Good morning, and welcome to Arthur J. Gallagher and Company's quarterly investor meeting with management. Participants have been placed on a listen-only mode. Your lines will be open for questions following the presentation. Today's call is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during this investor meeting, including answers given in response to questions, may constitute forward-looking statements within the meaning of the securities laws. These forward-looking statements are subject to certain risks and uncertainties discussed during this meeting or described in the company's most recent Form 10-K filing. Actual results may differ materially from those discussed today, and the company undertakes no obligation to update these statements. It is now my pleasure to introduce J. Patrick Gallagher, Jr., Chairman, President, and CEO of Arthur J. Gallagher and Company. Mr. Gallagher, you may begin.
Thank you, and good morning, everyone, and thanks for joining our quarterly investor meeting. These quarterly events give us a little more time to tell the Gallagher story outside of the busy earnings season. Today's format will be very similar to our previous meetings. I'll kick off today's meeting with some prepared remarks, including some comments on the current environment in first quarter. Five of our business leaders will each speak for several minutes describing their business and touching on topics like organic growth, M&A, various operating initiatives. Our leaders will also provide you with some market insights and frame how the first quarter is shaping up from an organic perspective. Doug Howell, our CFO, will wrap up our prepared comments with some financial commentary.
Today, he will also provide an important vignette on our shift in how we present our adjusted non-GAAP earnings. Our prepared remarks should last around 70 minutes. After that, we'll open up the line for questions and answers from those of you who are dialed in. I'd like to start with some comments about the deeply concerning crisis in the Ukraine. At Gallagher, we stand with people seeking safety, freedom, and harmony for themselves, their families, and their communities. We also stand firmly with those calling for peace and an end to the violence. Our hearts go out to everyone there whose lives are being impacted, and also to team members, partners, and clients who have family, friends, coworkers living in the Ukraine and in Russia. We condemn the actions of the Russian government. We're in full support of the sanctions being imposed.
We hope and pray that this conflict will end in the very near future. As for the impact on Gallagher of this conflict, first, we do not have any operations in Russia or the Ukraine. Second, we do have a very small number of clients who are subject to sanctions. Our current estimate is that we have less than $10 million of revenues directly at risk, split about evenly between our London specialty and reinsurance businesses. We have suspended those relationships and have robust procedures in place to assure that we're in compliance with all applicable sanction laws. Additionally, there will likely be some indirect exposure, really perhaps more at the macro level, like many other companies, but we currently see that as minimal as well. Accordingly, we have not significantly altered our near-term organic growth outlook nor EBITDA outlook.
Like the entire world, we will continue to monitor the situation, and I'm hopeful that peace will ultimately prevail. Moving on, I'm really excited about our business. We are growing organically. We're growing through mergers, servicing and retaining our clients, selling new business, improving our productivity, and raising our quality. Just yesterday, we were recognized by the Ethisphere Institute as one of the world's most ethical companies for the eleventh year in a row. It's a great testament to our team, our culture, and an honor we're very, very proud of. Let me now shift gears a bit and give you some color on the pricing environment and our first quarter performance. Starting with the PC market, pricing continues to increase in nearly all geographies and product lines around the globe.
Through the first two months of the year, global first quarter 2022 renewal premium increases are around 7.5%, broadly consistent with the increases we saw during 2021. Capacity in certain lines and geographies remains tight, and one line in particular I would describe as really hard is cyber. There's no question that substantial premium increases are still here today. Our risk-bearing partners remain cautious on rising loss costs, exacerbated by the ongoing conflict in Ukraine, so I see difficult P&C market conditions continuing at least throughout 2022. On the casualty side, social inflation, low investment returns, and the potential for increases in claim frequency are all potential negative drivers of future underwriting profitability. For property coverages, replacement cost inflation and the increased frequency and severity of catastrophe losses are causing underwriters to reassess rate adequacy across their portfolios.
On top of higher loss costs and lower investment returns, reinsurance costs are also increasing. The punchline is we aren't seeing a meaningful rate slowdown. On the benefit side, the February U.S. jobs report showed the unemployment rate dropping to 3.8%, just above the pre-pandemic February 2020 level of 3.5%. The improving employment situation is leading to higher covered lives within our core health and welfare business. The market remains extremely tight with nearly 11.3 million job openings domestically and 6.3 million people unemployed and looking for work. Barring any major shocks to the U.S. economy, we see robust demand for our employee benefit consulting services in 2022 as employers look to attract, retain, and motivate their workforce. Rising PC rates, positive exposure unit trends, increasing inflationary pressures, and a challenging employment situation.
Demand for our expertise, products, and solutions should increase in times like these. As we sit here today, it is looking like we might deliver first quarter brokerage segment organic in the mid- to upper-7% range, with full year 2022 similar to 2021. Doug will speak to this, but recall our earnings call commentary. Our first quarter is more heavily weighted to workers' compensation and employee health products, which don't have the same level of underlying rate increases. Granted, a lot could change in the world, but that's our view today. Moving to our merger and acquisition strategy. Our growing global platform is a great fit for entrepreneurial owners looking to add value to their current clients, grow their business, or to help further advance their employees' careers. Gallagher can help them achieve all of these objectives and more.
When I look at our M&A pipeline today, we have around 40 term sheets signed or being prepared, representing approximately $200 million of annualized revenues. While we know that not all of these will close, we believe we'll get our fair share. Let me give some quick sound bites you'll hear from the team today. Our U.S. retail PC leader, Mike Pesch, will tell you his business is performing very well. New business and retention are strong. Renewal premium changes are consistent with recent quarters. Midterm policy adjustments remain a small but indicative tailwind. Tom Gallagher will tell you that our international PC operations are doing extremely well. Organic is excellent across all our major geographies due to higher renewal premiums and strong new business trends.
Tom will also tell you, and I too saw it firsthand being with them two weeks ago, that our reinsurance teammates are really coming together, and they are quickly partnering with our various retail, wholesale, benefits, and claims paying businesses. Working together, our capabilities as an organization are both wider and deeper as a result of our reinsurance combination. Tom will also provide you with some color on our integration efforts in various work streams, but the punchline is integration is underway and on track. I remain very bullish about our reinsurance brokerage operations. Joel Cavaness will tell you his brokerage, MGA program, and binding businesses are sailing fast. Here, too, renewal premium changes are consistent with the past few quarters on top of fantastic new business production. William Ziebell will then talk about our employee benefits and HR consulting business.
He will tell you demand for our consulting practices and other service groups is robust and that a strong annual enrollment season is driving first quarter organic in line with our expectations. Scott Hudson will tell you our third-party claims administration business, Gallagher Bassett, is off to a strong start. First quarter organic is looking like it will be in the double digits again, with margins again above pre-pandemic levels. Then our CFO, Doug Howell, will tell you what we think this means financially for our first quarter results, give an update on expenses, and we'll walk you through a shift in how we present adjusted non-GAAP earnings and earnings per share. From my vantage point, we're executing well and are positioned to deliver another strong quarter and a year of financial performance.
I'll stop now and turn it over to Mike Pesch, who's going to discuss our U.S. retail PC operations. Mike?
Thanks, Pat, and good morning, everyone. I'm Mike Pesch, and I lead our U.S. retail property and casualty brokerage operations. My prepared comments today will cover three topics, following a similar cadence to last quarter. I'll start by providing you an overview of the U.S. retail PC business. Next, I'll discuss current domestic insurance market conditions, and I'll end with some comments on how I see the first quarter of 2022 shaping up. Let me start with an overview of our U.S. retail PC operations. In 2021, we generated around $1.9 billion of revenue, making us the third-largest PC retail broker in the country according to Business Insurance. We place more than $14 billion of premium annually through more than 160 offices and have around 7,600 employees, including more than 2,000 in our centers of excellence.
We serve all size of commercial clients, small, medium, and large, but have a high concentration in the middle market and upper middle market. These types of clients are typically paying between $100,000 million-$2.5 million for their insurance, which translates into roughly $10,000-$250,000 of annual revenue to Gallagher. In addition to the middle market, we have a growing large account risk management client list and a meaningful small commercial, personal lines, and affinity customer base as well. We find the middle and upper middle market very attractive, and that's because these clients typically don't have a dedicated risk management professional. Rather, they use us to identify, evaluate, and manage risks across their enterprises. We find the right markets to place insurance coverage on their behalf.
