Good morning and welcome to Arthur J. Gallagher & 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 conference call, including answers given in response to questions, may constitute forward-looking statements within the meaning of the securities laws. The company does not assume any obligation to update information or forward-looking statements provided on this call. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially. Please refer to the information concerning forward-looking statements and risk factors sections contained in the company's most recent 10-K, 10-Q, and 8-K filings for more details on such risks and uncertainties.
In addition, for reconciliations of the non-GAAP measures discussed on this call, as well as other information regarding these measures, please refer to the earnings release and other materials in the investor relations section of the company's website. It is now my pleasure to introduce Jerry Patrick Gallagher Jr., Chairman and CEO of Arthur J. Gallagher & Company. Mr. Gallagher, you may begin.
Thank you, Ray. Good morning, everyone, and thanks for joining our investor meeting today. For those that are newer to Gallagher and unfamiliar with these quarterly meetings, our objective is to provide the investment community an opportunity to hear from our business leaders, get insights into our operations, and provide some data points on performance outside of the busy earnings season. Let me walk you through the format of today's meeting. I'll start by covering Gallagher's competitive position, the insurance market backdrop, and our organic expectations for full year 2025. I will hand the call over to members of the management team. Each will speak for about 10 minutes, providing background information on our businesses, insights into various markets, and cover relevant growth and operating initiatives. Our leaders will also give you some indications on how they are seeing organic growth for the first quarter of the year.
Doug Howell, our CFO, will pull all the commentary together and provide you with a more detailed first quarter and full year outlook. Our prepared remarks should last around an hour. After that, we will open up the line to the group dialed in for questions and answers. Before I dive into my more typical comments, let me address the pending acquisition of AssuredPartners. We remain extremely excited about AssuredPartners' acquisition. The people are just fantastic, and we continue to believe the combination with Gallagher is very compelling strategically, culturally, and financially. As we previously disclosed, we received a second request from the Department of Justice related to our HSR filing. While we were surprised that we received a second request, they are fairly common for larger transactions like AssuredPartners.
We're actively working to respond, and we expect the deal will close in the second half of 2025. Moving back to my high-level comments, I always like to start these meetings outlining our value creation strategy. It's based on four key objectives, which those that have followed us for a while know have not changed for many years. Number one, grow organically. Number two, grow through mergers and acquisitions. Number three, increase our productivity, raise our quality, and number four, promote our culture. Our strategy is tried and tested through economic cycles, election cycles, interest rate cycles, and pricing cycles, and there are no plans to alter this strategy. In fact, our strategy has led to total shareholder returns as of December 31, 73%, 217%, and 633% over the preceding three, five, and ten-year periods, respectively. All these returns have outpaced the S&P 500 and the XLF.
With our vast near and long-term growth opportunities, further improvements in productivity and quality in front of us, and a continued focus on our bedrock Gallagher culture, we're extremely well positioned to deliver great returns for our shareholders. Let me dive deeper into our organic revenues. Gallagher has client capabilities in approximately 130 countries, 56,000 employees, and the ability to provide professional advice and solutions across insurance, reinsurance, human capital, and the claims management space. We are in a position of strength. We have industry-leading talent, deep expertise, a recognized brand, and a consistent global approach to sales and client service. As I look across geographies, industry verticals, and product offerings, the future organic growth opportunity for Gallagher remains enormous. Insurance is the oxygen of commerce. It touches just about everything in our daily lives.
Whether you're a restaurant owner or patron, shipping goods via air, railroad, or cargo ship, running a home, or driving a car, you need insurance to do any of these activities. The market today is large and growing. In fact, the Swiss Re Institute estimates there is more than $7 Trillion of annual insurance premiums globally, $4 Trillion alone in non-life premiums. Each year, these premiums are growing due to economic expansion, emerging risks and exposures, increasing insurance demand, and new coverages by those that already buy insurance. Gallagher can grow in just about any environment, and the team will lay out why we believe we can compete, win, and grow faster than the industry. We are also growing and creating long-term value for shareholders through mergers and acquisitions.
Since the beginning of 2020, we've acquired more than $2.7 billion of pro forma annualized revenues, and the future opportunity is also immense. That's because insurance distribution remains very, very fragmented across the U.S. and the rest of the globe. It's estimated there are tens of thousands of agencies and brokerage firms across our five major geographies, including 30,000 in the U.S. alone, according to a leading consulting firm. Most of these firms have less than $25 million of annual revenue and have terrific roots in their local communities. When they sell and join Gallagher, not only do we get revenue and profit, but more importantly, we get new talented entrepreneurs, their brains and capabilities.
These merger partners get immediate access to our niche experts, our extensive data and analytics, our thought leadership, our brand, our centers of excellence, and all of our tools and capabilities on their desk overnight, which creates immediate value for their clients, gives them a terrific new story for prospects, and it offers enhanced career opportunities for their employees. The real winners in our merger and acquisition activity are the clients. They get more insights, better advice, and on top of that, better service. We completed 48 mergers during 2024, and so far this year, we've completed 10 mergers and announced the acquisition of Woodruff Sawyer. Our global pipeline of opportunities, with term sheets signed, delivered, or being prepared, includes 45 potential mergers with more than $400 million of annualized revenue.
The pipeline is very strong and full of tuck-in M&A opportunities around the globe that could contribute to our long-term strategic plans. The third piece of our shareholder value creation strategy is to increase our productivity and raise our quality. We have developed a cohesive sales and service process utilizing common systems, which allows us to leverage the incredible amount of data we have. You'll hear from our leaders today that the value we provide to clients continues to increase as we use our data and technology to build innovative tools, deliver unique insights, and develop new products. Do not forget, we are always looking for new ways to utilize our Gallagher centers of excellence. It's not easy to build a 13-person insurance services operation. It's taken us nearly two decades.
With the robust platform built, I believe we can more quickly embrace digitalization, implement AI, and find ways to further automate various service and support functions throughout our businesses. While we have a long history of operational excellence, we still see the potential for further margin expansion in both our brokerage and risk management segments over the long run. Our greatest asset is our people, but our biggest differentiator is our bedrock culture. It's a culture grounded in doing what's best for clients each and every day, guided by the Gallagher way, and I believe our culture is unstoppable. Moving to an overview of the insurance market, a few observations from a global perspective. We continue to see broad-based renewal premium increases. That's both rate and exposure combined across all of our major geographies and most product lines.
In our view, carriers continue to behave rationally and are looking to grow in lines where there is an acceptable return while seeking rate increases where it's most needed to generate an underwriting profit. Take casualty, we're seeing renewal premiums move higher. First quarter umbrella, general liability, and commercial auto renewal premium increases are up more than 7% globally and are up 8% in the U.S., continuing the trends we saw through 2024. With social inflation, continued carrier reserve additions, medical cost increases, and litigation financing, we think further rate increases are to come in casualty. Shifting to property lines, first quarter premiums are down about 2%, which is similar in the U.S. and internationally. We've not seen much market reaction to the California wildfires.
However, with insured losses estimates in the $30 billion-$40 billion range, an active severe convective storm or hurricane season could easily change the market dynamics. In total, primary insurance renewal premium increases so far in the first quarter are up 4%. February renewal premium increases did come in a bit lower than January due to business mix that is less heavily weighted towards casualty lines. With that said, March renewal premiums are trending similar to January and fourth quarter of 2024. There really hasn't been much change in the market over the past six weeks. As for the reinsurance market, not much to report following January renewals. Overall, reinsurance capacity continues to be adequate to meet rising demand for cover. Moving to our view of economic conditions, the data points we typically track and discuss aren't indicating a broad slowdown.
First, our daily revenue indications from audits, endorsements, and cancellations, we are still seeing midterm policy adjustments in positive territory indicating continued solid business activity. Second, the number of job openings in the U.S. is still greater than the number of people looking for work and medical costs are inflating. Employers are still looking for ways to grow their workforce and control their benefits costs. All these data points indicate the economic backdrop is still favorable for us. Increasing renewal premiums, growing demand for insurance, a favorable economy, and continued strong net new business production continue to lead me to believe that our full year brokerage segment organic growth will be in that 6-8% range. As for risk management, we continue to see a similar outlook for 2025, also in the 6-8% range.
