Good morning and welcome to the Arthur J. Gallagher & Co.'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 law. These forward-looking statements are provided in the spirit of the SEC's request that companies provide investors with as much forward-looking information as possible in the midst of the COVID-19 crisis. They are subject to certain risks and uncertainties discussed during this meeting or described in the company's most recent Form 10-K and subsequent Form 10-Q filings. In particular, COVID-19 has created significant volatility, uncertainty, and economic disruption that may impact our forward-looking statements.
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 Mr. J. Patrick Gallagher, Jr., Chairman, President, and CEO of Arthur J. Gallagher & Co. Mr. Gallagher, thank you. You may begin.
Thank you very much. Good morning, and thank you for joining us today for our quarterly investor meeting. For years, we've done this in person, but we've done this meeting virtually a few times now, and we think it's a nice opportunity for investors to get quickly up to speed with our businesses and the continuing Gallagher story. For those of you that are familiar with Gallagher or have followed us for some time, you can get a concise business update from the last time we spoke, which was just over six weeks ago. The format today will be similar to our June and September IR meetings. After my opening remarks, each of our business leaders will speak for five to ten minutes, describing their business and how they compete while touching on topics like organic margins, the M&A pipeline, and other market factors.
Our leaders will also provide you with some observations from what they are seeing in the fourth quarter and how they are thinking about 2021. Doug will wrap up with some financial commentary. Our prepared remarks should last around an hour in total, and then we open up the line for Q&A from those of you who are dialed in. Before we begin, let me start by saying we continue to place the safety and health of our colleagues first. While our leaders on the call will not be commenting individually on our efforts, it does not mean that the well-being of our employees is not our top priority. Among our more than 30,000 employees, we have had only a few serious cases of COVID-19, all contracted outside of our offices.
We continue to be a healthy group, but even one case is too many, and our thoughts and prayers go out to them and their families. As I reflect upon our business since the onset of the pandemic, I have to say that I'm extremely pleased with how the team has responded and performed during this unprecedented period. We continue to service our clients, sell new business, look at merger and acquisition opportunities, and most importantly, our bedrock culture is alive and well, probably even stronger. While the global economy is poised for a recovery in 2021, the team remains highly engaged, helping businesses, some of which are still struggling, navigate an environment of rate increases, tightening terms and conditions, more limited capacity, and high unemployment. Our resourceful and talented professionals are providing the best advice and solutions for our clients, driven by deep product knowledge and data-driven insights.
Remember, about 90% of the time we're competing against smaller brokers that just don't have the expertise, capabilities, or data to successfully help their clients manage the current insurance and economic environment. I really like our competitive position. From a financial perspective, when the pandemic hit, we set our sights on still delivering adjusted EBITDA during 2020 substantially better than last year in our combined brokerage and risk management segments. We've done just that. Through September 30, we were up about 20%. More impressive is that we are up nearly 30% in the last six months alone. Our cost control efforts have provided significant savings: $74 million and $70 million in the second and third quarters, respectively. You'll hear Doug say later this morning we remain confident we will save another $65 million-$70 million in the fourth quarter. I'm extremely pleased with our team's execution.
Moving to mergers and acquisitions, year to date, we've completed 23 mergers at fair multiples. While a bit off our pace in prior years, the opportunity set for potential mergers remains almost limitless, and we expect the rest of December and 2021 to be very active. Our global platform is an excellent fit for entrepreneurs looking to use our tools and data to grow their businesses, support their current clients, and advance their employees' careers. Smart owners can see that their clients are expecting more expertise than data-driven insights, and a strategic partner like Gallagher can help them succeed. When I look at our M&A pipeline, we have about 35 term sheets signed or being prepared, representing approximately $400 million of revenues. While we know that not all of these will close, we believe we'll get more than our fair share.
Today, each of our division leaders will go deeper into their business, but let me give you a global perspective on two topics. First, the PC rate environment, and second, I'll touch on new and lost business and exposure unit changes. PC pricing continues to rise in most geographies and product lines around the globe, and the increases we are seeing in October and November are even stronger than the third quarter, and there are quite a few places where I would even describe the market as hard. Across our global PC book, rate is up nearly 8%. At the same time, capacity is shrinking, and terms and conditions are becoming more difficult. By line of business, property pricing remains the strongest, with rate increases north of 12%, followed closely by professional liability of double digits as well.
Casualty and commercial auto rates are firm in most geographies and are up around 7% globally. Even workers' compensation is now flat or up a bit. Carriers are making a case for firm rates to persist, citing elevated natural catastrophes, the pandemic, social inflation, and low investment returns. I think rate increases are likely to persist for some time, but that's when our team shines. Our job is to make sure our clients get appropriate, well-structured insurance coverage for their risk tolerance at a fair price. Turning to new business trends, retention, and midterm policy adjustments, here is what we are seeing in our book of business over the last two months. First, new business production is about a point better to prior year. That's amazing. Second, client retention remains at pre-pandemic levels and is similar to the fourth quarter of last year.