That client need aligns very well with our value proposition called CORE360. It's the approach we take when we evaluate our clients' and prospects' risk management programs, focusing on the six key cost drivers of the total cost of risk. It really resonates with clients looking for advice on holistic risk management and insurance solutions and embeds Gallagher inside our clients' business. We do this by organizing ourselves around specialized insights and deep expertise within many different industries. In fact, our operations are organized around 30 niche practice groups. Through these practice groups, we better understand the unique risk characteristics of different businesses and tailor insurance products and services to those needs. Our niche leaders support our producers in the field, making sure we are identifying and addressing the distinct risks that those industries are facing through specialized offerings and coverages. Take a higher education client.
You simply can't handle a client like this if you don't know anything about the distinct risk management and insurance needs of colleges and universities. We take this tailored, specialized, and in-depth approach to help manage our clients' risk and procure their insurance as a competitive advantage. It benefits retention, drives new business, and ultimately translates into organic growth over the long run. While our producers are out visiting clients and prospects face-to-face more frequently these days, we continue to parachute our industry experts into meetings virtually as well as release online thought leadership information and host industry discussions to generate new client leads and revenue opportunities. During 2021 alone, we hosted around 90 webinars with nearly 4,000 attendees.
Topics range from vaccines or returning to the workplace post-COVID to insights on lines of coverage like cyber and healthcare, our deep dives into specific niches like K-12 schools or public entities. We are constantly adding new on-demand content, podcasts, and webinars on our website, ajg.com. This includes our CORE360 Flashcast, condensed webinars on topics such as natural disaster recovery planning, how to build a more diverse inclusive workplace, to business continuity planning, just to name a few. With all this information available with a click of a mouse, our clients and prospects have the ability to tap into our network of experts 24 hours a day, seven days a week. When a client or prospect engages with any of the online content, our producers are notified.
Remember, 90% of the time, we are competing against a local or regional broker that just can't do this. Rarely do they have a niche expert, and even more rare, their online and data capabilities. I dare to even say they are non-existent. Our producers are further distancing ourselves from our competition through the use of our data and analytics platform called Gallagher Drive. Insights we are able to provide clients and prospects include purchasing behavior trends of other Gallagher clients, including what coverage lines, types, and limits ultimately bound. Prospects are now able to take the platform for a test drive by visiting our website and entering some basic information. Moving on to mergers and acquisitions. M&A continues to be an important part of our growth strategy, and we have a long, very successful track record of tuck-in M&A.
Many of our tuck-in merger partners are the result of relationships that were formed at the branch or local level, and those relationships have been developed over a period of time, in many cases, multiple years. We know these entrepreneurs well. We've seen them compete and understand their culture. The consistent message you'll hear today is that the most important piece to M&A is cultural fit. We look for teams that share our values around ethics and client service, want to be with Gallagher for the long term, know how to grow their business, and are already operating at attractive margins. Merger partners are drawn to the Gallagher platform because of our culture and also the tools, expertise, and resources we can provide them.
We typically target firms generating less than $10 million of annualized revenues, and in 2021, we completed 13 U.S. retail mergers with annualized revenues of about $50 million. Thus far in 2022, we have already agreed to terms with a handful of mergers and continue to have a really nice pipeline of opportunities across the country. Since the onset of the pandemic, the team has done a superb job growing our EBITAC profits. We did benefit from the natural contraction of travel and entertainment expenses in 2020 and 2021. However, our consistent focus on operational excellence has been a significant driver of our long-term profit growth.
From our move to a common agency management system to the standardization of processes to leveraging our centers of excellence, we are much more efficient today than ever, and we are always looking to further optimize our operations and increase quality. We have a best-in-class chassis that can handle significantly more volume. I would say we have a scale advantage compared to all of our smaller competitors. Operationally, the business is in great shape. Moving on to my second topic, the U.S. retail insurance market. The market continues to be challenging for many of our customers, and frankly, there hasn't been a significant change in the market overall. Nearly every area and line of business continues to experience rate increases. Finding significant capacity for coverage or carriers willing to offer large lines is very difficult, and terms and conditions remain tight.
Cyber continues to be the most challenging coverage for clients in terms of rate, capacity, and terms. The increased frequency of cyber events is well documented and a risk that is unlikely to abate anytime soon. Further, with the ongoing Russia-Ukraine conflict, we think there could be even more demand for coverage, and our recent cyber specialists additions across our producer ranks positions us well if we do see an increase in this demand. Moving away from cyber and looking more broadly, through the first two months of the first quarter, renewal increases in U.S. retail are similar to the past few quarters, up about 8%. Underneath that headline, professional liability is up about 13%, property up around 9%, casualty 8%, and workers' compensation up 3%.
Carriers are seeing the potential for increasing loss costs, the impact of inflation, and the current macro uncertainty, which is likely to keep the rate increases at least similar with recent periods. That is on top of carriers' concerns of increased natural catastrophe activity, social inflation, and depressed investment returns. Thus, our clients are likely to face another round of increased insurance costs upon renewal. This is when our colleagues can really separate themselves from the competition. Remember, our job as brokers is to help our clients find the best coverage while mitigating price increases through shopping coverages and tailoring client programs by increasing deductibles or reducing limits to ensure their risk management programs fit their budgets. I think we have the best talent in the industry. Finally, I'll conclude with some thoughts on what we are seeing so far in the first quarter.
Recall organic held up pretty well during 2020, and we built off resilience in 2021, delivering organic of around 8%. Through the first two months of 2022, we are seeing high single-digit renewal premium increases, a similar spread between new and lost business compared to last year, and a year-over-year increase in midterm policy adjustments driven by higher audit premiums and positive policy endorsements. Based on what we are seeing thus far, we think first quarter organic will be similar to full year 2021. Call it somewhere in the 8% range. Don't forget, we have a higher proportion of workers' comp-related revenue in the first quarter, which hasn't been seeing as positive of renewal increases compared to the other areas of the PC market.
To post 8% in the first quarter would be a really great result given our first quarter revenue mix. The business is very well-positioned. Our new and lost trends are strong and renewal premium increases are similar to the past few quarters. Our client value proposition, CORE360, combined with our service and data-driven insights, puts us in a position to consistently win. I am extremely bullish about our prospects. Okay, I'll stop and now turn it over to Tom Gallagher, who's going to discuss our international PC brokerage operations. Tom?
Thanks, Mike, and good morning to all of you on the call. This is Tom Gallagher, and I lead our global property casualty brokerage business. Today, I'm going to cover the international portion of our PC operations as well as reinsurance. First, I'll dimension the business. I'll size the different operations, provide some comments on the impact from the Ukraine crisis, give an update on reinsurance, then I'll discuss our international retail strategy, how it is closely aligned to what Mike just spoke about here in the U.S. Second, I'll discuss the PC market environment outside the U.S. Third, I'll finish up with some comments on the first two months of the first quarter. Starting with dimensioning the international and reinsurance business.
We finished 2021 with approximately $2.1 billion in revenues and placed more than $15 billion of premium on behalf of our clients. We operate in nearly 70 countries. However, our business is predominantly in the U.K., Canada, Australia, and New Zealand. Similar to the U.S., we serve a wide range of commercial clients, and while our sweet spot is middle-market retail clients, we also have a strong large account risk management business in addition to small business, high net worth, personal lines, and affinity clients. We also have a leading London specialty broker and reinsurance brokerage business we call Gallagher Re. Let me break down our revenues by geography. Starting with U.K. retail, we generate approximately $525 million of annual revenue in the U.K. and are a top five retail broker.
We have more than 75 offices across the country, and like the U.S., we utilize a niche specialist network. We are also a top five broker in Australia and the largest retail broker in New Zealand. In these two countries combined, we have about $400 million of revenue annually and nearly 100 different sales locations. Moving on to Canada, we have operations in eight of the 10 provinces and generate about $250 million of annual revenue. Outside of retail, our leading London specialty and global reinsurance platforms combined are now more than $1.2 billion of annualized revenue. Okay, to the impact of the Ukraine crisis. I too am appalled with what is happening.
As Pat mentioned earlier, we don't have any operations within Russia or Ukraine, and our direct revenue from clients in both countries is minimal, less than $10 million of revenue. Again, that's the revenue. Almost all of this exposure is stemming from our London specialty and Gallagher Re operations. As background, insurance programs in Russia and Ukraine tend to make their way to the Lloyd's and U.K. markets in the form of facultative and treaty reinsurance, and also from Western companies having physical assets or leasing or lending on assets with operations in Russia and Ukraine, and specialty lines such as energy, aviation war, marine war, political risk, political violence, trade credit, and potentially cyber. While we have deep expertise across all of these niches and specialty classes, we haven't engaged widely in either country. As I've said, our related revenues are minimal.
