers?

That's a good question. I mean it's because carriers value brokers who bring them well-structured business, not just more submission flow, a good broker helps frame the risk improve the data and place it with the right market. I mean, that makes underwriting more efficient and usually leads to a better outcome for the client and the carrier. And brokers still matter after the placement too, at the renewal, when exposure change when a claim happens. So even as technology improves, the advisory role stays important to both sides of the market.

Great. Thanks, Patrick. So Mike, back to you. I guess what do we think it does for producers day today?

Well, I can tell you, listening to our producers speak, they love it. It helps them get more prepared, faster, to give better advice. Look, it can upwards -- to take upwards of 2 to 3 days to analyze and compare policies. We've got that down to a 0.5 hour, 1 hour. That in practical terms, less time on the mechanical work and more time with our clients and more selling. And if you help producers get to an answer faster, look smarter in front of their clients, they're going to win more, and that helps keep good people as well.

Thanks, Mike. Doug, do you have any thoughts here?

Of course. Let me take that from -- maybe from the client standpoint, we talked about this in our March IR day when we were talking about this. Look at it from what a client is paying for their insurance. We know that it's about 3% of their total cost base. Our share of that is about 10%. So 30 basis points of a customer's cost base is what a broker really charges for a customer to have our advice. Clients know the value that we provide. And they know that they have 99.7% of their other costs to worry about. So I think the important thing is let's look at it this way. We really don't sell insurance to our customers. We buy insurance on behalf of our customers. We're their outsourced risk manager. And frankly, I think that they quickly get to the point they know what we earn as a bargain. And lastly, don't forget, AI isn't free to deploy either and so I think that our customers clearly know and trust our advice, and they've got 99.7% of their other costs that they've got to worry about.

Great. And Pat, so taking a step back, how do you think AI changes the insurance industry more broadly? Does it create any pressure on broker economics or even commission rates even over time?

Well clearly, I think you are on the table. We are -- we know that AI is going to help the industry work better. It's going to give us better underwriting, better claims handling and way better service. But it doesn't make insurance simple. Everywhere we look, the world is getting riskier and risk is complex. So advice is going to matter more and more. And as Doug pointed out earlier, we give that advice at a very reasonable rate. On commissions, I certainly wouldn't jump to any conclusion that automation is going to put structural pressure on the comments Doug made earlier again. We're just not taking that much out of the system. So I think it helps us structure programs access markets, navigate claims. And as it matures, it helps us do a better job that supports the business. It doesn't undermine it.

Great. Thanks. Back to you, Doug. Let's shift from organic here. So how should investors think about the timing of the financial benefits to Gallagher from our own AI investments?

Yes. Listen, I think that you heard me say in my prepared remarks that we're going to get productivity and quality first. Margins will follow that. And then over time, I see us getting revenue benefit through better service. Like I said, faster response time, and I think that we're going to win more on it. And I think that as I gave some of those comments in my earlier comments, that's a 3- to 5-year journey, but I think that we're starting -- this is accelerating every day. We've got 1,000 flowers blooming around the company we're experimenting, we're learning. I think that we're going to be able to push the opportunities for AI efficiency and profitability, it like faster than I think any of us really realize.

Thanks. And I'll stay with you, Doug, for one more question here. So let's talk through a few of the numbers really. One specific one I'll call out in the CFO commentary. On brokerage organic growth, we've been talking that property is softer across parts of the market. But why are you still comfortable with that 5.5% organic we have for the full year '26?

Well, listen, nobody has a crystal ball, but I think that's a ground-up approach to figuring out how we get to it. So we've really done some deep -- we have a process in place that our divisions do to give us an insight into their future. But also, I think that getting there -- that our 5% organic growth shows the diversification of our model. And it's also -- it's a bigger story than just property pricing. Casualty is still firm in a lot of places, too. So that's that's in most places. And so our broader point is it's not -- we're not tied to one pricing index as maybe people think. Rates, sure they're contributing, but maybe only around 1% of our organic outlook today. But the bigger drivers are new business, retention, client activity, exposure growth new coverages, customers opting into coverages that they went without during -- when prices were coming, when prices were going up. So I think that we tend to track more closely with things like nominal GDP, payrolls, insured values, the exposure growth of our customers, which you heard that say our overnights are showing that we have -- we're really operating in a strong economic condition right now based on our data. So pricing matters, but it's only 1 input, nothing that we're seeing today changing our confidence in our outlook.