Third, full policy cancellations are similar to historical levels and in many places even lower than last year's fourth quarter. Fourth, endorsements, premium audits, and other midterm policy adjustments remain a net positive overall as customers are adding coverages and exposures to their existing policies. Finally, the only real soft spot we are seeing is in our employee benefits unit where non-recurring HR consulting work is down. Even the high unemployment levels are only translating to a modest decline in covered lives amongst our health and welfare customer base due to furloughs and purchases of COBRA. I'll now foreshadow some punchlines you'll hear from the team today. You'll hear Mike Pesch tell you our U.S. Retail PC business is performing very well. New business and retention remain strong, while renewal premiums are higher year over year, which suggests rate is more than offsetting exposure unit declines.
Tom Gallagher will tell you that our International PC Operations are holding up quite well too, with some outperformance in Canada, solid new business and rate. Pricing in Australia and New Zealand remains modestly positive, while the U.K. is performing better than the third quarter so far. Joel Cavaness will speak to the relative strength we are seeing in our Open Brokerage Wholesale Intermediary Risk Placement Services. The MGA program and binding businesses are solid too, with growth on an improving trend. Although a bit choppy from month to month, he's seeing positive signs for the economy, and open brokerage rate increases are in the double digits. Bill Ziebell will then talk about our employee benefits and HR consulting business. Client retention remains solid, but unemployment levels continue to weigh a bit on covered lives within our traditional medical, dental, and vision benefit operations.
Many of our clients' HR consulting projects continue to be on hold, and new engagements are tough to come by. However, looking forward, we expect to benefit from a recovering labor market next year. Scott Hudson will take you through our third-party claims administration business, Gallagher Bassett. He will talk about the improvement in new claims arising we have seen relative to the April lows, but also note that claim counts have not reached last year's levels. We're seeing a tailwind from higher COVID-related comp claims this quarter, so organic should improve relative to the third quarter. Overall, we remain confident we will deliver full year 2020 EBITDA better than 2019 and believe 2021 will show organic growth closer to historic levels.
Our CFO, Doug Howell, will talk about our solid financial position before bringing it all together to tell you what we think this means for our fourth quarter. He will also give you an early indication of what we think will happen in 2021. From my vantage point as CEO, I believe we are executing extremely well, setting us up nicely for an even better year in 2021 with stronger organic, perhaps back to pre-pandemic levels in the second half. A ripe M&A environment and further execution on our productivity and quality initiatives that can help hold a lot of cost savings seen in 2020. I'm proud of our colleagues for sticking together while working apart, and I'm thankful for our clients' continued trust and our carrier partners' ongoing support. Happy holidays, everyone.
I'll stop now and turn it over to Mike Pesch, who's going to discuss our U.S. Retail PC Brokerage Operations. Michael.
Thanks, Pat, and good morning, everyone. As Pat said, my name is Mike Pesch, and I'm the leader of our U.S. Retail Property Casualty Brokerage Operations. My comments today will focus on three key areas. First, I'll start by providing you an overview of the business. Next, I'll discuss the current market conditions, including the rate environment. Third, I'll conclude with some observations from October and November. Let me start with an overview of our U.S. R etail PC Operations. In 2019, we generated almost $1.6 billion of revenue, which positioned us as the third largest PC retail broker in the country according to Business Insurance. We place more than $10 billion of premium annually through about 200 offices and have approximately 6,700 employees, including nearly 1,800 in our centers of excellence.
Our operations are focused on middle to upper-middle market commercial clients, and typically, we are placing between $100,000 and $2.5 million of premiums for each of our clients every day. That translates into roughly $10,000-$250,000 of annual revenues per customer. We also have a decent-sized commercial, small commercial, personal lines, and affinity customer base as well. We find that our core middle market clients typically don't have a dedicated risk management team to purchase or oversee their insurance coverages. That's important because those businesses have needs for an outsourced risk manager versus someone who is only there to place coverage on their behalf. That aligns very well with our value proposition that we call CORE360. It's the approach we take when we evaluate our clients' risk management program. We focus on six key cost drivers of a company's total cost of risk.
They include program structure, coverage gaps, uninsurable losses, loss prevention and claims, contract liability, and premiums. CORE360 embeds Gallagher inside the client's business and highlights how we are different as a broker as an outsourced risk manager. That resonates with our clients looking for a holistic risk management solution and advice. Our retail brokerage operations are organized around 30 niche practice groups, industry verticals where we have developed depth, expertise, and specialized insights. We see this specialization as a competitive advantage, allowing us to better understand the unique risk characteristics of our clients' business and provide value-added products and services to those industries. Our niche leaders support our producers and make sure that we're addressing specific risks and challenges that those industries are facing. For example, take a higher education client.