Okay, to close, let me give some quick soundbites on what you'll hear from the team today. Mike Pesch will tell you our Americas retail and specialty businesses are posting very strong performance. Renewal premium increases continue and net new business spread remains favorable. Patrick Gallagher will tell you our international retail and London specialty operations are having good performance. Retail renewal premium increases are up in the mid-single digits on average, and our London specialty business continues to show strong net new business performance. Outside the U.S., we're expecting solid growth. Tom Gallagher will tell you that our reinsurance unit performed fantastically during January renewals and had some nice new business wins. Tom will also provide comments on our global merger and acquisition strategy. Bill Ziebell will walk you through our employee benefits and HR consulting businesses.
He will highlight a still broadly favorable macro backdrop, excellent net new business trends, and continued demand for our consulting services. Scott Hudson will tell you our third-party claims administration business is seeing good growth driven by our ability to drive superior outcomes. Our CFO, Doug Howell, will bring it all together and tell you what we think this means financially for the first quarter and the full year financials. I'll stop now and turn it over to Mike Pesch, who's going to discuss our PC brokerage operations across the Americas. Mike.
Thanks, Pat, and good morning, everyone. I'm Mike Pesch, the leader of our property casualty business in the Americas. Most of my comments will focus on our retail operations in the U.S. and Canada and our U.S. wholesale operations known as Risk Placement Services.
However, I will also briefly touch on our other specialty businesses and our operations in the Caribbean and Latin America. I'll plan to cover three topics. First, I'll provide an overview of these businesses. Second, I'll discuss current insurance market conditions. Third, I'll give you some early indications of how the first quarter of 2025 is playing out thus far. Starting with an overview of our retail brokerage operations across the Americas. In total, more than $3 billion of revenue. Our largest and most mature operations are in the U.S., and during 2024, we generated $2.6 billion of U.S. revenue, making us the third largest PC retail broker in the country according to Business Insurance. Today, we place around $20 billion of U.S. premium annually, which is serviced by around 10,000 employees.
In Latin America and the Caribbean, we generate approximately $150 million of revenue across 15 countries and have approximately 1,700 employees. Moving to Canada, we are a top five commercial lines broker with clients in all 10 provinces and three territories. Here, we generate nearly $300 million of annual revenue through our roughly 1,500 employees. Our America's retail businesses have common characteristics, and we serve and compete for clients of all sizes, from large risk management clients to small commercial lines and also high-net-worth personal lines customers. With that said, the vast majority of our clients spend between $100,000 and $2.5 million on insurance premiums. That, in turn, translates into roughly $10,000-$250,000 of annual commission and fee revenue to Gallagher.
We find these clients very attractive, and that's because these size businesses typically have complex insurance needs if they don't have a dedicated risk management professional on their staff. Thus, they rely on our experts to identify and evaluate risk on their behalf and, of course, find the right markets to place their insurance coverage. Essentially, our experts become the client's risk management department, which effectively embeds Gallagher inside their business. This holistic approach to risk management is the foundation of our global client value proposition, Core 360, which focuses on the most important drivers of our client's total cost of risk. The advice and solutions we provide to clients is bolstered by our various niche practice groups. These subject matter experts have specialized knowledge and deep insights into numerous product and industry verticals.
By leveraging these experts, we can better identify and understand the risk characteristics of our customers and products. These industry-focused professionals work side by side with our producers in the field, making sure we are addressing the unique risks that different industries are facing. We also have hundreds of professionals working with clients to develop safety protocols and risk management programs while also assisting in claims resolution and advocating on behalf of our clients. Through focused risk management service offerings, differentiated coverages and products, and claims resolution advocates, we have a fantastic offering, which I believe is a competitive advantage when competing against the tens of thousands of brokers across the Americas. Like Pat said, "Join us, and the next day our decades of work and hundreds and hundreds of millions of dollars of investments are yours." Same for those producers looking for a better place to sell.
Moving on to our America's specialty businesses. In total, our specialty businesses generated around $1.3 billion of revenue during 2024. There are a few different pieces here, so let me break down our business further. The largest piece is Risk Placement Services, or RPS, which generated $800 million of revenue in 2024. Founded in the late 1990s, RPS is now the fourth largest wholesale broker in the U.S. and includes our open brokerage programs, binding, and MGA businesses. We compete against a wide range of insurance intermediaries, and clients tend to choose RPS because we are easy to do business with, are responsive, and have a wide breadth of products with strong carrier relationships. We are consistently engaging and soliciting feedback from our 13,000-plus retail clients to ensure our product suite and offerings are aligned with their needs.
The remaining $500 million of revenue is split amongst various specialty operations, including RTEX, our alternative risk solutions, captive management, and IOS administrative services business. It also includes our affinity business, where we offer specialized insurance solutions for over 300 national associations and affinity groups. Finally, we have our risk program administration business, where we offer a wide range of services for risk pools, including public, private, faith-based, and nonprofit customers. As you can see, we have a wide range of specialty offerings for customers. Moving on to my second topic, insurance market trends across the Americas. Starting with U.S. retail, our customers continue to experience renewal premium increases across nearly all lines of coverage, and there continues to be moderating trend in property and increasing trend in casualty lines. So far in the first quarter, renewal premium changes, that's both rate and exposure combined, are up 4%.
Overall, that's pretty similar to the past three quarters. However, there continues to be a shift between property and casualty beneath that headline. We continue to see more property renewal premium moderation, mostly for our larger U.S. clients, while casualty lines continue to show strength concentrated in auto and umbrella. That said, we are seeing in many cases where there are some potential price savings available. Clients are increasing their coverage levels. Let me give you some more flavor by line of business. Property is down about 2%. General liability and commercial auto are up 6%. Umbrella is up 10%. Workers' compensation is up around 1%, while cyber and DNO are about flat. Moving to Canada, renewal premium changes are up about 1%. Property is down low single digits, while casualty increases are also in the low single digits. Moving to the U.S. wholesale market environment.
Through the first two months of the quarter, our data is showing renewal premium increases of about 5%. Property renewal premiums are down low single digits. General liability and commercial auto premiums are up around 7%, and umbrella is up 12%. Most other lines outside of DNO are up low to mid-single digits. Similar to US retail, we continue to see property renewal premium changes moderating, while casualty renewal premiums are increasing. Across the Americas, we continue to see rational carrier behavior with pricing differentiation driven by client loss experience. Good accounts get some premium relief in certain lines. However, accounts with poor experience are seeing greater increases. This is the ideal market for us to show our expertise, product knowledge, and data-driven capabilities.
Every client is different, and we can help each one of our clients get the right coverage at the most optimal pricing by line of business for their risk profile. That's our job as brokers, and I believe we have the most talented team in the industry. Finally, I'll conclude with some thoughts on the first quarter. Through the first two months, we are seeing continued renewal premium increases, positive net new business spread, a small net positive impact from midterm policy adjustments, including audits, policy endorsements, and cancellations. Based on what we are seeing thus far, we think first quarter organic across the Americas will be about 7%, including 8% in RPS, 6% in U.S. retail, and 4% in Canada. Looking ahead, I remain excited about our near-term and long-term prospects.
We have solutions, sales talent, data-driven insights, and a client-first culture, which puts us in a position to consistently win. Okay, I'll stop and turn it over to Patrick Gallagher, who will discuss the remainder of our major property casualty retail operations in addition to London specialty. Patrick.
Thanks, Mike, and good morning, everyone. This is Patrick Gallagher, and my comments today will focus on our retail P&C units in the U.K., Australia, and New Zealand, in addition to our London specialty business. Similar to Mike, I plan to cover three topics. First, I'll dimension each of these businesses. Second, I'll discuss the P&C insurance environment in each geography, and then I'll finish up with some comments on what we are seeing thus far in the first quarter. Starting with our international retail businesses, we operate in approximately 60 countries globally and have client capabilities in another 70 countries.
Mike just covered Canada, Latin America, and the Caribbean. Let me focus on our other large international retail operations in the U.K., Australia, and New Zealand. Combined, these geographies finished 2024 with around $1.5 billion in revenue, placing around $9 billion of premium on behalf of our clients. Breaking these operations down further, we are one of the five largest U.K. retail brokers, generating more than $800 million of annual revenue across approximately 100 locations. In Australia, we are also a top five broker and have one of the leading commercial retail brokerage firms in New Zealand. Combined, Australia and New Zealand generate more than $600 million of revenue annually through 80 different locations. You heard Mike talk about our America's retail sweet spot is the middle market to upper middle market, and our customers in international geographies are similar in complexity to these clients.