To be completely clear, we are no longer providing service to Russian clients. Ultimately, the impact to Gallagher, like other companies, may be more driven by the changes in the macroeconomic environment and insurance market conditions stemming from the conflict. Shifting now to reinsurance. Since late last year when our reinsurance brokerage unit, Gallagher Re, officially joined forces with Willis Re's treaty reinsurance operations, the team has been hard at work on a number of different fronts. First, the team has completed its detailed integration planning process, and execution is in full swing. We have multiple teams working across 13 different work streams, including technology, data, finance, HR, payroll, and regulatory and compliance, just to name a few. I'm extremely pleased with the progress being made.
Second, the primary closing in December, we have completed four of the 12 outstanding deferred closings and remain on track to complete the remaining closings during the first half of the year. Third, as we told you on our January earnings call, early indications from our Q1 renewal season were encouraging. Importantly, the team remains on track to deliver its annual revenue target, leveling for foreign exchange and the impact of the crisis in the Ukraine. Doug will provide quarterly revenue detail later on, but needless to say, that would be a great full-year result by the team. Fourth, we've had minimal production talent leave us since December close, and we've been busy hiring new talent into the company. Good news on all four reinsurance fronts. We continue to get really positive feedback from both our clients and our prospects.
Moving to our global PC retail operations, our approach to the retail PC business is consistent across the globe. Our international strategy echoes our U.S. business that Mike just spoke about. We're driving growth by leveraging our niche practice groups, utilizing insights gleaned from our data and analytics, identifying, completing, and integrating M&A opportunities, and capitalizing upon our operational excellence to fund investments in growth opportunities. Our teams are constantly innovating and providing new products and insights. In fact, in many instances, what our teams are doing in a particular geography can be institutionalized, applied, and delivered to our retail clients around the world. For example, Mike introduced you to CORE360 and talked about our holistic approach to risk management. However, CORE360, it is not just our U.S. go-to-market strategy, it's our global value proposition.
Our successful Smart Market platform, which was developed in the U.S., is now being utilized by carriers in Canada, Australia, and the U.K. It's not just the carriers that find value in incremental data. Our clients and prospects around the globe also want more data-driven insights. Gallagher Drive, again, an analytics platform, is seeing increased mileage by our producers around the globe. It's our cohesive global strategy that allows us to develop a product, a process, or service offering and deliver it to our client globally. We believe this approach positions us extremely well to further leverage data, insights, thought leadership across borders. This is a key advantage over the smaller, local, and regional brokers. They just can't match our offerings, expertise, or service. Moving to mergers and acquisitions. Our story continues to resonate with entrepreneurs outside the U.S.
From a culture, support tools, specialisms, and access to data and analytics, the number of opportunities we look at is growing because joining forces with Gallagher will make their business better. Partnering with Gallagher can take their firms to the next level, offer them great opportunities to grow their book of business, and give their employees career paths. We completed 12 international mergers during 2021, including multiple acquisitions in the U.K., and that is on top of mergers in Canada, New Zealand, Australia, Norway, India, and Turkey. Our pipeline of opportunities outside the U.S. is really strong. Moving to some comments on the global P&C market, let me walk you around the world. In U.K. retail, renewal premium change is increasing about 7.5%.
Leading the way is package in the teens, followed by professional liability in the high single digits and property and casualty in mid-single digits. Within London specialty, rates are still going up across nearly all lines of coverage in the mid-single-digit range on average. Cyber liability remains the toughest class of business from both a capacity and rate perspective. Australia is up about 6%. Property is up low single digits, while casualty and professional liability are up mid-single digits. New Zealand renewal premium change is mid-single digits, with professional liability, commercial auto, and property up all around that level. In Canada, renewal premiums are up about 6% overall, with professional liability around 10% and property up around 7%. Most other lines in the mid-single-digit range in Canada. Let me finish up with some observations from the first two months of the quarter.
In terms of new business, retention, and midterm policy adjustments, overall, I'm seeing favorable new business and retention trends. Premium increases in the mid to high single digits and a small tailwind from positive policy adjustment endorsements. In the U.K., the spread between new and lost within retail is up over a point relative to a year ago, and we're seeing favorable trends within our London specialty operations too. Canada's new business is off a bit from the great 2021 levels, in part due to more non-recurring business last year, while retention remains in the low 90s. In Australia and New Zealand, both business and retention are better than last year's levels. Pulling it all together, internationally, I'm seeing first quarter organic around 9%-10% as favorable trends in new business, strong retentions, and positive renewal premiums continue to benefit our results.
Overall, our international brokerage business is performing extremely well, and I'm extremely optimistic about the prospects of our international PC business in 2022 and beyond. Okay, I'll stop now and turn it over to Joel Cavaness, who's going to discuss our domestic wholesale brokerage operations, known as Risk Placement Services. Joel.
Thanks, Tom. Good morning, everyone. I'm Joel Cavaness, and I lead Risk Placement Services, which is our U.S. property casualty wholesale intermediary. Similar to Mike and Tom, my comments today will focus on three main topics. First, I'll provide an overview of RPS. Second, I'll give some comments on the current state of the wholesale market. Third, I'll wrap up with some observations related to the first two months of the year. Risk Placement Services, or RPS for short, was founded in 1997, and we've grown to be the fourth largest wholesale broker in the U.S. today. We have about 2,500 colleagues, over $500 million in annual revenues, and we place more than $4 billion in premium on behalf of our clients. As a wholesaler, our customers are independent agents and brokers that need our specialized capabilities, products, and of course, our carrier relationships.
About 75% of our business comes from agents and brokers unrelated to Gallagher, with the balance coming from Gallagher Retail Brokers. Let me spend a minute walking you through our three main businesses, which are open brokerage, our MGA and program space, and our standard lines aggregation. Starting with open brokerage, here we help retail brokers who need access to a specialty product or insurance carrier that they do not have. We'll go out into the market and find coverage and negotiate with insurance carriers on behalf of the retailer and their client. The coverages we're helping retailers with tend to be very specialized, and they can range from hard-to-place property lines like hurricane-exposed property or flood, to casualty lines like long-haul trucking or liquor liability. Many times these placements are complex and involve multiple carriers and layers to fill a particular program.
Next is our MGA and program business. While we don't take underwriting risk, we do underwrite, price, bind, and collect premium, and issue the policies on behalf of the insurance carriers. We have about 40 distinct programs that range from commercial coverages for food delivery, country clubs, amateur sports organizations. We also have personal lines programs that include non-standard auto, manufactured homes, and other low-value dwellings. Our third main business is standard lines aggregation. Here, we provide our retail agent clients access to admitted products from lots of different carriers. As an example, a local agency in a small town might not have a direct appointment with a large insurance carrier. However, the agency can still access that large carrier's products through us. In essence, it gives that agency more insurance options for its customers.
RPS's goal is to be the recognized leader in the intermediating market by providing a wide range of products and services across a very large distribution platform. We compete with many different wholesalers, both big and small, but clients choose us because of our rapid turnaround times, our ease of doing business, our product breadth, and the strength of our carrier relationships. Mike told you that the U.S. retail property casualty rates continue to increase in nearly every line. Capacity remains hard to find in certain lines, and terms and conditions are tight. The backdrop of the admitted market continues to favor RPS since retailers need our help to place coverage. We have new excellent business production resulting from a higher level of submissions from our retail clients. There's been an incredible amount of traffic on our e-commerce platform this year.
That traffic has turned into lots of bound policies, and in fact, during the first two months of 2022, policy counts bound on the platform were up more than 15% year-over-year. Just a really fantastic result. We continue to add products to our platform which will make us an even more attractive partner for retailers. Just this year, we launched a new real estate appraisers E&O product, which brings our number of offerings to more than 30 distinct specialty products. We also offer our Smart Market platform to a growing number of excess and surplus lines carriers. We currently have six insurers using the platform, and we know that number is going to continue to grow during 2022. We have recently started offering unique tailored coverages with our key trading partners called Edge products.