Great. Thanks, Doug. So I've got 2 more questions here in front of me. I'll end with a couple of questions on capital allocation, M&A. Pat, how are you thinking about the M&A environment today? Are we seeing valuations or even competition changing the opportunity in any meaningful way?

Well, I mean, our approach has not changed over literally 20-plus years. So the market is active. There's competition for quality businesses. Our discipline, I think, matters. We still want to concentrate very closely on culture and cultural fit. That's been a big part of our success over the years, and we continue to see a very healthy pipeline. Our standards remain the same. We want a strategic fit. We want people who love the business, who can run a good business who fit culturally and that's what creates shareholder value.

Thanks, Pat. So final one to you, Doug, here. At Gallagher's current valuation levels, how are you thinking about buybacks versus M&A?

Well, listen, you've heard me say this in other situations. If we buy back a share of stock, we get a nice picture of our Gallagher, who is a hell of a salesman. But you know that I tend to favor trying to get more boots on the ground, get new partners, get new ideas, get new geographies, good new niches. Frankly, we're buying brains. We're not buying businesses and I think that brands that have the opportunity to trade with ourselves, work with our whole sales, work with London, work with Gallagher Bassett, work with our captives. Those to me -- sure, there is a slight safety opportunity, risk-adjusted safety by buying our shares back that we think are undervalued, but boy and boy, this is a business that's growing so much. And like Pat said, it's growing $200 billion a year in premiums. We need more boots on the ground. And we get that through organically by our internship that's got 600 kids in it this summer, and we get it through doing nice tuck-in acquisitions. So it's a trade-off that we balance, but I tend to favor growing our business rather than contracting it.

Yes. Great. Great, Doug. So operator, let's now open the line for other Q&A.

[Operator Instructions] Our first question comes from the line of Elyse Greenspan with Wells Fargo.

My first question is on brokerage organic. So you guys have pointed to the organic picking up in the second half of the year. I think, Doug, in the past, you said it was based off of incremental reinsurance demand during the midyear renewals. Did you guys observe that as you expected around these renewals? And is that still, you think, going to be the driver of organic picking up in the Q3 and Q4? And then I know we don't get Q3 and Q4 guidance yet, but would you expect those 2 quarters to kind of be similar to each other and both show improvement relative to the first half of the year?

All right. Yes is an answer to your question about reinsurance, we're still seeing that happening. In fact, we're seeing across all of our business that customers are opting in to buy more insurance. Second quarter might be a touch higher than -- excuse me, third quarter might be a touch higher than fourth quarter when we look at how it rolls in. But I'm going to say it's 5% or 6% in each of the next 2 quarters, maybe we'll get 6% in the second, and maybe it will be 4% in the fourth or it's 7% and 5%, something like that, but just realize that there might be, but it's not -- you're not going to see 10% in that third quarter, and you're going to see 1% in the fourth. It's not that -- there's not that kind of variance around our expectation by quarter.

And then my second question, so on the brokerage organic guide for the 5%. I know you guys guide all in, right, including supplementals and contingents. If you were looking at base organic, would that be similar to the 5%? Are you looking for outside growth in subs or contingents in the quarter?

I think -- listen, if there's a variance at the point, it's not something big. But here's the thing. Oddly enough is our supplementals and contingents continue to grow and maybe they outpaced our base commissions, it shows you the value that we're bringing to the carriers. It shows you the value of the quality of business that we're bringing and the volume of business. So I think if supplementals and contingents are running a point or so better than base commissions, I think that's a really good story.

Next question is from the line of Tracy Benguigui with Wolfe Research.

Doug, you mentioned that pricing is only around 1% of your organic outlook today. That's reassuring. But help me understand then why we saw a nice uplift during the hard market. Are you suggesting that pricing is asymmetrical.

Well, listen, I think what we're talking about is total premium change. And yes, I think it is a little bit Amicus rates were going up and exposure units were growing so much because remember, we kind of give you a total premium change in that, not just pure rates. But yes, there is an asymmetrical relationship.

And also, Tracy, let's not forget -- this is Pat. As rates are going up, our main function for a client around advice and dealing with the risk is also mitigating that price increase. So yes, there definitely is symmetrical.

Yes. And also, as prices are going up, we do take pay cuts along the way. And as on the way down, we tend to do a pretty good job of rediscussing with our clients the value that we bring and reminding them that we took pay cuts on the way up, and maybe now it's the time to -- that we get -- we share a little bit on that downside. And they think they're very smart. They know that what the value that we bring, there's inflation in that, too. So these are smart, smart customers that understand that we don't need to make as much on the way out, but we need to get some of that back on the way down.

