Arthur J. Gallagher reported net income for the fourth quarter dropped 80 percent. The Itasca, Illinois-based company’s fourth quarter net income declined to $4.7 million or $0.05 per share from $23.4 million or $0.25 per share in the same period the previous year. Quarterly revenues increased to $412.1 million from $410 million in the same period the previous year.
“Gallagher did not escape the negative impact of a rapidly eteriorating economy and continued soft market in the fourth quarter 2008. Fewer new business sales, reduced renewal exposure units, less investment income, declines in claim frequency and a strengthening U.S. dollar, all combined to challenge growth and profitability in both our Brokerage and Risk Management segments,” said J. Patrick Gallagher Jr., chairman, president and CEO.
However, Gallagher Jr. said acquisitions in the company’s Brokerage Segment continue to fuel growth. “During the quarter, we closed another 9 deals comprising over $65 million of annualized revenue. Including 2008 and our recently announced deal with Liberty Mutual, we’ve added over $200 million in annualized revenues as we come into 2009.”
He noted that throughout 2008, the team completed proactive measures to maintain the right workforce size and curtail expenses in anticipation of an uncertain 2009, including:
-Completing the company’s goal of reducing its brokerage workforce by 400 full time positions (excluding acquisitions) as announced in January 2008;
-Implementing a hiring freeze, with the exception of production talent;
-Postponing wage reviews in most units until 2010. This is in addition to a 2008 wage freeze in most units.