We also provide brokerage services to large account risk management businesses, smaller commercial enterprises, and high-net-worth personal lines clients. Similar customers with similar insurance and risk management needs. Accordingly, our sales approach and tools mirror that of the Americas. That was built by design over the last decade. Today, we have a truly unified global go-to-market playbook. Let me give you a few examples. First, Core 360, which Mike covered. While we introduced Core 360 around a decade ago as our U.S. go-to-market strategy, it is now the centerpiece of our global value proposition. It forms the foundation of our risk management discussions with clients and prospects of any size anywhere around the world. Second, our niche practice groups that cut across industry or product. Many of them have been organized at the global level, allowing clients across geographies to benefit from our deep knowledge and expertise.
Examples of our global niches include energy, real estate, hospitality, and marine. Third is our data and analytics platform, Gallagher Drive. Here, we are able to provide prospects and clients insurance trends of other Gallagher clients from around the globe. This includes what lines of coverage are being purchased, limits ultimately being bound, as well as potential catastrophe exposure and claims forecasts. The platform further differentiates us versus the competition with producer utilization of Drive continuing to increase across our platform. We also have Smart Market, which has evolved into a global offering across our various global retail platforms. Smart Market is being utilized by most of our large trading partners. There is Gallagher Submit, our online client renewal platform. It uses a digital interface to reduce the friction in the renewal process for clients.
With many of our carrier partners embracing digitalization, it's making the quote process easier and more efficient for all parties. Finally, our Gallagher Go mobile app. Here you can access your insurance account 24/7 to manage locations, vehicles, drivers, and other insurance-related content. Our retail platforms utilize the same sales techniques, tools, data, and analytics. They also rely heavily on our Gallagher Center of Excellence for large portions of their client servicing efforts too. Sticking with our Center of Excellence, our nearly two decades of working, standardizing our processes, and unifying our technologies around the globe have equipped us to better harness the power of AI. We are still in the early innings of our journey utilizing AI. The first group of tasks include policy checking and the issuance of certificates of insurance.
With these efficiency gains, we are able to redeploy resources for sales enablement and renewal support. We have an exhaustive list of resources that attract top talent and merger partners. It puts us in a great spot competitively. When considering we are competing with someone smaller than us around 90% of the time, these local brokers just can't match the insights, service, technology, or tools we provide. Now, shifting to London specialty. Our leading franchise has roots dating back to the mid-1970s. Here, we tend to focus on large commercial clients and also support retail agents and brokers around the world to place specialty insurance solutions across six main trading divisions: aerospace, marine, financial lines, construction, energy, and property. Our 1,200 colleagues generate more than $700 million of annual revenue and place more than $6 billion of premium annually.
London specialty growth has been fantastic in recent years, and we still have many exciting growth opportunities. Let me provide you with a few initiatives. First, we continue to invest in and further deepen our niches and specialisms. We are constantly looking to expand our capabilities, market relationships, and product offerings that align with client need, including financial lines, cyber, and energy. Secondly, we are looking to onboard and develop new talent. This includes seasoned producers that will add to our expertise across our six specialties trading areas. We also continue to develop our own through our summer internship program and our graduate program, GallagherFutures. Third is the utilization of Smart Market. It's an important platform that allows us to trade with participants more efficiently. A number of specialty markets have joined the platform, and I believe there is additional carrier appetite in 2025 and beyond.
Now, moving to my comments on the insurance market. Let me discuss what we are seeing so far in the first two months of the first quarter, starting with retail. In the U.K., renewal premium changes, both rate and exposure combined, are increasing 4%. Property is up 4%. Commercial auto is up 7%. General liability is flat. Package is up 3%. Professional lines down about 4%, and most other lines are up low single digits. Renewal premiums in Australia are up 4%. Most property and casualty lines are up mid-single digits, while DNO and professional lines are flat. New Zealand's renewal premiums are up about 2%. Property and DNO are up 3%, while general liability and commercial auto are flat. Within the London specialty market, we continue to see broad underwriting discipline from carriers. However, competition is growing across the property and financial line space, including DNO and cyber.
Clients are leveraging improved pricing to reduce their deductibles, push for better terms and conditions, and in some cases, buy more limit. Specialty carriers remain cautious on U.S. casualty classes and continue to watch for clues of moderating loss cost trends. We are seeing certain facultative markets reduce their casualty capacity. However, there has not been a significant shift higher in pricing for this business. Looking broadly across the specialty market, we believe renewal premiums are flat to modestly higher. Finally, new business production and client retention remain strong across all our major international retail geographies and London specialty. Pulling it all together, I see first quarter organic for our U.K., Australia, and New Zealand retail, and our London specialty units combined around 5%. These businesses continue to perform very well, and we remain excited about 2025 and beyond.
Okay, I'll stop now and turn it over to Tom Gallagher, who's going to discuss our reinsurance operations and global M&A strategy. Tom.
Thanks, Patrick, and good morning to everyone joining us on the call today. Today, my comments will focus on our global reinsurance brokerage operation, Gallagher, and then I'll pivot to discuss our global M&A strategy in more detail. Starting with an overview of Gallagher. Gallagher is the third largest reinsurance broker in the world and was formed through the combination of our 2013 startup of Capscom Re and the purchase of WTW's Treaty Reinsurance business in December of 2021. We finished last year with about $1.2 billion of revenue, most of which comes in the first half of the year, given the timing of major reinsurance renewals.
We strive to go to be the go-to reinsurance broker that can advise clients globally, regardless of location and size, utilizing deep expertise and analytical capabilities. Our 3,200 reinsurance professionals provide advice, modeling, strategy, and placement expertise on a wide range of offerings, including treaty reinsurance, facultative reinsurance, and other risk transfer products to nearly 1,000 underwriting enterprises around the globe. 2024 was a fantastic year for the business, with many important accomplishments, including double-digit organic growth, tuck-in M&A activity with the acquisition of Toronto-based MGB Reed, continued investments in production talent, including facultative capabilities, completing integration, including some exciting milestones, such as our new consolidated reinsurance agency management system going live in July of 2024 and exiting the transition service agreement with WTW effective November of 2024. Building on the tremendous accomplishments over the past year, we see many attractive and exciting growth opportunities ahead.
Let me provide you with some examples. First, we're expanding our product offering, including adding some solutions across life and health, marine and energy, programs, cyber, property, and facultative capabilities. Second, we are capitalizing on our global footprint. This includes growing our client base in existing geographies while engaging with opportunities and winning new clients across Europe, Asia-Pacific, and the Caribbean. Third, we are investing in new talent targeting these same product growth areas and geographies. This includes seasoned production hires that bring increased depth and expertise in the reinsurance market and leveraging the Gallagher internship program to replenish new talent across our global operations. Fourth, we continue to execute on cross-divisional opportunities. Since working together is ingrained in our culture, I believe we have a leg up when leveraging existing Gallagher relationships, whether through Gallagher Bassett, our retail business, or our MGA and programs operations.
Next, let me provide some comments on the reinsurance market environment from the January 1 renewals. Overall, the environment generally favored reinsurance buyers, and even with more demand for cover, we would characterize renewal discussions as orderly. There were differences by product line. For property, there was growing demand for cat cover from buyers, which was met with more than sufficient reinsurance capacity. This is notable, especially given that 2024 was another year of elevated higher natural catastrophe losses. We estimate more than $150 billion of global insured losses occurred last year. Importantly, reinsurers continued to exercise discipline on terms and did not revert to attachment points that exposed them to greater frequency. For most specialty coverage, such as energy, marine, and aviation, buyers also saw modest price declines, but again, no changes in policy terms. Shifting to casualty.
While there was adequate reinsurance capacity for most exposures, reinsurers remained cautious on US casualty risks due to elevated loss cost trends and potential reserve deficiencies. Those interested in more detailed commentary on January renewals can find our first view market report on our website. The global reinsurance market continues to grow as primary insurance carriers showed increased demand for cover. Gallagher should benefit from this trend. When combined with some nice new business wins, Gallagher had a fantastic 1-1, leading to first quarter organic in the mid-teens. Looking forward, wildfire losses and casualty reserve increases continue to be the focus of reinsurers today. With that said, U.S. severe convective storm season is just about here, which then leads into U.S. wind season. Time will tell how the year plays out. Regardless, Gallagher should continue to excel in this environment.
Shifting to our global M&A strategy across our various businesses and geographies, there remains a terrific opportunity to grow through mergers. That growth shows up initially through a merger and then helps fuel our future organic growth opportunities. According to one of the leading consulting firms, there are upwards of 30,000 agencies and brokerage firms in the U.S. alone, and we think there could be another 30,000 or so across our major operating geographies. Most of these 60,000 firms are small and family-owned and operated. We believe Gallagher is a natural home for these entrepreneurs and owners who are looking to add additional value to their current clients, help further advance their employees' careers, and to further grow their business. M&A at Gallagher is about believing we can be better together for the benefit of our clients.