And let's remember, we're totally transparent with our clients. So this is an adult conversation about the value we bring.

Okay. Great. And since I believe you use net debt in your leverage definition to adjusting for cash. Is it fair to use your long-term leverage target at 2.5x as a bogey to assess how much buyback you could complete. I would not be asking this question on M&A since acquired EBITDA helps leverage while buybacks do not.

Listen, I'd have to see what your puts and takes are in getting to the 2.5, but it depends on the rating agency aspect, depending on the debt covenant, we do have private placements out there that have some different but there are a lot of adjustments that go into that. But the point on this is 2.5 is the right number? Is it 3, including earnouts, you got to look at those 2 bigger components. So I think I understood your question, but as we think about how much we can buy going forward, but not trying to reduce or increase our debt ratio is our objective.

Okay. Yes, maybe I'll just rephrase, maybe you could just clarify how you look at leverage and if that gives us any insight on how much buybacks you could complete.

Yes, I think that we're comfortable moving our leverage up in order to do M&A. I don't think we'd want to push our leverage ratio up for the sake of buybacks. We have so many opportunities for M&A. So we have been consistent that we'll run the debt ratio up when we do M&A, and we're consistent when we bring it back down. So think about it more as a driver of M&A capacity than share repurchase capacity.

Our next question is from the line of Mike Zaremski with BMO Capital Markets.

I guess, back to the organic growth part of the value creation for Gallagher. Patrick, you talked about the 4 powerful strategies that allow you all to take market share, I thought that was helpful. And you also talked about how 1 of the biggest main questions you get from investors is how you're decoupling from the decelerating pricing power environment. So just kind of back to the crystal ball question that you received earlier, Doug. So do you all expect pricing to stabilize and maybe even improve? I mean, property doesn't fall as much next year or it may be net new, which I think last update you said was running at 2 to 2.5 points-ish. And I think historically has been as high as 3 to 4. Maybe that's improving. Maybe you can kind of just offer some more insights into why you guys are thinking that growth bottoms around in the 5s.

Listen, I think that as we look out for the year, the 5.5% number is kind of assuming a point from rate, I think that you're going to probably get maybe 0.5 point or so to exposure units growth, maybe a full point there. And I think we have a forward thrust of about gaining share of about 3% on that. So that's kind of how we're looking at. And what have we thought about for property? We're getting through the heavy property season right now. We are assuming that property will continue to move lower somewhat throughout the year. We haven't started looking at next year yet. But I'm not really -- sitting where we are right now, I'm not seeing a huge slide in '27 as much as we've seen it come down between '24 and '25 and '25 and '26. I believe if you look at that, it's been sequentially going down about 10% each year in the past. I don't think there's another 10% coming out of this market next year overall. [indiscernible] Property is also not just coastal exposed property. You've got a lot of non-cat exposed property that is still seeing significant issues with convective storms. We've got a big storm coming through Chicago, while we're speaking here. It's pretty dangerous out there when it comes to convective storms. So I would not expect the property market in '27 to have a similar down step as we would between '24 and '25 and '25 and '26.

That's helpful. And lastly, just sticking on organic, and I guess I'm nitpicking, but does the guide include the same amount of revenue synergies from -- Assured is kind of as you've spoken to in the past in terms of a small amount of revenue synergies starting probably more in the back half of this year?

Our organic growth has not contemplated much of any of that.

And so then would that be a cushion to the extent you do have some revenue synergies, I believe you've guided to when the transaction was done, that would kind of go into organic that you're not contemplating in your -- in the guide then?

Right now, you should assume that, that comes and will be attributed to the AP numbers. It will be hard to unscramble that egg, in some cases. But by and large, an AssuredPartners person gets a better commission structure because of on our programs, it will be pretty hard for us to pull that out and put it in our organic numbers. But that said -- maybe there's a ghost organic coming out of that, that's not in our calculation of our -- the way we calculate it.

The next question is from the line of David Motemaden with Evercore ISI.

I had a follow-up on the data center piece. And interesting to note that you guys just had a win last week. So I'm wondering how much you guys are expecting data center-related placements to contribute to organic growth now. And then also just maybe talk about the pipeline and your market share in that market.

