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Arthur J. Gallagher & Co. Announces Third Quarter 2005 Financial Results

ITASCA, Ill., Oct. 25 /PRNewswire-FirstCall/ -- Gallagher today reported its financial results for the quarter and nine-month period ended September 30, 2005. A printer-friendly format is available at http://www.ajg.com .

     Quarter Ended September 30
                                                                  Diluted
                                             Net Earnings       Net Earnings
                           Revenues             (Loss)       (Loss) Per Share
                    3rd Q    3rd Q           3rd Q  3rd Q     3rd Q   3rd Q
                      05       04    Chg       05     04        05      04
     Segment       ($ in millions)          ($ in millions)

     Brokerage     $264.1   $239.8   10%     $41.1   $45.3    $0.43   $0.48
     Risk
      Management     94.3     88.1    7%      12.7    12.4     0.13    0.13

     Brokerage &
      Risk
      Management    358.4    327.9    9%      53.8    57.7     0.56    0.61

     Financial
      Services       31.5     26.6   18%      (3.3)   (3.0)   (0.04)  (0.04)
        Impact of
         FIN 46         -      9.0    -          -       -        -       -

     Discontinued
      Operations
        Brokerage &
         Risk
         Management     -        -    -          -     0.2        -       -
        Financial
         Services       -        -    -          -    (0.5)       -       -

     Total
      Company      $389.9   $363.5    7%     $50.5   $54.4    $0.52   $0.57



     Nine Months Ended September 30
                                                                  Diluted
                                             Net Earnings       Net Earnings
                           Revenues             (Loss)       (Loss) Per Share
                    9 Mths   9 Mths          9 Mths 9 Mths    9 Mths  9 Mths
                      05       04    Chg       05     04        05      04
     Segment       ($ in millions)          ($ in millions)

     Brokerage     $736.2   $665.6   11%     $95.0  $107.3    $0.99   $1.13
        Litigation
         Matters        -        -    -      (21.0)      -    (0.22)      -
     Risk
      Management    275.5    255.5    8%      40.1    33.8     0.42    0.36

     Brokerage &
      Risk
      Management  1,011.7    921.1   10%     114.1   141.1     1.19    1.49

     Financial
      Services       96.1     72.6   32%      (8.8)   (0.8)   (0.09)  (0.01)
        Litigation
         Matters        -        -    -      (84.2)      -    (0.88)      -
        Impact of
         FIN 46         -     69.9    -          -       -        -       -

     Discontinued
      Operations
        Brokerage &
         Risk
         Management     -        -    -       (0.2)    0.2        -       -
        Financial
         Services       -        -    -        7.4    (1.1)    0.08       -

     Total
      Company    $1,107.8 $1,063.6    4%     $28.3  $139.4    $0.30   $1.48

"2005 has seen an unprecedented amount of hurricane losses. In particular, Katrina, Rita and now Wilma are putting incredible stress on our clients, on our employees and likely on industry-wide insurance pricing and capacity. Gallagher's teams have done an outstanding job of putting our clients' needs first and I couldn't be more pleased with our team's resilience. The insurance industry now has a tremendous opportunity to prove its value and we are proud to be part of that process," said J. Patrick Gallagher, Jr., President and Chief Executive Officer. "Our brokerage segment's revenue growth of 10% and our risk management segment's 7% revenue growth are outstanding quarterly results when faced with rate softening as well as regulatory turmoil. We believe we are making progress with the regulatory environment and look forward to focusing on building our company."

    Brokerage and Risk Management Combined Third Quarter Highlights
    -- Revenue growth of 9%, of which 3% is organic.
    -- Pretax margin of 20%, a 2.5% margin reduction from 2004. Factors
       impacting 2005 margin primarily include investments in new hires of
       0.2%, professional fees of 0.7%, continuing impact of staffing changes
       made in Gallagher's reinsurance operations of 0.6%, increased stock
       option expense of 0.3%, one-time severance costs of 0.2%, increased
       insurance costs of 0.7% and the softening seen in the insurance market
       place.  These were partially offset by employee benefit plan cost
       savings of 1.1%.
    -- Gallagher ceased entering into new contingent commission agreements as
       a retail broker effective January 1, 2005.  However, Gallagher will
       continue to accept contingent compensation from non-retail business and
       retail contingent commission related to entities acquired up to one
       year from the acquisition date.  Below is a table that shows revenues
       recognized in 2004 related to 2003 retail contingent commission
       contracts and in 2005 related to 2004 retail contingent commission
       contracts.  The increase in contingent commissions in 2005 resulted
       from brokers acquired in 2004.