These are similar to the advantage products that have been so successful on the retail side, and they provide enhanced coverage to clients. Right now, we offer umbrella and mechanical breakdown, and we're working on management liability Edge coverage that we hope to launch still in the first half of 2022. I also wanna highlight the exciting technology we are leveraging within the transportation unit, mainly the use of robotics. Using bots, we can take a single account submission from a retail broker and generate quotes from multiple leading transportation insurance markets. We plan on expanding our use of bots into other areas of the business, which should have a positive impact on our efficiency and quote turnaround time. There are lots of exciting things happening within RPS. Like the retail property casualty business, we too are a seasoned acquirer.
RPS has completed more than 50 acquisitions since the year 2000, including three in 2021. We look for partners that fit us culturally and provide us with new expertise or new products. We tend to be more interested in the MGA and program space versus open brokerage wholesale opportunities, which can more easily be replicated with seasoned producer hires. M&A partners are drawn to RPS because we can make investments in people and data and open doors to thousands of retailers. Given Gallagher's dual presence in retail and wholesale markets, we tend to be very successful on mergers that may have both retail and wholesale pieces within them. Our M&A pipeline today is very strong, including a few really nice binding authority operations.
We also continue to see many opportunities in the program space, but we are being very selective with these firms, and we are pursuing only business looking for unique, well-established, mature programs. Moving on to the domestic wholesale market environment. Overall, we're seeing renewal changes a bit above what Mike is seeing on the retail side. That's really not surprising. Wholesalers generally see rates move up at least as much as the retail side. Our data is showing open brokerage renewal changes of about 11% in January and February, which was similar to the increases experienced over the past year. This includes double-digit increases in cyber, some professional liability lines, and of course, cat-exposed property. Our binding operations are seeing mid-single-digit renewal increases so far in the first quarter, similar to the second half of last year.
Professional liability and property are seeing the largest increases, while casualty is up about mid-single digits. Overall, capacity remains tight, and despite multiple years of rate increases, carriers are generally not willing to deploy large limits on any one risk. We're still finding complex insurance towers extremely difficult to place. Excuse me. Southeastern cat-exposed property is a particularly difficult line of business right now, both from a pricing and capacity perspective. We're seeing a lot more personal lines business moving into Louisiana and Florida Citizens, each of the state's insurers of last resort, as private insurance carriers cut back their exposure. We expect this trend will bleed over into the commercial lines and a lot of that business renews in the second quarter. The market remains difficult overall and is likely to remain that way for some time.
Let me give you a sense of what we're seeing so far through the first two months of the first quarter. To start, we are once again having an excellent new business quarter thus far. Both brokerage and binding new business productions are above 2021 levels. At the same time, retention is holding steady versus prior year, with binding a little bit better than brokerage. Mid-term policy adjustments, including positive policy endorsements, are trending better than last year's levels, providing a modest tailwind as well. To bring it all together, as we sit here today, it kind of feels like the first quarter organic will be somewhere around 10%. That comes from 20% growth in open brokerage and mid- to single high-digit growth in our binding and program business.
We're off to a great start, and I expect 2022 will be another great year for RPS. Demand for our services is excellent, our product offerings continue to grow, and our relationships with our carrier partners are strong. I believe we should see attractive organic growth in 2022, and longer term, I really, really like our prospects. I'll stop now, and I'm going to turn it over to William Zabell, who's going to discuss our employee benefits consulting operations. William?
Thanks, Joel, and good morning, everyone. I'm William Zabell, and I lead Gallagher Benefit Services, our employee benefits insurance brokerage and HR consulting business. Today, I will cover three topics in my prepared remarks. First, I'll provide an overview of Gallagher Benefit Services, or GBS for short. Second, I'll give you an update on how we are executing in the current environment. Then I will finish up with some takeaways from the first two months of the year. Starting with an overview of GBS, the business began in the mid-seventies and generated around $1.4 billion of revenue during 2021. Today, GBS is the fourth largest benefits broker and HR consultant in the world, with approximately 4,700 employees. We operate across nearly 100 different locations within the U.S., U.K., Canada, and Australia.
About 90% of our annual revenues are domestic and 10% are international. Our producers sell traditional group health insurance products like medical, dental, vision, and voluntary products that employers offer to their employees. We also provide advice and recommendations on employer benefit plan design, financial projections of the plans, and potential funding alternatives. Combined, those products and services represent about 75% of our revenue. The other quarter of our revenue comes from HR and compensation consulting, pharmacy benefits, retirement, and other services that help employers address their human capital needs and organizational well-being. Our typical clients are middle-market businesses, which we define as having somewhere between 100 and 5,000 employees. However, we also have many larger corporate clients, offering them a fresh alternative to some of our competitors and a very formidable small group benefits business as well.
Similar to our retail property and casualty business, most of the time, we are competing against smaller, local, or regional benefits firms. Our client value proposition is called Gallagher Better Works. It's an approach that examines the most important levers that an employer has to attract, engage, and retain talent while simultaneously managing costs. From financial well-being, investing in physical and emotional health, to competitive compensation plans, our professionals explore the entire spectrum of employee benefits and rewards, and the solutions we design are tailored to align with our clients' unique needs regarding their people. Today, with the unemployment rate back below 4% and job openings near double the number of people looking for work, the war for talent is front and center again.
In fact, our recent benchmarking survey showed attracting and retaining talent is back to being a top priority versus cost containment priorities seen during much of the pandemic. Our approach through Gallagher Better Works positions us to help our clients attract new talent and drive costs out of their benefit plans. Moving on to M&A, GBS is a seasoned acquirer, and we are constantly looking for talented entrepreneurs looking to take their operations to the next level. We have completed nearly 60 mergers over the past five years, including eight during 2021. Merger partners want resources and tools and are drawn to GBS due to our specialized practice groups, niche experts, marketing initiatives, thought leadership, technology, and our culture.
Our pipeline of opportunities around the globe is excellent, so we think 2022 will be an active and successful year for our merger strategy. Let me make some quick comments regarding our sales process. Driven by client preference, over the past quarter, our professionals have been engaging and interacting with clients and prospects more and more on a face-to-face basis. At the same time, we continue to have success selling in a hybrid environment where in-person meetings are supplemented with experts brought in via video. We think hybrid client engagement is likely here to stay, yet ultimately, we will follow our clients' lead as to how they would like to interact with our professionals. Our webinars and insightful thought leadership continue to drive engagement with our clients and prospects.
We have already hosted 12 different webinars this year with more than 5,000 attendees. Just last week on International Women's Day, we held a female leadership webinar on emotionally intelligent leadership. The online event has already generated nearly 900 leads, including more than 300 meeting requests. These types of interactive web-based events are on top of the thought leadership that we are publishing regularly. For example, in late January, we released our 2021 Workforce Trends Report: Best in Class Benchmarking, showcasing what nearly 500 employers are doing differently to better manage their costs and their people. This type of insight is extremely valuable to clients and prospects in the current tight labor market. In fact, the report has already been downloaded around 3,000x .
Whether leveraging our thought leadership, engaging with our experts, or attending in-depth industry discussions, our broad offerings, deep expertise, and innovative solutions continue to separate Gallagher from the brokers consultants we are competing with day in and day out. Let me finish up with some observations from January and February, starting with the U.S., which again represents about 90% of our annual revenues. About 80% of our domestic revenues relate to typical coverage you get via your paycheck from your employer, such as medical, dental, vision, and voluntary insurance products. In terms of new business and retention, we are seeing more favorable trends during the first two months of 2021, and covered lives are also seeing a nice tailwind.
In fact, U.S. non-farm payrolls are up by more than 1 million jobs so far this year, which should also translate into tailwind for our revenue. Moving to the remaining 20% of our U.S. revenues, this includes our fee-for-service, individual products, and retirement consulting businesses. Most of our practice groups continued their positive momentum from last year into January and February. So far this year, revenue across these groups are in total approaching double digits. That includes really nice growth within our HR consulting and pharmacy benefit management practice groups. Our pipeline of opportunities remains excellent. That's on top of the new engagements that are already planned to begin in 2022. As I mentioned in December, the size of our engagements are rebounding nicely from the downsized project sizes during the height of the pandemic.
This is the tightest, most complex labor market we have ever seen. It's driving employers to prioritize strategies to attract, retain, and motivate their workforce. Clients are looking to refresh and revamp their compensation and human resource programs to better address today's hybrid work environment. Likewise, we are seeing continued strong demand for our advice and services, and it feels like this dynamic is here to stay for some time. Shifting gears to outside the U.S., which is again about 10% of our total revenues. Overall, revenue is up mid-single digits through the first two months of the first quarter, with revenues in the U.K. and Australia stronger than the trends in Canada. When I combine what we are seeing across our global business, first quarter feels like it could be up 6%.