Yes, David, this is Mike Pesch. So if you've heard my last comment on that question, I said really, I wouldn't factor it into a true impact to organic. It's going to be part of our normal organic growth story line. So I wouldn't single it out that way. As far as your other questions on market share, it's a little bit more difficult to unpack. And I think in prior conversations, we've talked about data centers come in very different sizes. I think the average size is about $0.5 billion of total insured values all the way up to the big ones that you read in the newspaper of $15 billion and $20 billion. So we play very well. And we organized our structure. We already had the pieces in place to really solve the data center opportunity across the infrastructure. We organize them globally. So our teams in London, our teams here in the United States all talk on a routine basis. They put out content, they're prospecting. We have the relationships with a lot of the real estate developers and others and construction companies that are building these. And so I can't speak to the overall market share. But as I said, we will get our fair share, and it was a great win last week.

Great. And then just the pipeline, how that's looking, the timing of when you think that will convert. Any comments on that?

Yes. The pipeline, and you may have read, there's a lot of articles out there about some of the pushback from some of the municipalities for some of these data centers. So we wouldn't share our pipeline in a public forum on this sort of thing, but it's a robust pipeline, but the timing of these things can be a little bit funky in the sense that there's a lot of pushback from municipalities. There's a lot of question marks around whether or not people want these data centers where they live. But again, we're going to get our fair share. We've got the relationships with the developers and the people that are building these things. And when they go live, we believe we have the team to service those accounts.

What we did instead you totally eliminate the [indiscernible] you got your 30,000 competitors in America that we are buying up every chance, they get stumble across an opportunity in the data center. They can't do it. So you've got a few players in this market, and we'll do just fine.

Got it. Yes. I appreciate that. And then, Mike, I think you also -- in your remarks, you had mentioned some of the divergence between RPC and renewal revenues. And I think you had mentioned retention exposure, but you had also mentioned stronger commission rates. I don't know if that was a property specific comment or that was that was broader. So just wondering if you could elaborate on commission rates and if that's something that you guys can continue to push up.

Yes. I would go back to some of Doug's comments on that in addition to mine. In a market that's softening, we -- commission economics becomes very important, right? We drive value, and you heard Patrick talk about the quality of submissions the volume that we're now placing when you combine wood roof and you combine AssuredPartners gives us that opportunity to increase our commission economics. Again, to Pat's comments, this is fully disclosed to our customers. But it also comes in a package of asking if we're on a fee, which is about 25% to 30% of the time, what we're driving tremendous value to our customer and where we can earn a raise on that placement for the great work that we're doing not only on the placement, but also the stuff that we do behind the scenes and claims advocacy and so forth. So it comes in a bunch of different packages beyond just commission. It comes in a lot of different areas. And so we feel like in this marketplace, we'll be successful given the fact that we have the volume, we have the quality, and we have the relationships with the carriers to drive that.

Our next question is from the line of Katie Sakys with Autonomous Research.

Patrick, I think you did a great job illustrating how Gallagher Drive is driving new business wins and improving some client retention. I was kind of curious across the broader brokerage business. If you guys can quantify the extent to which Gallagher Drive and perhaps some of your other initiatives are actually improving new business win rates and/or the client retention rate.

Yes. I mean I think we have some decent stats on when Gallagher Drive is utilized or frankly, any data or digital output from our teams are used with a client and -- or a prospect that we do see our close ratio go up. So if you generally close 30% of the prospects that are in your pipeline, we're seeing that increase to 40% and 50% when we place digital or drive and benchmarking in front of our customers. So yes, getting it out into the field into as many hands as possible and in front of as many prospects as possible, will definitely drive our hit ratio.

Got you. And then I think you guys have made it very clear that most of the time, you're competing against smaller brokers. But in the cases in which you are competing for new business against larger peers. How do you think your new business close rate compares to theirs?

This is Mike Pesch. Again, I would tell you that it's on par with exactly what Patrick just said. We think that the tools that we've invested in show very well against. And we've been told by outside consultants and other firms that our platform, Gallagher Drive and Blueprint and others stand out as a differentiating factor from impartial third parties. So we believe that those sort of things give us a very successful opportunity when we compete against someone of our size or bigger.

Also, let me comment on that -- this is Pat. A big part of competing at the larger end is our expertise. People want to do business with people that know their business, and that's when you get to our verticals and our niches. And that's a differentiator, 90% of the time, supported by the kind of things that we can do with the data and the data advice. And then you get into the larger accounts, it makes a huge difference when it comes to where things should be placed, how it should be shared, how it should be layered, what markets you're in. And that -- we'll put our expertise in our verticals up against anybody all day long.

The next question is from the line of Yaron Kinar with Mizuho.