         Contingent Commission Income    1st Q   2nd Q   3rd Q   4th Q

                    2004                 $15.9    $7.8    $1.9    $8.2

                    2005                  16.7     9.4     2.0


    -- In first quarter 2005, Gallagher sold its two medical claim management
       operations.  Historical revenues and expenses related to these entities
       have been reclassified as discontinued operations.
    -- Effective tax rate of 23% in 2005 versus 20% in 2004.


    Brokerage Segment Third Quarter Highlights
    -- Revenue growth of 10%, of which 1% is organic.
    -- The new hires made in the latter part of 2004 and early 2005 are
       validating and were profitable in third quarter 2005, but still margin
       dilutive.
    -- Third quarter compensation ratio was 1.9% higher than 2004.  Employee
       benefit plan cost savings of 1.0% were more than offset by new hire
       compensation costs of 0.4%, costs related to staffing changes made in
       Gallagher's reinsurance operations of 0.4% and increased stock option
       expense of 0.3%.
    -- Third quarter operating expense ratio was 1.2% higher than 2004, mostly
       reflecting increased professional fees of 1.0% and increased insurance
       costs of 0.4%.
    -- Pretax margin of 20%.  The 3.4% margin reduction from 2004 results
       primarily from the compensation, operating expense and renewal rate
       factors discussed above.


    Risk Management Segment Third Quarter Highlights
    -- Revenue growth of 7%, all of which is organic.  As compared to the
       second quarter 2005, claim counts on existing clients have stabilized
       and international new business has increased.
    -- Third quarter compensation ratio was 1.7% higher than 2004.  Employee
       benefit plan cost savings of 1.3% were more than offset by increased
       staffing levels.
    -- Third quarter operating expense ratio was 1.3% lower than 2004 due to
       expense savings initiatives implemented in the latter part of 2004.
    -- Pretax margin of 18%, which is flat versus 2004, reflects the
       offsetting compensation and operating expense factors discussed above.


    Financial Services Segment Highlights
    -- Tax credits and tax credit-related revenues related to Gallagher's
       synthetic coal (Syn/Coal) investments will phase-out if the average of
       the commonly reported crude oil price per barrel reaches certain
       levels.
         1) For calendar year 2005, Gallagher estimates that the commonly
            reported crude oil price would need to average approximately
            $70 per barrel for the remainder of 2005 for any phase-out to
            begin and average approximately $124 per barrel for the remainder
            of 2005 for a complete phase-out.
         2) For calendar year 2006, Gallagher estimates that the commonly
            reported crude oil price would need to average approximately
            $60 per barrel for the entire year 2006 for any phase-out to begin
            and average approximately $74 per barrel for the entire year 2006
            for a complete phase-out.
         3) Between now and January 2006, Gallagher will monitor the commonly
            reported crude oil price and decide if it should produce Syn/Coal.
              a) If at that time Gallagher believes the 2006 price of oil will
                 average below the phase-out price and decides to continue its
                 current Syn/Coal production schedule, then the Financial
                 Services Segment would expect to report a pretax loss of
                 approximately $20 to $25 million for full year 2006.
                 Gallagher's overall tax rate would be approximately 23% to
                 25% for full year 2006.
              b) If at that time Gallagher believes the 2006 price of oil will
                 average above the phase-out price and decides to idle its
                 Syn/Coal facilities, then the Financial Services Segment
                 could report a maximum one-time non-cash pretax charge of
                 approximately $18 million related to a write-off of its
                 remaining basis in these facilities.  In addition, if the
                 Syn/Coal facilities remain idle for all of 2006, the
                 Financial Services Segment could report a pretax loss of
                 approximately $5 to $10 million for full year 2006.
                 Gallagher's overall tax rate would be approximately 39% to
                 40% for full year 2006.
    -- Gallagher estimates a net loss of $0.04 per diluted share in fourth
       quarter 2005 for the Financial Services Segment, which is the same
       guidance provided in Gallagher's July 26, 2005 earnings release.