That's about what we thought six weeks ago following the annual enrollment season. We're off to an excellent start in 2022. With the challenging labor market expected to persist for some time, we see very strong demand for our services over the intermediate term. Looking out further, I believe we are really well-positioned to help our clients navigate their most pressing organizational well-being and human capital needs. Needless to say, I'm extremely excited about our future. Okay, I'll stop now and turn it over to Scott Hudson, who's going to discuss our risk management segment, also known as Gallagher Bassett. Scott?
Thank you, Bill, and good morning, everyone. My name is Scott Hudson, and I lead Gallagher Bassett, or GB for short, which is our third-party claims administration business. For those of you that are familiar with our financial reporting segments, it's synonymous with our risk management segment. I'll touch on three topics today. I'll start by providing an overview of Gallagher Bassett's business. Then I'll give some insight into what we're seeing thus far in the first quarter. I'll finish with some thoughts on our longer-term positioning. Gallagher Bassett was founded in 1962 by the Gallagher brothers and Sterling Bassett. GB generated over $950 million of revenue during 2021 and is one of the world's largest P&C third-party claims administrators.
A little more than 80% of our revenue is U.S.-based, and the remaining is spread across Australia and to a lesser extent, New Zealand, the U.K., and Canada. We have about 6,500 employees, most of which work from home. We do not take underwriting risk, but rather adjust claims for our clients. In 2021, we closed over 900,000 claims and paid out $11.5 billion on behalf of our clients. The level of annual claims paid would make us one of the top 10 largest P&C insurance companies in the U.S. A little over 60% of our revenue is from workers' compensation claims. Another 30% is from liability claims, and less than 10% relates to property. We are not a storm or catastrophe adjuster.
We also offer specialty products in the property and casualty lines, such as medical malpractice, products liability, environmental, professional liability, and cyber. We have a large number of products that address the bulk of our clients' exposures. We segment our business into four different client types. First, we serve large Fortune 500 businesses, commercial clients who have strong balance sheets and can self-insure or have large deductible programs. What they do is outsource their claims resolution process to GB. This is our largest client segment. Second, we have public sector clients. This includes school districts, municipalities, state entities, and federal governments. A good example of this is the Australian Workers Compensation state schemes. Third, we have alternative market or group captive clients. These entities utilize our services for their claims handling and claims infrastructure.
Fourth and last, our fourth and last client segment are insurance carriers. This includes carriers of all sizes outsourcing a portion of their claim handling. We believe we deliver clients the very best outcomes through a combination of expertise and execution. In certain cases, the best outcome can mean the avoidance of loss, as well as the mitigation of loss resulting from superior risk management and risk mitigation. We're also able to customize our services to align with our clients' expectations of best claims outcome. That might be providing brand protection and customer loyalty or back to work sooner. We tailor and customize our offerings to provide value and the best outcome for clients. We've had numerous recognitions highlighting our ability to provide superior claim outcomes. For example, last year, we were named TPA of the Year at the Captive Review U.S, Awards.
This award recognizes a TPA's capability to provide service efficiency, innovation, growth, customer service, tailored solutions, and client satisfaction. It was our fourth annual win of this specific award. Our renewal revenues are highly recurring, and we typically retain most of or all of our clients. In fact, our annual revenue retention runs into the mid- to upper 90s%. New business production tends to be a bit lumpier than the brokerage business because many of our prospects have very large volumes. Our quarterly organic growth typically bounces between low single digits for percent to low double digits for percent. Moving to mergers and acquisitions, GB has done its fair share of acquisitions, but our industry is already highly consolidated, so the subset of potential opportunities is much smaller. Our M&A strategy is to look for companies that will help us deliver better outcomes and claims results for our clients.
That could be through a new product offering, a new capability, or by providing deeper expertise. Ultimately, we're looking for highly specialized and complementary claim adjusting and risk consulting entities rather than just to add scale. In a typical year, we will complete one to two acquisitions, and we completed two during 2021. Today, we have a nice pipeline of potential opportunities. Moving to productive, productivity and quality. We believe we have industry-leading margins. Pre-pandemic, adjusted EBITAC margins were in the 17%-17.5% range and increased to more than 19% in 2021. While the initial lift, uplift during the height of the pandemic was due to some targeted expense actions, the improvement during the latter half of 2021 was due to our expense discipline and an improvement in organic growth.
With most of our colleagues working from home during COVID and the preference to continue working remote, we have begun to reduce our real estate footprint as well. These type of expense savings allow us to invest further and make enhancements to our products and services. For example, within our insurance carrier practice, we have made investments in our analytics capability and our dedicated carrier service model. Additionally, we're rolling out our technology updates so we can seamlessly interact and share claim information with our carrier clients. These investments have added to capabilities around policyholder service and superior outcomes. Looking forward to 2022, we are expecting full year margins to be in the 19% range, similar to last year. That's even as we continue to make substantial investments to improve our products, platform, and service levels. Let's shift gear now.
Let's shift gears now, let me walk you through what we're seeing in January and February. Starting with client retention, it remains excellent. No change from recent periods. Secondly, on the new business front, in the current environment, we are seeing more shopping as carriers and businesses look for ways to control costs. With our broadening product set and the challenging P&C insurance market conditions, our new business pipeline is very healthy. Third, as it relates to COVID claims, we did see a surge in COVID-related workers' comp claims in January, but that dropped in half in February. These claims were a nice volume filler as regular core claims continue to recover.
COVID has given us the opportunity to demonstrate to our customers that we are nimble, and we can tailor and customize in short order, that we could deliver a highly specialized COVID claims team that could quickly respond if there is any change in trajectory. Fourth, core new claims arising. Through January and February, we continue to see year-over-year increases in new claims arising. Core new arising claims are about 6% versus last year and still have plenty of room to grow since workers' comp and liability claims are still below pre-pandemic levels. While claim counts aren't always tied directly to revenue, we are encouraged by the improving trends. Overall, our 2022 outlook hasn't changed from what we provided on our fourth quarter earnings call six weeks ago.
With the strong organic performance in the first two months of the year, first quarter organic is likely to be in the low double digits for percet, and we continue to expect full year organic to be in the high single-digit range for percent. That would be two years with excellent organic and high-teen margins, which is simply fantastic. Longer-term, GB is extremely well-positioned. Client satisfaction remains at very high levels, revenue retention remains excellent, and we're making investments to improve and enhance our products and services. At the same time, we're expanding into numerous specialty lines of business, aligning our services with new potential customers. The team is executing on our strategy, and I'm very excited about both our near-term and long-term prospects. I'll stop now and turn it over to our CFO, Doug Howell. Doug?
Thanks, Scott, and thanks everyone for joining the call today. Today I'll cover four topics. First, I'll provide a quick recap on organic, as you heard from our business leaders. Next, I'll speak to margins. Third, provide some sound bites from our updated CFO Commentary document that we post on our website. Last, I'll do a vignette on our shift and how we will report adjusted non-GAAP earnings and fully diluted EPS. Okay, to the business unit organic recap. Mike and Tom had upbeat comments on our global P&C retail specialty and reinsurance brokerage operation. Now they are seeing new business production as excellent, positive policy endorsements are trending slightly more favorable, and renewal premium changes remain similar to 2021.
It feels like our global P&C first quarter organic will come in somewhere around that 9% level, even with the mix being skewed towards workers' comp. Tom also had great news about our Gallagher Re business, looking like we will deliver annual revenue and EBITAC consistent with what we thought when we signed and closed the deal. I'll give some updated quarterly modeling info when I get to my comments on our CFO Commentary document. Tom also reported that we have minimal revenue, about $10 million stemming from Ukraine and Russia. It's absolutely deplorable what's happening there. Joel's expecting another quarter of really strong organic results within our domestic wholesale businesses, RPS. Open brokerage wholesale organic running around 20% and binding and program businesses in the mid- to high single-digit range. Taken together, organic within Joel's wholesale units should be around 10% in the quarter.