I apologize if you already replied to that with Mike's question, I may have misunderstood. But when I go back to Page 6 of the CFO commentary, and I look at the revenue expected from AssuredPartners. Those have been coming down a bit. I think as we start looking at the second half of this year, that should impact organic, right? So if organic is actually a tad lower from AssuredPartners, where are you getting a better lift than you expected to keep that 5.5% -- approximately 5.5% growth expectation for the year?

Right. Yes. So let's go back to the narrative that as I think that we've had some netting that's going on as we understand their systems, so as they come onto our systems, co-brokerage fees or commission shares with other outside brokers, et cetera, we're showing -- they were showing gross revenues and then some expenses associated with that. Now we show that net. So if we co-broker with somebody, we do not put that into the revenues nor do we put it into expense. That's just their share of the revenue. So you're seeing a little bit of apples to oranges between the blue and the pink sections on this sheet. We will say that those revenue numbers as we discover more and more of where there's commission sharing going on, you could see a decrease in the total revenues, but the EBITDA is not changing. So that's just geography and accounting. So we've said before, I would not take the $720 million of revenue in fourth quarter '26, divided by the $704 million that you see in fourth quarter '25 and come to the conclusion that that's an organic growth number of 2.2% or whatever. I just did the middle math here on it that you would see in organic. So I don't think the schedule would say that. What I would say is that AssuredPartners when we bought it, the thesis was that they were running nice organic growth, not at the level of us and therein lies the opportunity. they were running maybe 1 point, 1.5 points less than us. So the opportunity is when we get AssuredPartners into our fourth quarter numbers, we will now have a year of opportunity that hopefully, we're seeing some terrific organic growth coming out of it. And TrueBlue, we're having some terrific wins that I see from the CFO's chair, I see the great wins that are coming up. We are better together. So you can't use this to able to judge how organic is going to be. Our thesis that we're going to improve organic growth for those producers at AssuredPartners have been waiting -- we were waiting 11 years for sales enablement tools is going to come true. There's nothing that makes us think it's going to be different. But you can't use this table to reach that conclusion. So you didn't miss the answer to the question because we didn't answer it quite that directly in the past. So it's a good question, but I would not jump to those conclusions.

Perfect. And then maybe just to confirm the fact that the EBITDA from AssuredPartners, the EBITDA expectations have remained unchanged. That's because the -- what had been accepted as revenue is now coming in more than expense [indiscernible], it's not because of the integration cost is greater for the [indiscernible].

This table on Page 6. What it's saying is that the geography between a gross up of revenues and gross up of expenses, it has nothing with the EBITDA that we think that we're going to realize out of this. And what I'm particularly pleased that, boy, if we hit full year '26, that $1.057 billion before synergies. And we think by the end of the year, we could be running maybe $160 million of synergies, too. One terrific deal has continued to be not only on a valuation standpoint, but just our teams -- it's pretty exciting how they're coming together, Yaron.

Yes. Yes, I definitely see it had as well. And then maybe shifting gears a bit. The M&A that we saw this quarter or seen quarter-to-date, continues to be a bit lighter than maybe we've seen in past quarters and years. But the term sheet pipeline seems to be very robust. So are we just looking about a timing difference here?

We always are a little short in the first couple of quarters. People tend to accelerate to try to get something done between now and the end of the year. Sometimes that can be tax driven. Some of them can be a state planning driven based on that. I think there is a realization that's happening right now. The sellers are coming to grips that the valuations that they're going to get by selling the business is is probably not as rich as they used to think it was. But here's the thing is we're finding that our story is getting better and better on that. The mystery of what equity means given by a PE owner versus our equity, we've got 1 common stock that every single person in our organization has. We pay a cash dividend. We pay our earn-outs in cash. We're not asking them to take promissory notes because we -- because they can't make their earn-out payments. They're understanding the tools and capabilities that we can show at the point of demonstration are better for their people. They're better -- all the tools that the guys talked about for an hour. They get that. 18 days after we bought AssuredPartners, the sales force had our tools and capabilities on their desk ready to use. It's been a training exercise to get them used. You get more from Gallagher by selling it, but sellers have to come to grips that valuations are coming down. That's the thing. So it -- sometimes it takes a little while to realize that something, maybe I need to take a better thing because if I were a small broker and agent I'd say, I need those tools now. I can't wait.

By the way, the deal brokers are still telling that the multiples are not coming down. So you get into a bit of a conflict.

The next question is from the line of Greg Peters with Raymond James.

