Gallagher Reports 2Q Earnings

Second-quarter earnings at insurance broker Arthur J. Gallagher AJG met our expectations, so we will stick with our fair value estimate. The company continued its acquisitive mode in the first half of the year, adding 20 brokerage agencies, and announced that it is filing to register 10 million additional common shares for future acquisitions. Claims administration revenue continues to be soft, reflecting a weakness in employment and the economy. In the short term, a contracting economy should continue to pressure revenue and earnings growth, but we expect better results after the current cycle reaches bottom.