That one plus one equals more than two, perhaps three, four, or even five. We've proven hundreds of times that a merger partner brings us expertise, market insights, creative thinking, and relationships. We get their brains, and that makes Gallagher better. We have many exciting things to offer our merger partners, including top-notch industry-leading expertise through our various niche practice groups, access to our data and analytics platform, Gallagher Drive, increased breadth of risk management solutions, retail, wholesale, benefits, alternative markets, and reinsurance, fantastic relations with our carrier partners, including some unique product offerings, a more efficient back and middle office through our Gallagher Center of Excellence, and a recognized brand name. When firms merge with Gallagher, they realize that we are their ultimate and final home. They won't ever have to change their name again. They won't be flipped.
They won't have to stop investing in the business or make drastic expense cuts to pay rising debt costs. They know any equity they have is the exact same type of equity that other employees in the firm and the management team have. Merger partners immediately get our knowledge and know-how, allowing them to bring more value to their clients. From clients renewing through Gallagher Submit to comparing insurance programs of other Gallagher clients using Gallagher Drive's clients like me, to the quick turnaround time of certificate insurance and the accuracy of insurance policies, and many, many more. All of these capabilities are becoming an integral part of client expectations. As an owner, you have a choice to make. Get all of our capabilities overnight by joining us, or hope that your clients don't demand it, or spend numerous years and a lot of money and energy building it on your own.
Many firms are recognizing this decision, and it is why our M&A deal sheet and pipeline continue to be incredibly robust. We have proven our M&A strategy will continue to deliver excellent results and returns in the future years. Okay, now I'll turn it over to Bill Ziebell, who is going to discuss our benefits brokerage and HR consulting operations known as Gallagher Benefit Services. Bill?
Thanks, Tom. And good morning, everyone. I'm Bill Ziebell, and I lead our employee benefits and HR consulting business, Gallagher Benefit Services, also known as GBS. My comments today will cover three topics. First, I'll provide an overview of GBS. Second, I'll give you some insights into the health and benefits market, our client value proposition, and our execution strategies. And I'll conclude with some observations from the first two months of the first quarter. Okay, starting with an overview of the business.
GBS was started in the U.S. during the mid-1970s and expanded into the U.K. in 2010, Canada in 2012, and Australia in 2017. Today, we have around 9,000 employees, including 2,300 in our centers of excellence, with significant scale and expertise across services focused on an employer's most pressing needs, including health, career, and financial well-being. The business generated $2.2 billion of revenue during 2024, making GBS the fourth largest benefits broker and HR consultant in the world. The U.S. remains our largest geography and represents approximately 85% of our annual revenues generated from about 70 locations. The remaining 15% is predominantly from the U.K., Canada, and Australia. Our producers provide solutions and access to a wide range of products that help businesses address their human capital needs. Products include traditional group insurance coverages such as medical, dental, vision, disability, and life.
We also have various voluntary products that employers can offer to their employees. In addition to these products, we provide advice on employer benefit plan design, financial projections of the plans, and potential cost-saving strategies. These offerings combined represent approximately two-thirds of our annual revenue. The remainder of our revenue comes from retirement services, compensation advice, executive life, HR consulting, and other similar offerings that help employers address their human capital strategy outside of health and benefits. Many times, we are competing against local or regional benefits firms and have capabilities to serve clients of all sizes. Frankly, we can provide a nice alternative to some of our bigger competitors and have a multinational consulting business where we can help employers with operations outside of our core geographies. Before diving into some of our growth initiatives, let me talk about the Gallagher People Strategy, our recently renamed value proposition.
It's the approach our professionals take to develop a total rewards strategy that employers can use to attract, engage, and retain talent while simultaneously managing costs. There are many employee benefits and rewards outside of compensation and medical coverage. For example, employers can enhance financial well-being through defined contribution plans or offer physical and emotional health products. Our bespoke and tailored approach helps clients move towards their human capital goals. Overall, the macro environment remains supportive of growth. Within the U.S., the labor market remains strong. In fact, since April 2024, the number of open jobs has remained relatively steady and at a level that is still well above the number of unemployed people looking for work. It's still difficult for employers to find the right talent.
While talent remains a top priority, we are hearing more and more from employers that managing rising medical costs is increasingly important. Employers are looking for ways to grow their workforce and at the same time face wage increases and continued medical cost inflation. Both are headwinds that our professionals are helping them navigate. A few thoughts on healthcare cost trends in 2025. We are forecasting medical cost trends up 8%, driven by health provider consolidation and hospital workforce shortages. For pharmacy costs, we are expecting trends up 10%, driven by higher cost, single-source brand drugs, and the increased utilization of GLP-1s. For stop loss, these trends are magnified in the mid-teens to mid-20s. Increases are being driven by a higher number of large claims, rising costs of hospital and physician services, specialty medications, and the impact of cell and gene therapies.
Elevated health program price increases are likely here to stay for the near to intermediate term. Remember, it's our job to help mitigate these increases through program design and various point solutions and services. An important approach we are taking with prospects is called Test Drive. We have clients provide us information about their current employee population and benefits program, and we leverage our proprietary data and experts to provide these prospects recommended program design and coverage changes. Many times, our experts propose ideas to enhance coverage while maintaining or even lowering costs. We are also rolling out our data and analytics platform, also named Gallagher Drive. We are using data-driven insights to further separate ourselves from the competition across our HR and benefits platform. We are also separating from the competition by showcasing our expertise through webinars, thought leadership, and various online and print content.
We have hosted many webinars this year covering topics like compliance, pension plan de-risking, weight loss drugs, and employee retention. These online events are on top of the thought leadership pieces we are publishing on a regular basis and drive ongoing engagement with our customers and prospects. Shifting to some comments on January and February, during the first two months of the year, we saw favorable new business production and customer retention within our core U.S. health and benefits business, solid growth in our international operations, and strong demand for our fee-for-service individual products and retirement consulting offices. When I combine what we are seeing across the global business, the first quarter organic is running more than 7%. Looking ahead, I believe we are positioned for continued growth.
Our experts delivering on our value proposition, combined with leading tools, insights, and products, will help clients navigate their most pressing HR and benefits needs. 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?
Thanks, Bill. And good morning, everyone. I'm Scott Hudson. I lead our third-party claims administration business, Gallagher Bassett. If you are familiar with our financial statement reporting, it is also known as the risk management segment. I'll cover three topics today. First, I'll provide an overview of Gallagher Bassett, or GB for short. Then I'll give some insight into what we're seeing so far during the first quarter. And I'll finish with some comments on how the business is being positioned for the long term. On to the business overview.
GB was formed in the early 1960s by the Gallagher brothers and Sterling Bassett and has grown to $1.5 billion of revenue in 2024, making it one of the world's largest P&C third-party claims administrators. More than 80% of our revenue is generated in the U.S., and the remaining 20% is spread across Australia and, to a lesser extent, the U.K. and Canada. We have more than 10,000 employees globally, and most of our claims resolution managers work from home. To be clear, we do not take underwriting risk, but rather adjust and pay claims on behalf of our clients. In 2024, we closed more than 1.3 million claims and paid out around $17 billion on behalf of our clients. That level of annual claims paid would put us close to one of the five largest P&C insurance companies in the U.S.
Most of our third-party claim adjusting revenue is derived from servicing workers' compensation claims, while around a third comes from liability claims, and 5% relates to property. We also service a significant amount of Australian disability claims following our late 2023 acquisition of MyPlan Manager. In this business, we closed nearly 5 million claims and paid out more than $3 billion during 2024. In addition to these services, we have many specialty product offerings for medical malpractice, professional liability, environmental, product liability, and cyber, to name just a few. It is also worth noting that within the property space, we are not large storm or catastrophe loss adjusters, but rather focus on specialty classes and complex claims. Across comp, liability, disability, specialty, and property classes, our suite of products and various offerings enable us to provide claim services for the majority of our clients' exposures.
We segment our business by client type. First are large commercial customers, think Fortune 1000 businesses. These clients have balance sheets that allow them to have large deductible programs or self-insure, and they outsource the claims resolution process to us. This is our most mature and largest client segment. Second are public sector clients. These include municipalities, state entities, federal governments, and school districts. Third are group captive or alternative market clients. These insurance entities utilize our services for their claim handling infrastructure. Fourth and last, our client segment is insurance carriers. These are underwriting enterprises that choose to fully outsource or white-label a portion of their claim handling operations. With around $250 million of annual revenue across 150 different carriers, and even more when you include the Australian state workers' compensation schemes, this continues to be the fastest-growing portion of our business today.