This is Mitch on for Greg Peters. My first question today is come on the competitive environment producer talent. Have you guys seen any changes in recruiting behavior, employment contract terms or how firms are using non-solicit protection?

Yes, Greg, look, we think we've got a great place to work. And so we look at that as an opportunity to recruit great talent. Doug mentioned it. We've got 650 young people coming into this business through our internship program this summer. We recruit our own, we build our own, but we are very strategic. If we have someone who's unhappy where they are at today, we have bid by non-competes. We don't see that changing. And if we want them on the team, and we think that they can build a bigger book of business with our expertise and our capabilities, we go about doing that. So our pipeline hasn't changed. We still have an active group out there connecting with people to make sure that we can build -- continue to build a great franchise with great talent that wants to be a part of it.

Mitch, this is Pat, too. Another point here, I think, that doesn't get made very often that I think is going to be a big part of this is you talk and look at all these team lifts and what have you. Clients are getting smart. What's in this for me? Oh, okay, fine. So you're happy because you're making a move there. And I think when Mike's point is when we try to recruit someone from someone else with the tools that we're talking about, what have you, we give the answer to that question. I'm going to Gallagher for myself for sure. I want to work in a place where I'm happy. But you as a client are going to win. And an awful lot of our competition do team lifts and all this other garbage, don't have that answer.

Yes. I got to say, I think another year of the fact that some of the return expectations that maybe these producers were expecting in their current homes. If they have any type of equity aren't coming through, I think we're going to have more and more opportunities because they just can't wait at point-of-sale capabilities to better them. They can sit and be at their old firms for a long time, and they're never getting the sales enablement tools that we have. So the mods won't come to go. So I think we're going to be a net winner on it.

And that's kind of the U.S. lens. The London is pretty frothy right now. There's a lot of change and a lot of movement going on in London, and I think we're the calm home.

So Alex, your line is open for questions.

Sorry about that. There was a lag there. I had a question on the risk management business. You provided a lot of good commentary on AI. And I think at 1 point, you mentioned the benefits on growth would come a little later, but it does seem like you're growing pretty well in risk management and some of the things you talked about were compelling. I'd just be interested in more color on is that a place where you actually are beginning to see some of that? And could we see growth accelerate related to some of those things you're doing there?

This is Scott. I think the -- I mean, the fact is, over the last year or so, we've seen a lot of really nice new business wins. And it continues -- I think it's a reflection of the investments we're making. Our emphasis on great outcomes. We're building that story. It's becoming more compelling and it's across all the segments that we serve, whether it's the carriers, the large risk management clients. So I think we feel really good about the spot that we're in and the story is resonating in the market.

Great. Can you talk maybe a little more specifically about headcount, like what we should expect as you're executing on some of the things that you've talked about from an efficiency standpoint, some of those cost reductions talked about, will we actually see head count reduce? Or is there is more of that operating leverage? I'm just trying to understand how we'll expect it to come through in margins?

So let me break it down for it. I think that you're going to see our head count on producers go up. I think you're going to see our middle office that as we bring more and more efficiencies to the middle office, when I talk about regardless of whether it's our technologies, our quality centers, our serves of excellence. And then if you think about AI, I think that we have enough internal attrition that will naturally contract that work for us. But frankly, we're growing so much that just holding steady could be a really, really -- it would be a really, really nice win. In the back office, I do believe that AI will continue to allow us to, again, harvest the benefits of natural attrition. And that won't be a perfect one-to-one match as AI comes in. But 1 thing I will say right now is that we are hell-bent on making sure that have some technology causes a job to be no longer necessary that we work very -- our human resource department works very hard to find -- to repurpose that employee into a spot where we've had attrition in some place else. So attrition will do most of our natural work over the next 3 years on that. We lose 15% of our people a year. So I mean, there is -- it will probably be a net hirer during that, but that we'll be able to net hire at that -- such a pace.

Our next question is from the line of Mark Hughes with Truist Securities.

Talked about in property, kind of the disconnect between some of the more dramatic rate decreased numbers we've seen in your own experience. I wonder if you take into account what you're doing on commissions and maybe policyholders buying more coverage and maybe also taking into contingent. How would you have seen property revenue in the last few months, last 6 months? I know you've given us some premium renewals and pricing, but how about your revenue or operating

Let's break that down to that basis. Remember, any large account or any medium-sized account where they've got a big property tower they've got a huge cat exposure. We're working on a fee for them by and large -- by and large, I'd say, when you get into kind of more of the [ in-exposed ] property in package and everything, those rates are still holding in there compared to cat-exposed properties. So we work on a fee in many cases, as you get into a package policy, you get to a unique property place and some of our real estate and higher ad type positions. There are commissions on that to a certain extent. But by and large, think about it is that we're protected from -- and we didn't benefit on the upside. It was going up 20%. Our property book wasn't -- our commission on that property wasn't going up 20% because there's a lot of fees in there. So the mix of our business on property, you need to think of the huge, huge property placements is more of a fee-based business than it is a commission business. Does that help you?