You heard William say that when he walked you through our employee benefits and HR consulting businesses that our traditional health and welfare brokerage had a strong annual enrollment season. And they also see continued to improve as unemployment declines and people enter the workforce. At the same time, Bill is seeing increasing demand from employers looking for creative ideas and solutions to help retain, motivate, and grow their employee base. Right now, it's looking like our benefits division will post first quarter organic growth near 6%. When I put all these comments together, it feels like our total brokerage segment first quarter organic growth should be pushing 8%. That's a bit more favorable than we forecasted during our January earnings call.
Moving on to risk management segment, you just heard Scott tell you that first quarter organic is shaping up to be at least 10%. Core new arising claim volumes continue to increase over the last year and new business remains excellent. Let me now move to some comments on adjusted EBITAC margins. First, to full year margins. As we said in January, we believe we can hold full year adjusted EBITAC margins if we post full year organic in the 7%-8% level. Plus, we said that the roll-in impact of reinsurance might help all-in full year adjusted margins by 10-20 basis points. As we sit today, we still have line of sight to that, so no change in this full-year scenario. Second, when it comes to modeling the quarters, that's a little more complex.
We didn't provide how that looks on a quarterly basis back in January, so here I go now. As you build your models, it might be helpful to split your thinking into the following layers. First, the impact of Willis Re. Recall that business is seasonally very strong in first quarter, and we also didn't have it in our numbers last year until December. Please take a look at page 6 of the CFO Commentary document. The bottom table is our current view of how we think that will come into our books on a quarterly basis. You'll see it provides a nice adjusted margin tailwind in the first quarter, a small tailwind in the second quarter, then flips to a margin headwind in the third and the fourth quarters.
Second, don't forget that we're already posting larger revenues in the first quarter because of the seasonality in our benefits businesses. Margin in our first quarter will be higher than the second, third, and fourth quarters. Third, remember that in the first two quarters of 2021, we were still deeply in the pandemic. Here in 2022, we're going to have costs return. That creates a difficult compare, especially more so in the first half than in the second half of 2022. You know, we're not seeing current cost run rates be out of line with what we're seeing in the fourth quarter. When you roll it all together, we think there is about a half a point of all-in brokerage adjusted margins expansion in the first quarter.
It flips to about a point of contraction in both the second and third, and then back to about a point of expansion in the fourth quarter. First quarter is seasonally larger, the math brings us back to full-year all-in brokerage adjusted margin expansion being up, like I said before. This, this clearly highlights how margin change is volatile quarter to quarter here in 2022. Most of that quarterly margin change volatility should go away in 2022 because reinsurance will be in our books for the second year, and we are more back to a normal out of the pandemic. As for the risk management segment, you heard Scott say how he's using savings driven by operational improvement initiatives to drive enhancements and investments in the business. We think posting margins near that 19% range is achievable for full year 2022.
Okay, let's now move to the CFO Commentary document. Flip to page 3 of that. Take a look. There's a few minor updates on this page, mostly related to FX amortization of intangibles, which I'll get to in a minute, depreciation and a refinement in our expected book-to-tax income tax rate. M&A tuck-in purchase multiples. With growth rates still strong, we're seeing deals closer to that nine to 10x multiple. Up a tick, but still represents a really nice arbitrage to our current trading multiple. With core strong operating cash flows expected in 2022, a cash flow sweetener from our clean energy investments and $350 million of cash on hand at the end of February, we expect to be able to fund our current M&A pipeline without using any stock.
We still believe we could do more than $4 billion of M&A through the end of 2023 without using any stock. Flip to page 4 of the CFO Commentary document and the 2022 corporate segment outlook that's in the reddish column. No change in full year, but we have updated the quarterly spreads. Those updates mostly relate to the timing of taxes and employee equity plans. Turn now to page 5 of the CFO Commentary document. This page shows the information on our clean energy investments. The purpose of this page is to remind everyone that we're entering into a six to eight-year period where we won't have GAAP earnings in the P&L, but we will be harvesting significant cash flows, but those flow through our cash flow statement.
You'll see in the blue column, we reported 2021 GAAP adjusted net earnings of about $97.4 million. The reddish column shows a very small after-tax loss here in 2022, but the important takeaway is shown on the line towards the bottom called net after-tax cash flow from clean energy investments. Working from left to right, you'll see that cash flows are expected to jump from $40 million in 2021 to $125 million-$150 million a year in 2022, and possibly more in 2023 and beyond. That should be a really nice cash flow sweetener. Given what is happening with energy prices, we would hope our leaders in Washington, D.C., would consider an extension of the law. We remain well-positioned to restart production if that happens.
Okay, let's move on to page six, to the top table, the rollover acquired revenue table. These estimates for our first quarter shouldn't change much given only two weeks left in the quarter, so it might be worth a quick look as you fine-tune your estimates. Also on page six, the bottom table, as I touched on before, is an update to the full year and quarterly outlook for Willis Re. You'll see full year is only slightly different from what we provided last August when we signed the deal. You'll read in footnote three that most all of that difference relates to FX and also from the impact of Russia and Ukraine. As for the quarters, there's a more pronounced difference, but that's purely timing between quarters.
You'll read in note three that it arises simply when we conform that business to our accounting methods. The punchline takeaway should be that we're still expecting to be very close to what we estimated when we signed the deal. That would be a really fantastic outcome by our new reinsurance team. Okay, let's go to page 7 to my vignette on how we will report adjusted non-GAAP net earnings and EPS starting in Q1 2022. The punchline is we intend to add back amortization expense net of tax. With the purchase of Willis Re in December, we believe it's time to make this presentation shift. It'll be helpful for several reasons. It really improves the transparency around the impact of acquisitions. It improves year-over-year and multiyear comparisons.
It's more consistent with how several other brokers and other financial service sector companies present, and it more closely aligns with how we internally evaluate the performance of our business. Let me walk you through what you have on page 7. The left side of the page is simply a partial reprint of our full year 2021 earnings release that we provided at the end of January. On the right side, we presented our full year 2021 results as if we had made this change last year. That right side shows an added non-GAAP adjustment line, shaded in gray, called amortization of intangibles. This adjustment has an impact on both the Brokerage and Risk Management segments, but not in the Corporate segment.
Perhaps stating the obvious here, but there's no change in EBITAC nor GAAP net earnings or GAAP EPS, only to non-GAAP adjusted net earnings and fully diluted EPS. So that's an illustration of how it will be presented in our earnings release. Also recall that every quarter we post an Excel document on our IR website. It's called the Supplemental Quarterly Financial Information. It has quarterly GAAP and adjusted non-GAAP information by segment going back several years. We think the supplement is a convenient modeling helper. What you will see posted now is an updated version that recasts all the historical information to reflect how we will report going forward. Let me take a minute to walk you through it, and I would use the Excel file when you do this. Open the Brokerage Segment tab.
Rows six through 63 are a detailed GAAP income statement for our brokerage segment results going back to 2017. There's no change in what we've provided previously. When you drop down to row 72 to 112, that provides a view of the non-GAAP adjustments associated with the brokerage segment. All of this is the same from what we provided before, except when you get to row 86, shaded in gray. This is where we show the pre-tax amortization adjustment. Then on row 92, that has been adjusted to reflect the tax impact. Consistent with how we allocate taxes by segment, the tax impact reflects the statutory tax associated with the intangible amortization expense.
When you get to rows 130 to 187, those rows bring it back together, arriving at our adjusted non-GAAP results. You'll see that row 144 shaded in gray is now zero because the amortization expense has been eliminated. Row 150 also changes because of the tax impact. As you move across the different worksheet tabs, you'll find it flows the same for the risk management segment and then the combined brokerage and risk management segment, but not for the corporate segment tab. No change there. Okay, that's the vignette. We'll start reporting this way Q1 2022, when we announce in late April.
We hope it's been worth spending a few extra minutes today to walk you through the changes that might be helpful when you update your models. Those are my prepared comments. It's looking like Q1 is shaping up to be another excellent quarter, and I think that we are very well-positioned to deliver another strong year of financial performance through full year 2022. Back to you, Pat.
Thanks, Doug. I think we go to some questions and answers here, if we've got them, operator.
Yes. Thank you. The call is now open for questions. If you have a question, please pick up your handset and press star one on your telephone at this time. If you're on a speakerphone, please disable that function prior to pressing star one to ensure optimum sound quality. You may remove yourself from the queue at any point by pressing star two. Again, that's star one for questions. Thank you. Our first question is from Elyse Greenspan with Wells Fargo. Please proceed with your questions.
Good morning, Elyse.