The company will host a webcast conference call on Wednesday, October 26, 2005 at 9:00 a.m. ET to further discuss these quarterly results. To listen, please go to http://www.ajg.com .

Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm, is headquartered in Itasca, Illinois, has operations in seven countries and does business in more than 110 countries around the world through a network of correspondent brokers and consultants. Gallagher is traded under the symbol "AJG" on the New York Stock Exchange.

This press release may contain certain forward-looking statements relating to future results. The Private Securities Litigation Reform Act of 1995 provides a safe harbor for forward-looking statements. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those expected, depending on a variety of factors such as changes in worldwide and national economic conditions, changes in premium rates and in insurance markets generally and changes in securities and fixed income markets as well as developments in the area of tax legislation and in crude oil prices. Please refer to our filings with the Securities and Exchange Commission, including our Annual Report on Form 10-K, for a more detailed discussion of these factors.



                            Arthur J. Gallagher & Co.
                          Segment Statement of Earnings
                 (Unaudited - in millions except per share data)

                                         3 Months 3 Months 9 Months  9 Months
                                           Ended    Ended    Ended     Ended
                                          Sep 30,  Sep 30,  Sep 30,   Sep 30,
    BROKERAGE SEGMENT                       2005     2004     2005      2004

    Commissions                            $215.8  $197.2    $609.4    $555.4
    Fees                                     43.7    39.7     114.0     101.9
    Investment income - fiduciary             4.6     2.9      12.8       8.3
         Revenues                           264.1   239.8     736.2     665.6

    Compensation                            149.0   130.8     431.5     379.8
    Operating                                52.9    45.1     155.0     129.3
    Depreciation                              3.8     3.3      10.9       9.6
    Amortization                              5.0     4.0      15.4      12.6
    Litigation and contingent commission
     related matters                           -       -       35.0        -
         Expenses                           210.7   183.2     647.8     531.3

    Earnings from continuing operations
     before income taxes                     53.4    56.6      88.4     134.3
    Provision for income taxes               12.3    11.3      14.4      27.0
    Earnings from continuing operations     $41.1   $45.3     $74.0    $107.3

    Diluted earnings from continuing
     operations per share                   $0.43   $0.48     $0.77     $1.13
    Growth - revenues                         10%      9%       11%       10%
    Organic growth in commissions and
     fees (1)                                  1%      3%        1%        2%
    Growth - pretax earnings                  -6%      2%      -34%       11%
    Compensation expense ratio                56%     55%       59%       57%
    Operating expense ratio                   20%     19%       21%       19%
    Pretax profit margin before litigation
     related matters  (2)                     20%     24%       17%       20%
    Effective tax rate                        23%     20%       16%       20%

    RISK MANAGEMENT SEGMENT

    Fees                                    $93.5   $87.7    $273.5    $254.4
    Investment income - fiduciary             0.8     0.4       2.0       1.1
         Revenues                            94.3    88.1     275.5     255.5

    Compensation                             53.0    48.0     152.8     138.7
    Operating                                22.8    22.5      64.3      68.6
    Depreciation                              1.9     2.0       5.9       6.0
    Amortization                              0.1     0.1       0.3       0.3
         Expenses                            77.8    72.6     223.3     213.6

    Earnings from continuing operations
     before income taxes                     16.5    15.5      52.2      41.9
    Provision for income taxes                3.8     3.1      12.1       8.1
    Earnings from continuing operations     $12.7   $12.4     $40.1     $33.8

    Diluted earnings from continuing
     operations per share                   $0.13   $0.13     $0.42     $0.36
    Growth - revenues                          7%     17%        8%       19%
    Organic growth in fees  (1)                7%     16%        8%       18%
    Growth - pretax earnings                   6%     49%       25%       37%
    Compensation expense ratio                56%     54%       55%       54%
    Operating expense ratio                   24%     26%       23%       27%
    Pretax profit margin                      18%     18%       19%       16%
    Effective tax rate                        23%     20%       23%       19%