It does help. And then if you crystallize that into a number, like with all of those dynamics, what is that meant for property just so we can think about your real experience in your P&L versus some of these other numbers.

I said earlier that 1% was probably where I thought that the overall organic was influenced by rates in general. Maybe properties getting a negative of a point and casualty is a positive point or something in that range. We're not having huge swings based on our property. It's a very narrow range around that 1%.

Yes. That's helpful. How about on U.S. wholesale property pricing. You gave us some broader numbers, something including retail. What's the wholesale experience been on property?

You're going to see that as being a little bit more outside of that. I think you're going to see that. It might be the tail -- that's a tail that went a little bit more.

And then if you looked at overall wholesale renewal premiums, do you have a number you might share on that?

Listen, I'd have to dig out what we said in the scripts on that, but wholesale right now, I think that we're -- depending on how you define wholesale, you've got open brokerage, you've got programs got finding a business that's running in kind of the mid- to low single digits combined organically plus Mike has a [indiscernible].

Yes, Mark, I would just add. So where you're seeing maybe that be more impacted to the traditional flow of business, specifically from Gallagher into RPS that does have an impact. But we the benefit of AssuredPartners. Just in the last year, the premium trade into RPS from AP is up 129%. Submissions are up 182% and RPS revenue connected to AP is up 95%. While you see some put on calls relative to the traditional Gallagher business, the benefit of AP is making a big impact into RPS and that's the beauty of doing a deal like that.

And then if I might, just to tack one on, where did you find $100 million in trade in the risk management business?

I think it's one of those things as we look at -- Scott will actually -- I don't think we can answer the customer, but when we -- it's basically fraud detection, but go ahead, Scott.

It's -- this one specifically, Mark, was the -- all about fraud detection in the auto space specifically. And it's -- they have a large exposure and some new innovative ways, in particular, using AI that we were to detect it. And probably more importantly, they were aggressively pursuing it, which in partnership with them, it made a big difference.

Yes, it sounds like it.

Our next question is from the line of Meyer Shields with KBW.

2-part follow-up for Doug first. Can you explain why it takes, I guess, 3 to 5 years for the revenue benefits of better service to show up? This is in the context of AI. And I'm wondering if you're seeing any initial attempted pushback from the carriers for whatever reason?

All right. So you mixed up a couple of things. Revenue benefits will take a little longer as it emerges into our hit rates. When we sell somebody today, if we use AI to help us sell in those, sometimes that's an 18-month sales cycle. What I think -- what I said is when the benefits come in to Gallagher, it will take us 3 to 5 years to probably realize those numbers that I gave you earlier in my prepared remarks. Real reason why is that a lot of that has to do with span of control. When you come in as workloads of not the worker bees and not the leaders, but in that span of control layer that sits in the middle, as we start to improve what daily workers are doing and then scrape that information to a reportable information in the span of control layer, it just takes a while for that to get implemented. And then for those -- that span of control to increase. And again, we're going to do most of that with attrition. And so as we expand out, span of control, it just takes a while for us to put that in place. An example would be is I don't know if I want AI to do wire transfers, but I have no problem with AI tabulating how many wire transfers scanning it for quality control, any for fraud for doing that. I don't want AI actually doing it yet, but I don't have a problem with it being there tabulating and reporting out on what's happening. And that just takes a while to lay over the actual work layer.

Okay. That's helpful. And then I guess a question for Pat. Look, you made the comment that you're growing faster in large account space. And I guess, I'm just curious because I would imagine that there's a greater gap in competence when you're competing with smaller brokers, not to take anything away from from Gallagher, but when we look at the large account brokers, they seem stronger than I would imagine your typical storefront broker could be. So I was hoping you could dig into that a little bit.

Meyer, let's not confuse the two. I'll let Mike answer in a second. I did not say that we're growing faster, taking accounts away from our bigger competitors. I said our book of business and our new business is growing faster in the large account space. And a lot of that is taking large accounts and pieces of large accounts away from the smaller brokers who don't deserve it in the first place.