Hi. Thanks. Good morning, everyone. My first question, I wanted to piece together some of the comments, really, Doug, I guess, and Pat, from your commentary. You guys said, I think, that total brokerage organic should push 8% in the first quarter. If we go back to the Q4 call, you guys had said that the Q1, right, would be around 1% below what we thought the full year was, just because of the skew to workers' comp and benefits business. Does that still apply, just as we think about the back three quarters and how the full year could end up?
Within the answer to that question, can you just, you know, tell us if you're seeing expecting any kind of slowdown in the economy, you know, just given, you know, the uncertainty with Russia and the Ukraine and other things around the world?
Well, look, I'll take the 1-point step back in the first quarter. You know, we are looking at a fairly strong international quarter this quarter. We still are seeing a little bit of a mix issue in our first quarter, where our workers' comp book doesn't perform quite as, doesn't grow quite as high, and our benefit business doesn't grow quite as much in the first quarter. Again, both of those are not getting the winds behind them of rates that the other P&C businesses are. Would I say the full year now we could expect a full point step-up from what we see in the first quarter? Probably if we have a really strong fourth quarter.
Again, we were starting to run nicely in the third and the fourth quarters of 2021. If we get another step-up, if rates hold in there, which we are seeing they are doing right now, you could see that 1-point step-up for the full year.
As it relates to the economy, Elyse, you know, I think that's a mixed bag answer. Who knows exactly what's going to happen with Ukraine? It's a crazy situation. If I talk to you about the customers we're seeing, there continues to be nothing but a robust request for people to hire. I mean, every place you go, people are saying it's difficult to get employees, they're working hard to keep them, and it's costing more money. I think that in a sense tells me that their businesses are strong, especially in businesses that were hard hit by the pandemic, in restaurants, leisure, et cetera, travel.
I think given a worldwide recession hasn't happened yet, and we somehow hope that the Ukrainian situation gets contained, we should be in for a good, solid, robust year in terms of our customers.
Thanks. On Willis Re, I realize the numbers were revised a bit, Doug. I think you said for you know, FX as well as, you know, what's going on in Russia and the Ukraine. But I guess my question is, you know, when we neutralize for that, are you guys seeing some growth relative to the baseline that you told us, you know, last summer when you announced the deal? Or was it expected, right, that this would kind of be, you know, a year where you'd kind of keep the revenue flat and then, you know, we can think about growing that base, you know, with some of the hires that you mentioned in 2023?
I just had a chance to spend a good bit of time with our folks in the U.K., and I'll tell you, the sentiment and the cultural fit that we saw there is absolutely real. I think what's most exciting for me is that the team has come together and they're talking about opportunities like crazy. I'd be absolutely thrilled if we land on the numbers we told all of you we were buying this year. What I love is everyone on the team is talking about the fact that their mantra or what they're charged with is doubling that business. They're talking about doubling the business on an organic basis because they've got more resources. We've said from the beginning, this is not a synergy play. We're not cutting expenses.
In fact, we're investing in that business. I think the whole thing looks extremely positive to me.
Yeah. For them to hold in at the pro formas that we had, given the breakage that happened long before we signed the deal, I think it's an absolutely outstanding outcome.
Again, you know, hats off to the management team. I've said this publicly. I would find it very difficult to hold a team together that is told at one time you're going to merge with a much larger competitor, told later you're not going to merge with them, you're going to merge with someone that's comparable in size but doesn't have the reinsurance position. Get them excited about that, tell them that they're not going to, in fact, have that acquisition. They're going to stay part of the original mothership, only to be told thirty days later, "No, you're going back to Gallagher." Holding that team together through those machinations, give me what we bought, and I'll do a dance.
Thanks. One last quick one for Doug. Are you at this point not expecting there to be an extender bill? I know you had pointed to the potential, and you guys are seeing some losses running through in the clean energy line this year. Is there still the potential that we could see an extender bill, or you're just not expecting that at this point?
Here's what I would say is I think there's more momentum around getting an extender, you know, for D.C. to see the merits of that, given what's going on with energy prices right now. I haven't seen what Senator Manchin had to say this morning on CNBC, but I've seen some of his prepared comments, and he has this on his list of things that are important. I would say that there's a really decent chance of it getting extended, which I think would be really good for America's energy needs right now.
Thank you.
Thanks, Elyse.
Thank you. Our next question is from the line of Mike Zaremski with Wolfe Research. Please state your question.
Hey, good morning, everybody. First question on the tax rate guidance changes. Just curious on any changes to the cash tax rate as well? I believe historically you've talked about your cash tax rate, if I'm thinking about this correctly, being in the very low single digits.
Yeah. No, I think that it's a modest change, mostly due to some state tax changes. We'll get the deduction for that on our federal return, and it really doesn't move the needle that much. I mean, I think the book rate might add, might cost us a nickel this year or something like that, in total. I think you can probably halve that in what it really means to cash, and it won't move the needle on our cash taxes paid.
Okay, great. Just checking. Next question on the wholesale side and Joel's comments. He talked about basically expecting a bleed into commercial lines in 2Q potentially as business moves out of the standard marketplace in certain coastal regions. Just curious, any color? Is that, you know, in terms of framing the size of that marketplace and whether that could have a material impact on the industry or AJ later this year?
I mean, you know, you always have some dislocation. It's not going to have a material impact because candidly, the prices are increasing so dramatically in some of those regions. You know, I just left last night, WSIA, and having conversations with the marketplace about Louisiana and Florida were kind of a non-starter, you know, where people would at least listen to your conversation. This week it was kind of a blank stare and a pretty quick no. People are just too concerned about what's happened the last couple of years and, you know, certainly global warming concentration of values.
I think what it's going to do maybe later in the year as people kind of gather their thoughts about, you know, what their PMLs in those particular areas might look like, I think things will probably open up some. That's not going to do anything to pricing, but it will at least make some insurance available because I think you've probably read in the trades if you've, you know, depending on how, you know, closely you follow that sector, the businesses going into the, to both Louisiana and Florida citizens is pretty dramatic, which puts, you know, that risk, squarely into, you know, the taxpayers, and that's a concern. I think it's gonna be really a rough, probably next six months for that area of the country.
You know, the geographical concentration down there of people and properties continues to grow.
I think we'll all come up with some solutions maybe towards the second half of the year.
Okay, that's helpful. Thanks, Joel. Maybe if I can sneak one last one in, probably for Scott on the GB side of the biz. Scott, you mentioned that non-COVID related GL and comp claims still below pre-pandemic levels, but trending higher, I believe. Just curious, internally, are you all surprised at all about kind of the non-COVID claim levels? Or if so, any kind of theories what's keeping them from rising, especially given it looks like employment is fairly full. You know, some folks, I think on the NCCI side have commented that maybe the Affordable Care Act is causing less people to make claims. So just curious, any color there? Thanks.
I mean, we're talking about it every day, Mike, but I don't know that. I think some of it is just the overall pace of business where it is increasing relative to six months ago or12 months ago in, you know, segments of our client population. It's not quite back to pre-pandemic levels. I think it's moving in that direction. You know, a year ago, it wasn't necessarily moving in that direction. Now it is. You know, there is a bit of changing of the workplace in some instances. You know, we're always gonna be, you know, especially on the comp side, you know, the workplaces are getting safer. You know, so there's that trend in place.
I don't think there's anything necessarily systemic that we're seeing that's changing the nature of the business.
Thank you.
Our particular business as it relates to the comp side. Next question, operator.
Yes, the next question comes from the line of Greg Peters with Raymond James.
Good morning, Greg.
Hey, good morning. This is actually Sid calling on behalf of Greg.
Thanks, Sid.
Just a quick question on the M&A market. I know Doug touched on it a little bit. On page three, it looks like the lower end of the multiple is increased, and we've seen some recent transactions where the multiples have been higher. I'm just curious if we should expect the multiples to continue to increase or just your general outlook on the M&A market and any pressures you're seeing.
Well, I think it's, you know, really, multiples are a direct correlation to growth rate expectations. I think that, you know, if we get a difficult and hard market that, you know, goes on three or four or five years, yeah, you could see multiples run up another turn or two. I think that would be there. Again, we still have a nice arbitrage to our multiple. The important thing is I think that the partners that we're looking for see the value and the capabilities that we bring to help them be better. Remember, we don't really buy retirements. We buy folks that want to stay in this game for a long time.