Customers choose us because of our deep expertise, consistent execution, and outstanding service, which leads to superior outcomes. A superior outcome in some cases could mean mitigating a loss or avoiding a loss altogether. It may also result from quicker return to work, more efficient medical delivery, or greater employee satisfaction. In fact, we tailor our offerings to provide customized service and increased value for our clients. Our teams can prioritize the company's objectives from brand protection, customer loyalty, or getting employees back to work sooner. We can execute because our claim resolution managers are organized around client and claim type. For example, we do not assign a resolution manager that handles slip and fall claims to a large trucking loss. Rather, our offerings are designed to align with client expectations of a best outcome.
Our claims resolution managers also have access to proprietary industry-leading technology to enable them to achieve the best outcomes. The tools we have developed focus on what matters most to our clients, supporting and complementing our professionals. This includes using our data to guide decision-making throughout the life of a claim, performance benchmarking tools, analytical reports, easy-to-access claim status and financial information, and a simple process for the exchange of information. Our REMIS platform, Luminous, has consistently been recognized as the best in our industry, winning awards year in and year out. Like other areas of Gallagher, we continue to refine and enhance our systems and processes. Recently, we have introduced more machine learning and AI capabilities, which we expect will improve risk and claim management performance. Today, about 90% of our U.S. claims are handled by—excuse me—today, about 90% of U..S claims are still handled by insurance carriers.
There is a large potential market for our insurance carrier services. The opportunity outside the U.S. is also significant. In fact, many underwriting enterprises are growing and, at the same time, are faced with aging claim systems and recruitment challenges. Outsourcing a portion of their claims handling can help them address both of these issues. Another potential compelling opportunity for insurance carriers is our specialist runoff capabilities. It allows underwriting enterprises to move a large group of legacy claims to our platform, which can result in better outcomes and reduced loss adjustment expense as carriers reduce or eliminate claims infrastructure that's no longer needed. Moving to mergers and acquisitions. The TBA industry is much more consolidated than the highly fragmented brokerage market, so the opportunity set for mergers is less. With that said, we're actively looking for potential merger partners that expand our offerings and deepen our expertise.
Let me provide three illustrations. First, our February acquisition of W.K. Webster, a marine and transit claims specialist. With operations across the U.S., the U.K., Europe, and Asia, it expands our footprint and provides comprehensive services to insurers and self-insured corporations globally. Second, our late 2024 acquisition of Catons Law. Here we added to our capabilities for commercial, financial, and professional liability insurance across the U.K. Third, our December 23rd merger with MyPlan Manager in Australia. It's the leading provider of claim and administration support services to participants in Australia's National Disability Insurance Scheme. The merger enhances our capabilities, adds to our relationships throughout Australia, and provides us with opportunities for growth. We use M&A as a strategic tool to add to our offerings across all of our major geographies. Moving to some comments on the first quarter of 2025.
Let me provide you with some data points on what we're seeing through February. First, client retention remains excellent. Frankly, we just don't lose a lot of customers due to our expertise, outstanding service, and industry-leading tools. Second, our new business pipeline remains very strong. Our value proposition of superior outcomes is very important as prospects react to cost pressures across their businesses. Third, new claims are rising. Overall, counts are flat this year over year, mostly driven by declines in property-related classes, while general liability, auto, and work comp claims trends are up slightly. Pulling it all together, we're expecting a solid first quarter, organic of about 5%, and adjusted EBITDA margin around 20.5%. As we think about the full year, we still believe we will be in that 6-8% range and margins right around the 20.5% level. That would be another fantastic year.
Looking ahead further, I believe the business is in great shape due to our continued investment in new claims resolution managers and an outstanding group of seasoned leaders. The embracing of new technology that further enhances and improves the claim experience, the further leveraging of new services, including our enhanced marine capabilities and our integrated industry solutions, the expansion of our products and offerings, including broadening of our specialty insurance capabilities to cover more of our existing clients' and potential customers' exposures, our efficient client-centric platform making us the provider of choice, and our compassionate and client-service-focused culture, which keeps client satisfaction at very high levels. As you can tell, I am very bullish about our long-term prospects. Okay, I'll stop now and turn it over to our CFO, Doug Howell. Doug?
Thanks, Scott. And hello, everyone. Today, I'll cover four topics.
First, I'll do a recap of the revenue, organic revenue, and market commentary made by each of our business unit leaders and roll it up for the quarter. Second, I'll provide some comments on 2025 margins. Third, I'll give you some sound bites from the updated CFO commentary document. Then I'll wrap up with my typical comments on cash, M&A, and capital management. Okay, to the business unit organic revenue recap. Mike, Patrick, and Tom all provided you with positive outlooks on our global P&C and reinsurance brokerage operations. Across each of our business units, the teams continue to deliver strong new business production and excellent client retention. It deserves a special shout-out to the reinsurance team that had a fantastic January 1 renewal season.
As for renewal premium changes captured within our data, we are seeing some moderation within property lines and yet continued steady increases in casualty lines. These are the same primary P&C trends that we have been discussing for the past few quarters. You also heard from the team that in many cases, clients are using potential property savings to opt in and just buy more insurance and more cover. We also continue to see a bifurcation in renewal premiums between small and middle market accounts versus larger accounts, with small and medium accounts seeing higher renewal premium changes than accounts paying more than $1 million a year in premium. This trend is most apparent in property lines, while casualty increases are actually more uniform by client size. Excuse me. First quarter audits, endorsements, and cancellations are still trending nicely positive, indicating continued solid underlying business activity.
As Pat said, we continue to see a favorable economic backdrop. As we consider all this information, it feels like our global P&C units combined might post first quarter organic somewhere in the 9-10% range. Next, Bill just walked you through our employee benefits and HR consulting business. He has seen strong net new business activity, continued increases in medical cost trends, and solid demand for our consulting products and offerings. Accordingly, we see first quarter organic above 7% within our global benefits operation. Combining P&C and benefits, it's looking like first quarter brokerage segment organic will be in that 8-9% range. That would be a fantastic quarter. Looking forward, we continue to hear concerns surrounding casualty reserves and loss cost trends. We still believe meaningful rate increases in casualty could continue over the next few years.
As for property, future property rates are a little harder to predict. The impact of the costly California wildfires and that we are entering into the U.S. tornado and hurricane season naturally are causing some carriers to carefully watch property rates too. A word on tariffs. It's too early to see any impact on our daily indications of an impact to our clients' business activity. Also, it seems that many believe the U.S. economy is resilient enough to withstand tariffs that would cause a significant slowdown. While it's tough to make a call on that today, it doesn't seem to be too concerning to us. On the other hand, we are having a hard time building a case where tariffs don't cause some inflation that in turn puts some upward pressure on loss costs.
Historically, our daily indications have been a terrific canary in the coal mine, so we will continue to watch those carefully. As we sit here today with first quarter organic in that 8-9% range, combined with continued casualty rate increases, storm season coming, inflation still looming, and no signs of a significant economic slowdown, we remain comfortable with our 6-8% outlook for full year 2025 brokerage segment organic growth. As for the risk management segment, Scott just told you first quarter organic is likely to come in around 5%. For full year, we're still expecting risk management segment to again be in that 6-8% range. Let me shift now to our brokerage segment adjusted EBITDA margins.
We still believe we're positioned to expand full year underlying margins by about 60-100 basis points if full year organic falls within that 6-8% range. Once again, there's no new news here. Of course, that would exclude the impact of the cash we are holding for AssuredPartners. That does create some headline margin noise. Let me unpack that for a minute. For first quarter 2025, we estimate over 300 basis points of margin expansion. Let's break that down. First, organic growth in that 8-9% range would drive an underlying margin expansion of about 100 basis points. The rolling impact from M&A from some of our tuck-in M&A partners tempers that expansion by about 20 basis points since those tuck-ins just don't have a business that's as seasonal as Gallagher towards the first quarter.
Lower short-term interest rates on our fiduciary assets relative to last year tempers expansion by about 10 basis points. Finally, interest income earned on AssuredPartners financing cash that we're holding would expand margins by about 250 basis points. As for second quarter headline margin expansion, it's looking again like we'll be pushing 300 basis points, again driven by strong underlying margin expansion and interest income on the cash we're holding for Assured Partners. Looking towards the second half of the year, margins are a little bit more challenging to forecast because of potential changes in short-term interest rate, the impact of future rolling M&A, and of course, again, the AssuredPartners closing date when that happens. However, there's nothing that we're seeing that causes us to change how we see underlying margin expansion. Remember how we view that.