Yes. I would just add, Pat is exactly right. Our takeaway ratio, our win rate against our larger competitors is about on par with our win rate, maybe when we look at it overall. But I'll share just a quick story with you. We just picked up a really nice account here in Chicago, 3 6-figure accounts that had been with a local broker for 20 years. And we came in and showed all the tools and resources that we could provide to this account. It was a gut-wrenching decision for the CEO of this company to fire what was one of his best friends. That, back to Doug's point about the implication or the impact of AI, the impact of our tools and resources can take 18 months, 2 years, 3 years to unravel those relationships. We have to get someone fired to get hired. And so that's a very difficult thing when you're talking about a 20-year relationship, but the tools and resources, the tipping point of those continues to show itself in our win rate, whether it's a smaller competitor or a larger competitor.

Our last question is from the line of Robert Cox with Goldman Sachs.

First question, I just had a 2-part question on the Middle East. The first part is you talked about lower activity in some cases in the Middle East. I'm just curious, and I know it's not having a big impact, but curious what type of activities or products you're seeing delays and how that trended versus the first quarter. And then the second question is just if you think we might see some lagged inflation impacts kind of show up in RPC over the rest of the year from the Middle East conflict.

Well, it's a moving fee. This is Patrick, right? It's a moving fees. The biggest portion of our business that touches that is the London specialty team, the marine team, the aviation team. When I was talking about a slowdown, there has been a slowdown in aviation in the region. And so while there are war risks and other rate issues that drive revenues and exposure is up, there is some delay in construction projects for energy construction. There's some delay in flying, but then there's also the marine that is ensuring the boats in the Strait of Hormuz. So it's a real moving piece the delays are mainly in regard to aviation.

Yes. And I will add this, this is Doug [indiscernible] as we're looking at organic outlook for the quarter when it comes to our London specialty and business, there is 1 large account that I'll be honest. I don't know if it's going to renew here in June or on July 1. I don't know if it's going to be a June 30 placement or we'll get it put to bed in July. And that might be a $4 million or $5 million flip between first -- second quarter to third quarter. But I think that overall, what we're feeling is that there's a lot of pent-up demand to get on our marine business, our aviation business. So there could be some timing between quarters if that's what you're plumbing for on it, Rob, or -- but I think the fact is demand for our services is going to be even more, and I don't think rates are going to just drop down immediately because there's been a memo of understanding about what's going to take 60 days to get fleshed out.

And on the inflation piece, do you think that we might see that flow through in a bigger way over the rest of the year?

Well, listen, I think inflation causes pressure on replacement value. You've heard me speak before that I'm not completely convinced that the carriers are done with their march to get properly paid on replacement costs across the sector. I think inflation puts pressure on medical. I think inflation puts pressure on replacement costs on liability settlement. I just think that fundamentally, clients struggle with the impact of inflation because of their premiums go up. And that's where we're there to help them. And I think that that's our job to help them navigate through the inflation. So I think there could be inflation pressures, but I'm not completely convinced that that the business can't handle that in terms of the premium rates. It might put a little bit of a floor in some of the -- if there's some rate cutting pressure, competition out there, I might put a floor on that pretty quickly.

One last comment before we get to our -- my final remarks, Rob, it's really been interesting to me to look at our data, which I think is sensational data on our cancellations, our audits and what's actually happening in our book of business the resiliency of the middle market accounts, literally across the world. And you keep seeing things, we got a war in Iran. We've got Israel and Lebanon at each other. And you expect, oh my gosh, business has got to slow down. Our middle market businesses are robust. And I think they've been able to deal with tariffs. They've been able to deal with inflation. I think we're going to see continued growth in that area.

And then just a follow-up, 1 last question.

This will be the last.

Yes. Fair enough. U.S. retail commercial auto renewal premium change, I think, accelerated 6 points quarter-over-quarter. I'm not sure if last quarter was just artificially compressed, but just curious if there's anything to point out in terms of what's going on there.

Yes, you got a lot of bad access and huge settlements. I don't think that distracted driving and people running into each other.

Got it. Thank you.

Thank you again, everybody, for joining us this morning. I think you heard the team today loud and clear that we're incredibly confident in our ability to execute and believe that we're very well positioned for continued long-term growth. And so we look forward to speaking with you again after our second quarter in our earnings call this summer. Thanks for being with us today.

Thanks, everyone.

Thank you. This does conclude today's conference call. You may disconnect your lines at this time. Thank you for your participation.