You simply can't provide substantial value to an account like this if you don't know anything about the operations and risks of a college or a university. We believe this tailored approach helps us retain customers and drive new business over the long run. It's nearly impossible for smaller regional or local brokers who are our primary competitors to match that. Our data shows that 90% of the time we are competing against brokers that are smaller than us. Our differentiated value proposition through CORE360 combined with this niche expertise has led to really nice retention, new business, and ultimately organic growth. Organic has been around 5% pre-COVID. That includes retention consistently in the low to mid-90% and double-digit new business production as a percentage of our trailing revenue. As we now pass the nine-month mark of the pandemic, almost all of our U.S.
Retail colleagues continue to work from home, but that hasn't slowed us down and hasn't slowed down our sales culture. Our producers are leveraging webinars and online industry or product discussions that are generating incremental revenue opportunities and new client leads. In fact, we've hosted nearly 50 virtual webinars so far this year. The largest event was in May. We called it Denver at Your Doorstep. It replaced the Global Rims event that was canceled due to the pandemic. We had a great turnout with about 1,600 attendees to the all-day sessions. We've also established on-demand webinars on our website, ajg.com. This allows clients and prospects the ability to tap into our niche practice leaders and product expertise anytime, any day of the week. Producers are notified if a client or prospect engages with any of our online content.
We're seeing entire new client engagements being done in a virtual environment from initial pitch to close, and we think this is adding to our new business sales. Let me explain this a little bit further. Prior to COVID-19, our 30 niche leaders and 500 or so product experts would spend countless hours traveling to prospect meetings or attending dinner pitches. With our prospects no longer expecting us on an in-person visit, we have a better opportunity of getting our most knowledgeable subject matter experts in front of our prospects, and we have the internal tools to efficiently pull experts from anywhere around the globe and get them involved in the engagement. On top of that, insights that we can provide from Gallagher Drive, our data and analytics platform, clients can visualize what coverage types other Gallagher clients are buying and what limits they're ultimately purchasing.
This is becoming a key difference in our offerings to our clients, especially when we compete against local or regional brokers. It's really exciting for me to watch our producers compete and win during the pandemic. In addition to client engagement, we are also having tremendous success connecting virtually with our own colleagues. As an example, just recently, we held an internal strategy session around our next technology investment with over 40 producers and leaders in attendance. The meeting incorporated a more typical online presentation, but in addition to that, it included virtual breakout sessions that supported idea generation. This is important learning as we think about internal meetings and travel in the future. Moving on to M&A. We have a strong, successful track record, and M&A continues to be an important part of our growth strategy. We target firms generating between $5 million and $10 million of annualized revenues.
Most of our merger partners are the result of relationships that we have built at the local level, so we know these entrepreneurs very well and understand their culture. We want the right fit, so we take our time looking for the right partners, teams that want to be with Gallagher for the long haul. Looking beyond the Gallagher culture, partners are drawn to the tools, the expertise, and resources that we can provide them. Looking forward, we have a very full M&A pipeline here in the U.S. We are really excited about the few mergers that are on track to be completed before year-end. With the tough PC market conditions in the U.S., I think our pipeline is poised to grow. Moving on to productivity and quality, I believe our operations are in great shape.
Our efforts over the last 10 years to streamline workflows, standardize processes, leverage our centers of excellence, and move onto a common agency management system have resulted in faster, leaner, and more productive as an organization. In terms of EBITDA profits, we continue to realize benefits from operating expenses that we save through the different areas, including the natural contraction of travel and entertainment expenses, but also outside labor and lower occupancy costs. What I'm even more excited about is the acceleration of automation projects and the continued shift of work to our centers of excellence. These actions should help us improve quality and position us to make future investments in analytics and new production talent, which should be additive to growth over the long term. Now, moving on to my second topic, the market and the U.S. retail pricing environment. I would continue to describe the U.S.
market as increasingly difficult, but remember, not every hard market is the same. We are seeing in nearly every area and every line of business a firming and, in a few lines, becoming hard. Terms and conditions continue to tighten, and finding capacity in some lines is becoming increasingly difficult. Overall, third-quarter price increases in the U.S. were nearly 8%, with strength in property and professional liability. Thus far, here in the fourth quarter, pricing is up about 8.5%, with property and professional liability up 12%, commercial auto up 5%, and casualty up 9%. Work comp rates are even up a little heading into year-end. Looking forward, I feel like the rate increases we are seeing have legs. It feels less like a sprint and perhaps more like a marathon. In fact, just last week, AM Best affirmed its negative outlook on U.S.