Quarter in and quarter out, we believe at organic greater than 4%, we should see some underlying margin expansion. At 6% organic, maybe 60 basis points of margin expansion. At 8% organic, maybe around 100 basis points of margin expansion. Despite some margin noise from time to time, the punchline really has not changed at all. As for the risk management segment, we're expecting 20.5% margin here in the first quarter and around that level for the full year. That would be another terrific year. Now, moving to the CFO commentary document that we posted on our Investor Relations website. We'll start on page three. This provides you with the usual brokerage and risk management segment modeling helpers. Just a couple of comments here. First, on FX relative to late January CFO commentary document, the dollar has weakened a bit, mostly against the pound.
Just take a look at that and the updated revenue impacts that we provided on that page for the remaining quarters and full year. Second, just an annual reminder to take a look at your quarterly brokerage segment non-controlling interest forecast for 2025 as these amounts can vary from quarter to quarter. Excuse me. All right. Let's now flip to page four to the corporate segment outlook. Two items to call out for the quarter. First, we've updated our interest and banking expense estimate to align with where we now expect in the first quarter. Second, our expected first quarter acquisition-related expenses are coming in a little more favorable than expected. Turning to page five, this page shows our tax credit carry forwards.
It shows you that over the next few years, we expect to fully utilize our tax credit balances, which were around $770 million at December 31. It is important to note that all the talk around credits in Washington, D.C. does not look like it poses any threat to our historical credits. We continue to expect additional cash flow of about $180 million this year and even more in 2026 and later years. Do not forget, this benefit will show up on our cash flow statement rather than our P&L. It continues to be a really nice cash flow sweetener. Moving to the top of page six in our investment income premium finance revenues and fiduciary interest income table. We have updated our forecast to reflect current FX rates in this table and still assuming two 25 basis point rate cuts during 2025.
You'll also see that we've added a separate line for interest income we're earning on cash raised that we're sitting on for the AssuredPartners transaction. Let me unpack that a bit. To help you maybe refine your models and just get your head around this based on what you're assuming for a closing date, let me give you a framework to think about the monthly financial impact of sitting on that cash versus having closed AssuredPartners. First, the $13.5 billion that we have to pay is fully invested, which generates about $45 million of monthly pre-tax interest income on that cash that we're holding. We're paying about $20 million of monthly interest expense on the related borrowings. You net that, tax effect that, it ends up about $20 million net after tax or about $0.08 of adjusted EPS earnings per month.
On the other hand, if we closed AssuredPartners on a pro forma basis, we'd be making around $0.16-$0.19 a month of adjusted EPS. Let me walk you through how I get to that. First, we'll start by taking AssuredPartners' annual pro forma EBITDA of $938 million. You divide that by 12, and it gives you about $80 million of EBITDA earnings a month. Next, deduct that $20 million of monthly interest expense in the debt, impact that maybe by $3 million of monthly depreciation expense. And then when you tax effect it, you'll get about $40 million of monthly after-tax adjusted earnings, or that's about $0.16 a share. Then with synergies, that would go to about $0.19 per share.
The punchline is that it costs us about $0.08-$0.10 of EPS for each month of delayed closing, which frankly is very manageable financially. We hope this helps you kind of get your head around the impact of sitting on that cash while we wait to get the acquisition approved and closed as you build your models. Let's move down to page six to the M&A rollover revenue tables. The pink section obviously excludes AssuredPartners, and it shows we're expecting around $75 million of first quarter rollover revenue in our brokerage segment and about $10 million in our risk management segment. That's for deals that we've closed through yesterday. There shouldn't be much change given that we are close to the end of the quarter on that. Just make sure you reflect these estimates in your models.
You will also need to make a pick for the remaining quarters of 2025, and then your pick for when you think AssuredPartners might close. Let me wrap up with my typical comments on cash, debt, and M&A. At the end of February, available cash on hand was around $15.5 billion. Most of that is earmarked for Assured. Our current cash position, combined with a strong expected free cash flow the rest of the year, positions, in my opinion, well for our pipeline of M&A opportunities. In total, we estimate around $16 billion of fund M&A during 2025 and nearly $5 billion in 2026. Those are my prepared comments. We are off to a terrific start in 2025, and the team is really executing well on all of our strategic priorities. Our full year 2025 organic growth is unchanged. Margins are increasing nicely. We see opportunities there.
The M&A pipeline is strong, and most importantly, our culture continues to really propel us forward. It should be another fantastic year for us. Operator, I think we're ready now to move to Q&A.
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 keypad 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. Additionally, we ask that each participant limit themselves to one question and one follow-up. Again, that's Star one for questions. Our first question is coming from the line of Elise Greenspan with Wells Fargo. Please proceed with your questions.
Hi, thanks. Good morning. My first question is on the reinsurance business. Mid-teens organic growth, pretty strong number for the first quarter. Can you just provide a little bit more detail on just the components of what's driving that? I think you mentioned some new business wins. Can you just help us understand what's price, retention, and new business, and just what helped with that strong number in the first quarter?
Yeah. I'll take that one real quick. Listen, I think it's across the board. We've had some really terrific, nice new business wins. Our teams are really showing well against the competition there. Retention is holding up, and we're delivering admittedly some price breaks for our customers, but at the same time, they're actually coming into the market and buying more covers. It is a mix of better new business, less lost business, delivering some price increases that allows us to redeploy our customers' monies into additional coverages, all leads to a terrific quarter. The team is really, really hitting it out of the park.
Thanks. My second question is on AssuredPartners. How did the economics of the deal relative to the accretion that you outlined change if it gets pushed back, if at all? Is AP still pursuing M&A transactions during this perhaps lengthier regulatory process? Can you provide an update on just how their revenue growth has been since you announced the transaction?
I don't think it delays the economics. If you think of it, it costs us, if you think it costs us $20 million a month to sit on it for a little bit, and if you think we're delayed six months, I'm going to make that up. Maybe if you want to factor all that into your pricing, it adds $100 million of effective purchase price differential. On the other hand, they're growing, so we're going to get more EBITDA as a result of that. I would say economically, it doesn't change the terrific economics that we got on the deal. Second of all, underline, their business is performing in line with our business. I think that their specialty businesses are performing well. We don't have deep insights yet, so this is anecdotal on that because we have to be careful about what we really know.
The answer is this business is performing very well. We're not seeing significant or any producer departures that we're being told from that. I think the business is holding in there well. The teams are still really actively engaged on complying with these additional information requests and are taking it diligently, and we're making terrific progress on that.
While we're not allowed to be operating the businesses together, clearly there's a lot of interaction between the two teams. The enthusiasm has not waned one bit. In fact, if anything, the enthusiasm is growing. As the market changes a bit, they're just chomping at the bit to get to our tools.
Yeah. They see this as a great way for both of us to actually provide better value to the customer that's buying the insurance.
Right.
This is a customer-centric merger that they will have better opportunities to get better coverages. That enthusiasm tends to build every day.
Thank you.
Thanks, Elise.
Our next questions are from the line of Mike Zarembski with BMO Capital Markets. Please proceed with your questions.
Hey, good morning. A couple of follow-ups on the AssuredPartners deal. In terms of the timeframe, just to be clear, am I right that the agency has 30 days after you all respond? Maybe you can update us on timeframe. By you all saying it'll be a second half of the year close, maybe you can tell us your assumptions. Are you saying you're not going to respond to them for a few months? Are you putting more cushion in for maybe further back and forth? I guess just related, does this waiting period cause a delay on any other deals that have to go through the HSR Act, such as the Woodruff Sawyer deal or just other deals that would be in the pipe? Thanks.
All right. Let's work backwards on it. We already have HSR approval on Woodruff Sawyer, so now that's just a matter of completing the conditions to close. We don't see any barriers on that. I think we're waiting for maybe one approval in the U.K. on that. The agreement that we have on AssuredPartners does allow us to continue our M&A strategy. There are many jurisdictions that we can buy as much as we want there in the U.S. I think there's a pretty high cap on that, so we don't see that as being an impediment. The AssuredPartners team is still actively looking at acquisitions. Obviously, we have the right to approve those under the SPA on that to agree to them, but the teams are working on their own.