This is just a singular point in that when they monetize their life's work, and then they get to go do what they love doing. They love selling, they love taking care of their customers, they like this business. It doesn't always come down to the multiple. We find that those folks that want to join us, they get a nice monetization for their life's work, and then they get to do what they love. You know, we always think that we're gonna have a positive arbitrage to our trading multiple.
Okay, great. Thanks.
Thanks, Sid.
Thank you. As a reminder, you may press star one on your telephone at this time to ask a question. If you're using speaker equipment, please disable the function prior to pressing star one to ensure optimum sound quality. Our next question is from the line of David Motemaden with Evercore ISI. Please proceed with your questions.
Morning, David.
Good morning. Doug, I just had a question. On the last call, you had mentioned targeted planned investments in 2021 of $35 million. I guess, is that set in stone, or how are you thinking about it? Obviously, the first quarter is shaping up to be better than expected from an organic growth perspective, but you know, it is definitely a fluid situation out there. Is that something that's set in stone, the $35 million of targeted investments? Or is that something that you might consider pulling back if you know, depending on how the year progresses?
Well, you know, listen, we have the ability to do that on many of these things, but there's some really exciting things that we think that we can invest in that fuels organic growth in the future. Would we pull back on it if something drastically happened? Of course, we have those levers, and we've proven during the COVID crisis, and actually you go back to the three or four crises before over the last 20 years, we've proven that we can adjust our expense structure pretty damn fast. But right now, we're pretty excited about what's on the drawing board, what we can do on that. I wouldn't see us pulling back on that. Gee whiz, we're running, you know, organic numbers that's kind of all-time high as a combined organization over the last 20 years.
Now is the time to make some of these investments in order to position us to grow better in the future. You know, $35 million is a nice number, but you know, on the fact that we're pushing $2.5 billion of EBITDA, it's entirely manageable within our structure. Remember, we didn't cut back on a ton of investments during COVID. You know, we continued to invest, we continued to have our interns, we continued to have technology spends developing. You know, Joel built his you know a big portion of his e-commerce platform during COVID. You know, Scott's been investing in his business. Mike developed CORE360 during this time and Gallagher Drive. We've been investing along the way.
This $35 million increment is, you know, on top of what we're already investing.
Got it. Yeah, no, that makes sense. That's fair. If I could just ask another question. I know it's still early days, but I'm wondering if you are seeing any tangible benefit in the primary brokerage business from some of the capabilities that you added with the reinsurance acquisition, and maybe if that's possible to quantify that.
I think that quantifying it right now is not possible. We don't have. I don't have a litany of accounts that we've written or what have you. What I can say is that the two teams continue to find areas that overlap and that they're excited about. One of those, I'll give you this example, is we have very good data and analytics now around our retail book of business, in particular the United States. It's getting even more robust in size. When the reinsurance team sits down with the retail team and says, "What is our relationship with company XYZ?" They look at the data and say, "My goodness, we've got all these touch points.
What a great conversation we're going to have with that client or potential client." In addition, we do a lot of things, as you know, that are kind of gray area. Are they reinsurance or are they excess cover? The pools, the captives, the things that we've done forever that are the core of our being in taking people into more of a risk management approach, providing Gallagher Bassett services, huge opportunities to talk to our reinsurance brethren about what does that really mean. We're the biggest provider of public entity cover and pool arrangements, one of the biggest provider of group captives. That business together. You take a look at the ILS market, which is insurance-linked securities, and we're one of the biggest players in that market. This adds a tremendous amount of additional capabilities there.
Yes, we're seeing an awful lot of discussion around opportunities, but I can't put a quantification on it right now.
Yeah, I'll add just as a lead indicator, when we're done with this call, Joel, Mike, and I are gonna jump on the phone with our new reinsurance partners in Canada to talk about a capital formation idea that they need some help with. We've got the distribution on the retail side there, and we're looking at something in Florida as a way to our reinsurance guys have got some ideas there that we're working on. Joel's got the distribution. Mike's got the distribution. Scott's got the claim paying ability. You know, there's lots of things that are happening. My calendar has a lot of reinsurance activity on it that was never there before, that is cross-divisional excitement. So not all these come to bear, but the point is they're reaching out to us.
Tom may have some thoughts about what's happening in the U.K., but that's what I'm feeling here in the U.S.
I think the opportunities for us globally are just tremendous. We just continue to find connections among the teams, for the opportunity to develop new avenues of revenue for us.
New areas of coverage too.
As I said in my prepared comments, the cyber market is a disaster right now, and we're the biggest player in cyber reinsurance. There's a tremendous need for capital there. When that starts to give way to people that look at it as a great opportunity to make money, we'll be right in the middle of it.
No, that's great. That's exciting to hear everything that's going on behind the scenes, so I appreciate that. Maybe if I could just sneak one more in. I had asked about this on the last call, just you know, the $4 billion of cash available for M&A over the next couple years. You know, just looking back, I don't think I've seen a two-year period where you've spent that much on M&A, even including you know, the reinsurance acquisition. Maybe could you just talk more. Is within that $4 billion, I'm assuming there is some debt capacity that like, maybe you might not use for a share repurchase authorization.
Maybe could you just talk a little bit more around how you're thinking about potentially buying back shares, just given how much cash you guys are gonna be generating, over the next few years?
Yeah. I think obviously if we don't fill it up with acquisitions, we'd buy shares back with it. We're not gonna borrow to buy back shares. We want to make sure that we maintain a solid investment grade rating. We're committed to that. There's a healthy amount of debt that's in a structure, and we would make sure that we would stay healthy on that. You know, I look down the table at the guys that are out there beating the bushes every day on acquisitions, and I got to tell you, there's a lot of activity going on. I wouldn't bet against us that we can't deploy it. I think that if we didn't, we'd buy our shares back, too.
Right now, I think that we've got a real line of sight to tucking in a lot of tremendous brokers. I think we can spend it. We'll see what happens.
Okay, great. Thank you.
Thanks, David.
Thank you. Our last question comes from the line of Meyer Shields with KBW. Please proceed with your questions.
Good morning, Meyer.
Thanks. Good morning, all. Quick question if I can on reinsurance. I know there are a lot of moving parts because of, you know, what you described as the previous breakage. Broadly speaking now, are ceding companies looking to buy more or less reinsurance?
Say it again, Tom.
I just wanted to-
Did you ask are insurers looking to buy more or less reinsurance?
Yes. Restate the question.
... exactly right.
Is that what you're saying? Well, what's the appetite for reinsurance that's out there? I would say that it's flat to up. I think you'll see some notable names that they may be wanting to carry more risk. I still believe I haven't seen a noticeable appetite shift. Tom, I don't know if you have.
Doug, I would say the exact same thing. Obviously, the size component of the new Gallagher Re changes the profile a bit for us in terms of what we've been seeing. Our business, our original Gallagher Re team has been growing organically. That suggests that there's a robust market for it. The noise that I hear from our new teammates is that there's still plenty of interest in using reinsurance as a vehicle to smooth earnings for the insurance company. We believe that that market will continue to exist. It was a very difficult December for them. Very difficult. That suggests that there's opportunity.
Okay, that's very helpful. Then second question, I guess this is either for Doug or for Tom, where we, you know, talk about sort of a difficult scenario if macroeconomic conditions deteriorate. Obviously, we've seen the ability to pull back expenses on the legacy Gallagher business. Are there any limitations on temporary expense controls at Gallagher Re?
Are there any limitations to expense controls at Gallagher Re?
Right. In other words, can you replicate? Hopefully, it's not necessary, but if the worst comes to worst, then would Gallagher Re impede the ability to cut or postpone expenses the way you did during COVID?
Yeah, of course. We run a very tight ship. Doug's team does a terrific job of making certain that we've got the information we need as quickly as possible to make good business decisions all the time. That's the way we've run the company for as long as Doug has been here.
I think you can look back. I like that, Doug's referral to previous disasters. In previous critical disaster times, we've performed well. Well, let's just hope we don't have many more of those. I'm pretty sure this management team knows how to clinch.
Okay, that's perfect. Thanks so much.
Thanks, Meyer. I think that's it for questions. Let me just say thank you again for joining us this morning. I think you can see from our comments today we're upbeat about our prospects for 2022 and beyond, and we look forward to speaking with you again during our first quarter earnings call at the end of April. Thanks very much, everybody.
This does conclude today's conference call. You may disconnect your lines at this time. Thank you for your participation.