"Gallagher did not escape the negative impact of a rapidly deteriorating economy and continued soft market in the fourth quarter 2008,” J. Patrick Gallagher Jr., chairman, president and chief executive officer of the brokerage, said in a statement. He indicated that fewer new business sales, less investment income and declines in claim frequency were some of the factors that stymied growth and profitability in Gallagher’s brokerage and risk management segments.
As a result of acquisitions, there was some growth in the brokerage segment, which reported a 6.6% rise in 2008 revenues to $1.19 billion. In 2008 Gallagher added more than $200 million in annualized revenues from acquisitions, including the recently acquired renewal rights to a portion of Liberty Mutual Group Inc.’s middle-market business.
The risk management segment saw revenues increasing 4.8% to $464.9 million, while revenues from its financial services and corporate segment reported a $7.7 million loss for the year, related in part to a fourth-quarter charge and additional expenses. Gallagher said it continues to wind down its financial services investments, many of which were tax-advantaged investments related to tax laws that expired at the end of 2007.
During 2008 Gallagher shaved expenses and adjusted its workforce, including eliminating 400 full-time positions. While those actions negatively impacted net income, they are expected to generate about $25 million to $30 million in annualized cost savings, the company said.