    BROKERAGE & RISK MANAGEMENT COMBINED

    Commissions                            $215.8  $197.2    $609.4    $555.4
    Fees                                    137.2   127.4     387.5     356.3
    Investment income - fiduciary             5.4     3.3      14.8       9.4
         Revenues                           358.4   327.9   1,011.7     921.1

    Compensation                            202.0   178.8     584.3     518.5
    Operating                                75.7    67.6     219.3     197.9
    Depreciation                              5.7     5.3      16.8      15.6
    Amortization                              5.1     4.1      15.7      12.9
    Litigation and contingent commission
     related matters                           -       -       35.0        -
         Expenses                           288.5   255.8     871.1     744.9

    Earnings from continuing operations
     before income taxes                     69.9    72.1     140.6     176.2
    Provision for income taxes               16.1    14.4      26.5      35.1
    Earnings from continuing operations     $53.8   $57.7    $114.1    $141.1

    Diluted earnings from continuing
     operations per share                   $0.56   $0.61     $1.19     $1.49
    Growth - revenues                          9%     11%       10%       12%
    Organic growth in commissions and
     fees (1)                                  3%      8%        3%        8%
    Growth - pretax earnings                  -3%     10%        NMF      16%
    Compensation expense ratio                56%     55%       58%       56%
    Operating expense ratio                   21%     21%       22%       21%
    Pretax profit margin before litigation
     related matters  (2)                     20%     22%       17%       19%
    Effective tax rate                        23%     20%       NMF       20%


    See notes to third quarter 2005 earnings release and non-GAAP financial
    measures on page 6.



                          Arthur J. Gallagher & Co.
                        Segment Statement of Earnings
               (Unaudited - in millions except per share data)

                                         3 Months 3 Months  9 Months  9 Months
                                           Ended    Ended     Ended     Ended
    FINANCIAL SERVICES SEGMENT            Sep 30,  Sep 30,   Sep 30,   Sep 30,
                                            2005     2004      2005      2004

    Investment income                       $31.0   $24.0     $91.9     $65.4
    Impact of FIN 46 on investment income      -      9.0        -       69.9
    Investment gains (losses)                 0.5     2.6       4.2       7.2
         Revenues                            31.5    35.6      96.1     142.5

    Investment expenses                      30.5    25.1      90.1      59.8
    Impact of FIN 46 on investment
     expenses                                  -      8.6        -       67.2
    Interest                                  2.9     2.6       8.5       6.9
    Depreciation                              2.4     2.5       8.8       6.4
    Impact of FIN 46 on depreciation
     expense                                   -      0.4        -        2.7
    Litigation related matters                 -       -      131.0        -
         Expenses                            35.8    39.2     238.4     143.0

    Earnings (loss) from continuing
     operations before income taxes          (4.3)   (3.6)   (142.3)     (0.5)
    Provision (benefit) for income taxes     (1.0)   (0.6)    (49.3)      0.3
    Earnings (loss) from continuing
     operations                             $(3.3)  $(3.0)   $(93.0)    $(0.8)

    Diluted earnings (loss) from
     continuing operations per share       $(0.04) $(0.04)   $(0.97)   $(0.00)



                      Consolidated Statement of Earnings
               (Unaudited - in millions except per share data)

                                         3 Months 3 Months  9 Months  9 Months
                                           Ended    Ended     Ended     Ended
    TOTAL COMPANY                         Sep 30,  Sep 30,   Sep 30,   Sep 30,
                                            2005     2004      2005      2004

    Commissions                            $215.8  $197.2    $609.4    $555.4
    Fees                                    137.2   127.4     387.5     356.3
    Investment income - fiduciary             5.4     3.3      14.8       9.4
    Investment income - all other            31.0    33.0      91.9     135.3
    Investment gains (losses)                 0.5     2.6       4.2       7.2
         Revenues                           389.9   363.5   1,107.8   1,063.6