We're out there competing with them day in and day out on M&A acquisition opportunities like we did before, but frankly, we didn't bump up against them that much in the past. It was only like 6% of the opportunities. The information requests that we're working on with the DOJ will take us a while to accumulate that information and provide it, and then I think that starts a 30-day clock after we provide that information. It's going to require us to do that and also the AssuredPartners folks to do it. They're working down their path. We're working on ours. I think for purposes of preparing all this information, we've assumed a mid-second half close. I think for doing the math in a lot of these documents, we're hoping that we can get this done in the fall sometime. Does that help?
Yes, that helps. Appreciate it, Doug. My follow-ups, maybe moving over to the competitive environment, more specifically on wholesale. Some of the prepared commentary kind of painted the picture that the wholesale pricing moderation was somewhat similar to what we're seeing in the standard marketplace, at least U.S. standard marketplace. I'm curious, is it surprising versus historical to see moderation in pricing fairly meaningfully on the property side, but the data still points to actual flows staying positive, like moving into the E&S marketplace? Is there anything kind of going on we should be thinking about? I thought historically when prices soften, you start seeing kind of just an outflow of business back into the standard marketplace. Or maybe I don't—maybe I don't have enough data. Any comments would be helpful.
Yeah. Mike, this is Mike Pesch. Maybe I could paint a picture for you in the E&S marketplace. Just at a very high level, the most recent report showed that Surplus Lines Premium increased from $116 billion in 2023 to $130 billion in 2024. It is now about 24% of the overall P&C marketplace in the U.S. We do not see that trend changing. If you get into the mix of business, whether it is property GL, there might be some shifting between GL and property in and out of the admitted marketplace into E&S. There are still, and you heard in my comments, there is still a tremendous need. Our submission flow into RPS is still up year to date in the mid to high single-digit range. We are still seeing the inflow of submission activity. I think that is speaking to some of my comments about the marketplace.
Very good accounts with a lot of controls in place may have an opportunity to move into the admitted marketplace. Opportunities, whether it's property or GL, where there's less controls, are still going to have a need for the E&S marketplace. I'll just throw one other comment in there around the rate environment. Remember, the rate environment might be coming down a bit in property, but you also have the competing factor of valuations. Cost of building materials, wood specifically, is increasing. There's an offset there because most underwriters, whether it's in the E&S or in the admitted marketplace, are looking at valuations in a hard way right now because of the fact that those building materials are increasing. We still see positive momentum both in our submission count and in the general progression of business moving into the E&S marketplace.
They want specialty coverages that are tailor-made to the client's needs.
Thank you.
Next questions are from the line of David Motemaden with Evercore ISI. Please proceed with your questions.
Hey, good morning. Pat, you guys had mentioned that you guys were surprised by the second request for information. I mean, I was as well. I guess, do you have any sense in terms of are there any particular jurisdictions where there might be concentrations of revenue? Or do you have any sort of sense in terms of what may have caused that?
No, I don't think so. David, pardon me. The fact is this is one of the largest transactions in our space. I think that it makes some sense from a regulatory perspective to just say, "Could we please take a look at this?" The way they do that is to send a second request. While we were surprised because we all dealing in the business every single day realized this doesn't really impact market share. It doesn't show us, when we look across our book of business and their book of business and have outside help from economists, it doesn't show any place that we can see that it would be anti-competitive. It does make some sense that a regulator would say, "I want to look at this." We're not really perplexed.
They haven't given us any indication that we're concerned about this level or that level of ownership of premium income or revenue. It is just a matter of trying to fill out for them the request that they've given and just strictly keep hitting it right down the middle of the fairway, give the regulator what the—and look, we're used to living in a regulated environment on a global basis. We understand this, and we're good with working with regulators. It is just a matter of giving them what they're requesting, and we think we'll be able to move on.
Got it. Thank you. That's helpful. Maybe second question just on it sounds like you're obviously getting some share gains in reinsurance as pricing has moderated. I'm wondering if you could talk about just the trajectory of share gains within the primary business as RPC has moderated a bit here over the last few quarters and into the first quarter of this year. Have you seen your new business wins tick up? Is there anything you could provide from a quantification of that over the last 6 or 12 months?
I don't have specific increase in terms of new business wins or what have you in front of me, but I can tell you a couple of things. I think the combination of what the reinsurance folks and our retail folks are doing together, which we said when we bought this thing was going to be a powerful element in our battle in the field. That has clearly been the case. This is not just about going into insurance companies and saying, "Hey, we put this much in the front door, we'd like so." It really is looking across the portfolio with both our insurance company partners as to where we can be helpful, but also seeing where what we're doing as a reinsurer can help our retail people. That conversation is going back and forth all the time. That's been helpful.
Number two, when they came aboard, the Willis Re folks felt that they needed a significant investment in capabilities that were data and IT related. We have spent a tremendous amount of time and money giving them what they have prescribed or have said is going to be a competitive advantage. Frankly, they are proving it. They are showing that, in fact, if they make it easier for their people to use the data and analytic capabilities that they have said they need and that we can provide using our unique one-source data, which really is a data lake that includes information from our trading positions all around the world, it makes them better as a competitor. Heavy use of AI in that business, being able to work off a new workbench. The point is they are showing that they are investing in being better for their customers every day.
They're showing that they've got on-the-street information from our retailers, and they're being very aggressive about going out and saying, "Hey, look, there's a difference at Gallagher now. Let us tell you what it is." They're seeing a lot of new wins. Doug also hit on the point that while prices may be moderating a bit, people are in fact buying more reinsurance, and we're very, very helpful to our clients in showing them where they can do that economically, where they should do it based on their accumulations, and they're respecting that advice as well. I see that as being something that we'll continue to see grow, and very, very proud of the team that joined us in that acquisition.
Yeah. I can throw a couple of numbers behind it. I'm just kind of looking at our new loss spread differential, the spreadsheet here. Like in the U.S., and again, this is through February year to date, we're up 70 basis points in spread differential in the U.S., up 2% in U.K. and Ireland, up 2 points. The spread differential is up 2% in Canada. As I come across the thing here, there is a spread differential that's happening. Again, we would think as we show our wares that we would stand to lose less business and gain more business opportunities. We are seeing across the board better new business versus lost business spreads. It's not anecdotal.
Got it. Thank you so much for the answers.
Thanks, dude.
Thank you. The next questions are from the line of Alex Scott with Barclays. Please proceed with your questions.
Hey, thanks for taking my questions. First one I had is I wanted to see if you could unpack the drivers behind some of the differences you're seeing between the smaller end of the market and the larger end of the market, specifically in retail brokerage. Maybe just your thoughts on what's happening there. Is it more on the property side versus casualty? What are the underlying influences?
Yeah. Alex, this is Mike Pesch. When you think about the difference between our small and, I guess you would call, mid-to-risk management business, I'm just unpacking this a little bit for you so I get some clarity. Accounts from a premium change perspective, accounts greater than $100,000 in premium, we're seeing about 5.2%. When you go to the small sector, $0-$10,000 in premium, it's about 6%. Sorry, that's 2024. In 2025, year to date, the larger accounts are just under 1%, and the smaller accounts are closer to 9%. Everywhere in between is a mixed bag of the difference between those two numbers. The answer to the question is, in the larger segment, of course, you're seeing less because those companies tend to have a lot more controls in place from a property perspective or a casualty perspective.
In the smaller to mid-size, you're seeing premium increases still holding serve with what we saw last year and the year before. That is a broad range from account size. Remember, we trade predominantly in every sector, but if you look at our book in general, the middle market and upper middle market is where we see a lot of activity. That still supports a bit of the tailwind that I spoke of from an overall market perspective. Does that answer your question, Alex?
Yeah. That's really helpful. Thank you.
Yeah. Let me pile onto that with Mike's. I don't know if we saw the—I’d have to pull out. We only got the data here. I apologize. Going back to the beginning of 2024 that Mike was looking at. I think that, if memory serves, I don't think the small and medium market had the sizable rate increases if you go back three years ago. This might be them catching up as much as it is that the large market kind of led the way with premium rate increases three years ago, something like that. If memory serves me right, there could be a little more reversion on this. Just remember, large losses can come from small accounts too. It's not just from large accounts. I think they're just catching up on that.
Yep. All really helpful.
One thing I would add, Alex, is that remember the bigger risk management accounts tend to compensate us based on a fee. So while the premium—what I'm talking about in terms of premium—it doesn't necessarily impact. Now, it's a negotiation and a discussion with our client about value-added services and things that they need to continue operating their business effectively. But about 25-30% of our business is on a fee, which usually captures that larger risk management type business.
