Gallagher Profit Down 64.7 Percent, Revenues Up 22 Percent

April 25, 2003

Itasca, Ill.-based brokerage giant Arthur J. Gallagher & Co.’s first-quarter net income dropped by 64.7 percent in the first quarter to $11.9 million, while the firm reported $254.3 million in revenues, up by 22 percent.

According to a statement, Gallagher decided to exit from its investments in venture capital, development stage enterprises and turnarounds and recorded an after-tax charge of $19.3 million, or 21 cents per share, to reduce the carrying values to the estimated realizable value.

The company does not intend to make future investments in these investment classes. Of the company’s $700 million investment portfolio, the net carrying value of these investments totaled $31.7 million and $4.4 million as of Dec. 31, 2002, and March 31, 2003, respectively. The company believes its other investments are sound.

In addition, late in the first quarter the company signed a new synthetic fuel deal, which is expected to keep the effective tax rate in the mid-20s for the year.

CEO J. Patrick Gallagher Jr. said he was pleased with the 22 percent revenue growth in the company’s brokerage segment. The new producers added in the last two years are the reason for the growth, Gallagher added.

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