    Compensation                            202.0   178.8     584.3     518.5
    Operating                                75.7    67.6     219.3     197.9
    Investment expenses                      30.5    33.7      90.1     127.0
    Interest                                  2.9     2.6       8.5       6.9
    Depreciation                              8.1     8.2      25.6      24.7
    Amortization                              5.1     4.1      15.7      12.9
    Litigation and contingent commission
     related matters                           -       -      166.0        -
         Expenses                           324.3   295.0   1,109.5     887.9

    Earnings (loss) from continuing
     operations before income taxes          65.6    68.5      (1.7)    175.7
    Provision (benefit) for income taxes     15.1    13.8     (22.8)     35.4
    Earnings from continuing operations      50.5    54.7      21.1     140.3

    Earnings (loss) on discontinued
     operations, net of income taxes           -     (0.3)      7.2      (0.9)

    Net earnings                            $50.5   $54.4     $28.3    $139.4

    Diluted earnings from continuing
     operations per share                   $0.52   $0.57     $0.22     $1.49
    Diluted earnings on discontinued
     operations per share                     -       -        0.08     (0.01)
    Diluted net earnings per share          $0.52   $0.57     $0.30     $1.48

    Dividends declared per share            $0.28   $0.25     $0.84     $0.75

    Other Information
    Basic weighted average shares
     outstanding (000s)                    94,912  92,265    93,727    91,246
    Diluted weighted average shares
     outstanding (000s)                    96,583  95,053    95,653    94,449
    Common shares repurchased (000s)           11     615        70     1,170
    Annualized return on beginning
     tangible net worth (3)                                      7%       47%
    Number of acquisitions closed               1       4         8        14
    Workforce at end of period (includes
     acquisitions)                                            8,099     7,451

    Earnings From Continuing Operations
     Before Litigation and Contingent
     Commission Related Matters,
     Investment (Gains) Losses, Pension
     Plan Curtailment Gain, Depreciation,
     Amortization and Stock Compensation
     Expense (4)
    Earnings from continuing operations     $50.5   $54.7     $21.1    $140.3
    Litigation and contingent commission
     related matters                           -       -      166.0        -
    Investment (gains) losses                (0.5)   (2.6)     (4.2)     (7.2)
    Pension plan curtailment gain              -       -      (10.0)       -
    Depreciation                              8.1     8.2      25.6      24.7
    Amortization                              5.1     4.1      15.7      12.9
    Amortization of deferred comp and
     restricted stock                         1.5     2.5       5.6       7.3
    Stock compensation expense                2.3     1.4       6.5       3.9
    Tax effect                               (3.8)   (2.7)    (69.8)     (8.0)
    Earnings from continuing operations
     before litigation and contingent
     commission related matters,
     investment (gains) losses, pension
     plan curtailment gain, depreciation,
     amortization and stock compensation
     expense                                $63.2   $65.6    $156.5    $173.9

    On a diluted per share basis            $0.65   $0.69     $1.64     $1.84


    See notes to third quarter 2005 earnings release and non-GAAP financial
    measures on page 6.



                          Arthur J. Gallagher & Co.
                          Consolidated Balance Sheet
               (Unaudited - in millions except per share data)

                                                             Sep 30,   Dec 31,
                                                              2005      2004

    Cash and cash equivalents                                $313.9    $224.6
    Restricted cash                                           583.9     488.9
    Unconsolidated investments - current                       31.4      26.0
    Premiums and fees receivable                            1,328.6   1,355.5
    Other current assets                                      162.0     132.8
         Total current assets                               2,419.8   2,227.8

    Unconsolidated investments - noncurrent                    89.9     132.4
    Fixed assets related to consolidated investments - net    128.2     195.6
    Other fixed assets - net                                   55.4      63.4
    Deferred income taxes                                     209.4     184.8
    Other noncurrent assets                                    75.8      59.7
    Goodwill - net                                            237.1     219.0
    Amortizable intangible assets - net                       170.2     155.2
         Total assets                                      $3,385.8  $3,237.9


    Premiums payable to insurance and
     reinsurance companies                                 $1,948.4  $1,838.9
    Accrued compensation and other accrued liabilities        307.7     253.4
    Unearned fees                                              41.1      35.0
    Income taxes payable                                       37.7      24.8
    Other current liabilities                                  21.0      18.6
    Corporate related borrowings                                 -         -
    Investment related borrowings - current                    34.7      41.4
         Total current liabilities                          2,390.6   2,212.1