Yep. Okay. Separate follow-up. Just on the Q1 guide being really strong in brokerage 8-9%, can you talk through why not take up the full year? Is it more just that you do not have as much visibility yet on the later part of the year, and it is an uncertain environment that is causing it? Is it more to do with reinsurance maybe helps a lot more in the first quarter? Can you help me think through whether it is more seasonality or whether it is more just caution and not wanting to guide too much throughout the year?
Listen, we're five weeks away from the last time that we gave you that 6-8% range. Maybe we can be a little more bullish when we get to our April call on that. What I think it's doing is, in my opinion, a really strong first quarter substantially reduces the risk that it's going to not be at least 6% if you think about it that way. I think give us another six weeks to take a look at it. There's a lot of uncertainty out there with what's going on in the marketplace. We've started off with a lot of storms. Where's property going to settle at right now? Casualty still.
I guess as I sit here, the interesting news that I'm reading is as carriers file their yellow books right now and we get deeper insights into the reserve positions, I think that will tell us a lot between now and April. They've only been filed now for two weeks. A lot of folks have done some work on it. You always get that yellow book wake-up period in March and April. Let's see what happens before we get too terribly excited about it.
Understood. Thank you.
Thank you. Our final question comes from the line of Katie Sakys with Autonomous Research. Please proceed with your questions.
Yeah. Hi. Thank you. First question. On the timeline for AssuredPartners, does the shift change any considerations we should make to seasonality? And then perhaps more broadly, can you kind of give us a reminder of what exactly seasonality to organic growth looks like for the broader brokerage segment over the next couple of quarters?
Listen, I think AssuredPartners coming in in the fall, they will have some first-quarter seasonality because of their business. They also have maybe some July 1 renewals in their public entity space. By and large, I would not expect AssuredPartners rolling into our numbers to have a dramatic impact on our seasonality. Maybe similar to ours, but no, it will not cause it to be a greater seasonality to first quarter. It might moderate that a little bit. In that case, obviously, we'd love to put that $3 billion into our books in the fourth quarter. That would be pretty nice to have another $750 million of revenue in the fourth quarter if we can get it done. Their seasonality will not impact ours very much, Katie.
Okay. Thank you. Just one quick follow-up. On the 8% RPS organic guide for this quarter, did you break that down between Open Brokerage and MGA at all?
Yeah. Katie, I can do that for you. This is Mike Pesch. Overall, first quarter, if we break it down, RPS 8%, Open Brokerage is mid-single digit organic, and Binding and Programs is in the mid-teens organic with higher renewal premiums and increased submissions specifically in that business.
Okay. Great. Thank you so much.
Thank you. We have a follow-up from Elyse Greenspan with Wells Fargo.
You got another one. Go ahead, Elyse.
Hi. Thanks. I guess I wanted to come back to the organic growth, right? You guys left the 6 to 8.
Elyse, you're breaking up. Are you on a cell phone? I can't hear you very well.
Oh, sorry. Can you hear me now?
Far better. Much better.
Thanks. Sorry about that. I wanted to come back to the organic guide, right? The 6-8% for brokerage for the year with the Q1 trending better. It sounded like in response to Alex's question, right, you left the door open to maybe raising that or being more precise with Q1 earnings. Is there any other seasonality we need to be thinking about in terms of the quarters that could be better or worse? I know you guys had previously flagged, right, stronger Q1 due to reinsurance. I'm just trying to think about the back three quarters of the year from an organic perspective.
Yeah. Here's the thing. I think that right now, let's make sure that I think that we let's make sure that we understand what I said. Our strong first quarter makes us feel more comfortable about our 6-8% range, right? First and foremost, let's say that. Second of all, there are still some lumpy-type businesses that we need to get our hands on. The life business that we talked to you about a lot can move some numbers around, maybe as much as half a point of organic in a quarter, a little bit one way or another. We'll see. Those are kind of interest-sensitive type products. We'll see what happens with the rate environment on it. I would say, like I said, the way I close it, let's not get too terribly excited.
We just feel more comfortable with the 6-8% range. Is that a great way? Isn't it terrific to have a terrific first quarter coming at us?
My second question was on some of the pricing stuff we just went over. It seems like small accounts went from, I think you were saying, up around 6% to 1%, 2024 to 2025. I said that wrong, right? The large accounts was the one that went down. You saw small accounts actually go up from 6% to 9%, right, where there was more compression on the large side from 5% to 1%. Is that in property and casualty? I guess, is that an all-in number? I'm a little bit surprised, I guess, that you—I know we went through some of the color during the comments, but that the small accounts went up so much and there was so much give back on the large accounts in terms of pricing.
Yeah. This is a blend. This is not singling out any one line of coverage of what I gave to Elyse. If I look at property, now again, this is, I think, agnostic to size account, but it's down about a point in that category. GL umbrella are carrying the difference significantly in the 5%-6% range. Again, that's $100,000 in premium, which generates about $10,000 in income when I was mentioning the size of account. It gets a little funky because you've got the mix between both commissionable accounts and fee-based accounts. Once you start getting north of that $100,000, really start getting north of $1 million to capture its impact to us from a revenue standpoint.
There is a lot of things in play there, as I mentioned, the cost evaluations on a property perspective, and then the GL and umbrella lines still seeing some rather significant increases.
Okay. One other one, Doug, that I was just thinking about. The deal obviously is pushed.
That's it.
The deal is pushed back a little bit. You guys have obviously had the cash and you're carrying this. You guys always generate a lot of cash, right, each year that you say can fund M&A. Would you think at some point, if the deal gets pushed back more towards the later stages of the year, of perhaps buying back stock, right, and then using cash generated for AP? Or does it feel like the pipeline is strong enough that you'll just kind of hold on to the capital until the deal closes?
You're still going to get this deal done. That's a hypothetical. I don't want to go down that rabbit hole on. This deal, we're going to do exactly what the regulators asked. We're going to prove what we know, and that this is better for customers at the end of this day. That question, give me six months, and then I'll even think about that. That cash is going to be used for AP.
Okay. Got it. Thank you.
Thank you. We had a last-minute follow-up from Mike Zarembski from BMO Capital Markets.
I'm just envious that Elyse asked six questions, so I need to ask one more.
Oh, go to.
Thanks. It's a positive one. When I heard the answer on RPS's MGA programs business being kind of a double digits, well into double digits organic growth in one Q, I believe, we've seen some rather explosive growth in the overall MGA marketplace in recent years, including on the M&A side from some of the public peers kind of driving that business to be a bigger part of their business. Just curious, is that anything behind that double-digit growth that might be trendable or anything we should know?
No, Mike. This is Mike Pesch again. I would say, look, the environment is such that clients want faster product launches. The carriers want lower operational costs, and they want the ability to specialize in niche markets. That trend has been occurring for the last two to three years, if not longer. We are still very bullish on where we could build that and continue to build out specific programs that cater to not only our retailers but the 25,000 other brokers that RPS trades with on a day-in and day-out basis whose customers are looking for the exact same thing.
Mike, is that an area that is conducive for M&A, or is there something structural that those MGAs prefer to maybe be with more of a larger wholesaler or just stay independent?
Yeah. No, it is definitely an area we look at. In fact, we spent a lot of time over the past year looking at different opportunities in areas where we may want to start to build a relationship with the idea of merging. The opportunity exists to build our own. We have a unique genetic makeup at Gallagher in the sense that we also have Gallagher Re to support us when we go to market. We have the distribution channel through the retail, and we have RPS in the program space. We can start to tailor-make, and that's what we're doing, tailor-make programs to not only our book of business but also, again, the 25,000 other independent agents that we work with.
Yeah. We've been buying—we started RPS in 1997, and there's not been a time that we've ever backed off buying MGAs.
We're one of the largest MGAs in aggregate in the United States.
Okay. That's right.
Love that business.
Thank you.
Thanks, everyone. Thank you again for joining us this morning. We appreciate it. As you heard from the team today, I think we're poised to continue our growth, and we can really execute in this market environment. I believe we're incredibly well-positioned to continue the strong financial performance we've had over the longer term. I'm incredibly proud of our past returns. As I said in my prepared remarks, 73% TSR over three years, 217% TSR over five years, and 633% TSR over 10 years. We see our job to keep building on that and our responsibility to do it with the best culture in the business. Thank you for being with us today. We're excited about the quarter.
Thank you.
This will conclude today's conference. We may disconnect your lines at this time. We thank you for your participation.