    Investment related borrowings - noncurrent                 80.7     140.0
    Other noncurrent liabilities                              130.0     124.8
         Total liabilities                                  2,601.3   2,476.9

    Stockholders' equity:
    Common stock - issued and outstanding                      95.2      92.1
    Capital in excess of par value                            221.7     146.4
    Retained earnings                                         488.1     539.0
    Unearned deferred compensation                            (15.2)    (12.2)
    Unearned restricted stock                                  (5.2)     (4.3)
    Accumulated other comprehensive earnings (loss)            (0.1)       -
         Total stockholders' equity                           784.5     761.0
         Total liabilities and stockholders' equity        $3,385.8  $3,237.9

    Other Information
    Tangible net worth  (5)                                  $377.2    $386.8
    Book value per share                                      $8.24     $8.26
    Tangible book value per share  (6)                        $3.96     $4.20


    Notes to Third Quarter 2005 Earnings Release and Non-GAAP Financial
    Measures

    This exhibit contains supplemental non-GAAP financial information within
    the meaning of Regulation G of the SEC's rules.  Consistent with
    Regulation G, a description of such information is provided below and a
    reconciliation of certain of such items to U.S. generally accepted
    accounting principles (GAAP) is provided elsewhere in this press release.
    Gallagher believes the items described below provide meaningful
    additional information, which may be helpful to investors in assessing
    certain aspects of Gallagher's operating performance and financial
    condition that may not be otherwise apparent from GAAP. Industry peers
    provide similar supplemental information, although they may not use the
    same or comparable terminology and may not make identical adjustments.
    This non-GAAP information should be used in addition to, but not as a
    substitute for, the GAAP information.

    Non-GAAP Measures Defined

    (1) Organic growth excludes the first twelve months of net commission and
        fee revenues generated from the acquisitions accounted for as
        purchases and the net commission and fee revenues related to
        operations disposed of in each year presented.  These commissions
        and fees are excluded from organic revenues in order to determine
        the revenue growth that is associated with the operations that were
        a part of Gallagher in both the current and prior year.  In
        addition, organic growth excludes contingent commission revenues.

    (2) Represents pretax earnings (loss) from continuing operations before
        the impact of pretax litigation and contingent commission related
        matters divided by total revenues.

    (3) Represents year-to-date net earnings divided by total stockholders'
        equity, less net balance of goodwill and amortizable intangible
        assets, as of the beginning of the year.

    (4) Represents net earnings before the after-tax effect of the impact of
        litigation and contingent commission related matters, investment gains
        (losses), pension plan curtailment gain, depreciation, amortization,
        amortization of deferred compensation and restricted stock expense
        and stock compensation expense.

    (5) Represents total stockholders' equity less net balance of goodwill
        and amortizable intangible assets.

    (6) Represents tangible net worth divided by the common shares
        outstanding at the end of the period.



                            Arthur J. Gallagher & Co.
                        Unconsolidated Investment Summary
                            (Unaudited - in millions)

                                                          September 30, 2005
                     September 30,         December 31,     LOCs &    Funding
                        2005                  2004         Financial  Commit-
                 Current  Noncurrent  Current  Noncurrent  Guarantees  ments

    Unconsolidated
     Investments:
    Direct and
     indirect
     investments
     in Asset
     Alliance
     Corporation
     (AAC)        $0.6       $46.7     $0.8      $46.7        $-        $-

    Low income
     housing (LIH)
     developments:
      Bridge
       loans       5.6           -      5.2          -         -         -
      Partnership
       interests     -         1.2        -        1.5         -         -
      LIH
       Developer     -         8.8        -        9.2         -         -

    Alternative
     energy
     investments:
      Owned
       partnership
       interests   1.4        18.7      0.9       19.1       4.4       1.3
      Biogas
       project       -           -        -       14.7         -         -
      Partnership
       interest
       installment
       sales      22.1         8.1     18.6       12.9         -         -

    Bermuda
     insurance
     investments     -         0.4        -       20.4       6.7         -

    Real estate,
     venture
     capital and
     other
     investments   1.7         6.0      0.5        7.9         -       1.3

      Total
       unconsol-
       idated
       invest-
       ments      31.4        89.9     26.0      132.4      11.1       2.6

    Non-recourse
     borrowings -
     Biogas
     project         -           -     (0.2)     (13.8)        -         -

      Net
       unconsol-
       idated
       invest-
       ments     $31.4       $89.9    $25.8     $118.6     $11.1      $2.6



                         Consolidated Investment Summary
                            (Unaudited - in millions)

                                                            September 30, 2005
                                      September  December    LOCs &    Funding
                                          30,       31,     Financial  Commit-
                                         2005      2004     Guarantees  ments

    Home office land and building:
      Fixed assets                      $101.6    $101.3        $-      $-
      Accumulated depreciation           (17.7)    (15.8)        -       -
      Non-recourse borrowings - current   (0.9)     (0.9)        -       -
      Recourse borrowings - current          -         -         -       -
      Non-recourse borrowings -
       noncurrent                        (72.5)    (73.1)        -       -
      Recourse borrowings - noncurrent    (3.0)     (3.0)        -       -
      Net other consolidated assets and
       liabilities                         4.0       2.8         -       -

           Net investment                 11.5      11.3         -       -

    Florida community development:
      Fixed assets                           -      60.3         -       -
      Accumulated depreciation               -      (0.7)        -       -
      Non-recourse borrowings - current      -     (17.9)        -       -
      Recourse borrowings - current          -     (17.0)        -       -
      Non-recourse borrowings -
       noncurrent                            -      (0.1)        -       -
      Recourse borrowings - noncurrent       -     (12.4)        -       -
      Net other consolidated assets and
       liabilities                           -      (2.4)     12.6       -

           Net investment                    -       9.8      12.6       -

    Airplane leasing company:
      Fixed assets                        51.8      51.8         -       -
      Accumulated depreciation           (16.8)    (14.1)        -       -
      Non-recourse borrowings - current  (30.6)     (2.6)        -       -
      Recourse borrowings - current          -         -         -       -
      Non-recourse borrowings -
       noncurrent                            -     (29.9)        -       -
      Recourse borrowings - noncurrent       -         -         -       -
      Net other consolidated assets and
       liabilities                        (0.2)        -         -       -

           Net investment                  4.2       5.2         -       -

    Syn/Coal partnerships:
      Fixed assets                        15.6      15.6         -       -
      Accumulated depreciation            (6.3)     (2.8)        -       -
      Non-recourse borrowings - current   (3.2)     (2.8)        -       -
      Recourse borrowings - current          -         -         -       -
      Non-recourse borrowings -
       noncurrent                         (5.2)     (7.7)        -       -
      Recourse borrowings - noncurrent       -         -         -       -
      Net other consolidated assets and
       liabilities                        (0.9)      1.6         -       -

           Net investment                    -       3.9         -       -

    Total consolidated investments:
      Fixed assets                       169.0     229.0         -       -
      Accumulated depreciation           (40.8)    (33.4)        -       -
      Non-recourse borrowings - current  (34.7)    (24.2)        -       -
      Recourse borrowings - current          -     (17.0)        -       -
      Non-recourse borrowings -
       noncurrent                        (77.7)   (110.8)        -       -
      Recourse borrowings - noncurrent    (3.0)    (15.4)        -       -
      Net other consolidated assets and
       liabilities                         2.9       2.0      12.6       -

           Net investment                $15.7     $30.2     $12.6      $-
SOURCE  Arthur J. Gallagher & Co.
    -0-                             10/25/2005
    /CONTACT:  Marsha J. Akin, Investor Relations of Arthur J. Gallagher &
Co., +1-630-773-3800/
    /Web site:  http://www.ajg.com /
    (AJG)

CO:  Arthur J. Gallagher & Co.
ST:  Illinois
IN:  FIN INS
SU:  ERN CCA

JR-JK
-- CGTU060 --
5044 10/25/2005 16:15 EDT http://www.prnewswire.com