Commercial line sector, citing the current economic environment, but also continued social inflation, recent natural catastrophe activity, low interest rates, and more difficult reinsurance conditions, all of which would signal the need for more rates. While future price increases could place upward pressure on premiums, remember, it's important to realize that price increases don't fully show up in our organic. Our job as brokers is to help our clients mitigate price increases by shopping coverage and tailoring clients' programs with increasing deductibles or reduced limits to ensure their risk management programs fit their budgets. Finally, I'll conclude with some specific thoughts from October and November. Organic has held up pretty well during 2020, about 5.5% in the first quarter and then 4% in the second and third quarters. Based on what we are seeing thus far, I think fourth-quarter organic will be similar to the second and third quarter.
Underlying our view of the following trends from October and November, first, new business remains strong and continues to run similar to 2019 levels. Second, retention is also very similar to last year, within about half a point. Midterm policy adjustments are running similar to slightly better than pre-COVID levels. Most of the midterm adjustments are coming from policy endorsements as companies reset their coverages, while premium audits and full policy cancellations are similar to the year prior. Fourth-quarter renewal premiums, which capture both rate and exposure, are higher relative to last year. To the extent we are seeing exposure units decline, rate is more than offsetting the decline. Almost every major line of business is showing year-over-year increases in renewal premium thus far in the fourth quarter. Like last quarter, the exception to this trend is workers' compensation.
While rates are up a bit, exposures are down relative to 2019, leading to modest premium declines. Remember, workers' compensation represents only about 10% of our annual revenues. I think the business is very well positioned. Retention and new business levels remain solid. Rate increases continue to move higher, and exposures are off their lows. That market backdrop, combined with our superior value proposition and service, I truly believe our competitive positioning has never been stronger. I remain excited about our future. Okay, I'll stop now and turn it over to Tom Gallagher, who is going to discuss our international PC Brokerage Operations. Tom?
Thanks, Mike, and good morning to all of you on the call. My name is Tom Gallagher, and I lead our Global Property Casualty Brokerage business. Mike just covered the U.S. side, so I'll tackle the international portion today.
Let me start by dimensioning the business and speaking to our recent performance. Then I'll cover the pricing environment outside the U.S. and close with some data points from the fourth quarter thus far. Starting with an overview of the business, we finished 2019 with approximately $1.6 billion in International PC revenues, and we placed more than $10 billion of premium on behalf of our clients. We have a diverse group of businesses internationally, and while we have about 300 offices in nearly 50 different countries, our business is predominantly in the U.K., Canada, Australia, and New Zealand. Like the U.S., we are focused on middle-market retail clients, and we too have small business, high-net-worth personal lines, affinity, and a very strong large account risk management business. We also have a leading London specialty broker and a fast-growing reinsurance brokerage business called Gallagher Re.
Let me break down our revenues by geography, starting with retail. In the U.K., we're a top five retail broker. We generate about $400 million of revenue annually. Like our U.S. counterparts, we utilize a niche specialist network and have around 75 individual offices largely throughout the country and smaller cities. Moving to Australia and New Zealand, combined, we have around $350 million of revenue annually. We're the largest retail broker in New Zealand and a top five broker in Australia. Jumping to Canada, we're building toward $200 million of revenue with operations in seven of the 10 provinces. Outside of retail, our London specialty and reinsurance platforms combined are another $400 million of annual revenue. Our international growth strategy mirrors the successful path undertaken by our U.S. business.
We're driving our global organic growth by leveraging best practices across geographies, sourcing and integrating M&A opportunities, and using our operational excellence to capitalize on scale advantages. We have found in many instances what our teams are doing can be tailored, applied, and delivered to our retail clients anywhere around the world. For example, we have implemented CORE360 as our global value proposition. What started out as a U.S.-focused strategy is now how we go to market everywhere around the world. It goes the other way as well. Our U.S. operations are implementing creative sales ideas from their international colleagues. It's been great to see it happen in the U.S. as well. That cohesive global strategy allows us to further leverage cross-border and cross-divisional content, insights, and thought leadership. This is a key advantage over smaller brokers, those we compete against most of the time.
These firms just can't match our offerings. Internationally, our operating expense saves are also driving nice increases in EBITDA over last year. While a large portion of the savings are from the natural contraction of travel and entertainment expenses, we have also further leveraged work in our centers of excellence. In fact, we saw international headcount increase in our centers of excellence at more than double the pace than the U.S. retail between April and November of this year. This change in our workforce was set in motion pre-COVID, but the team has done a really nice job accelerating the shift. We think this will have positive implications for quality, which was the original reason we created the Gallagher Service Center. We're also seeing savings that could persist over the longer term.
Moving to mergers and acquisitions, we're seeing a large number of opportunities outside the U.S., which tells me our story is resonating in international markets around the world. Our culture, support tools, specialisms, and access to data and analytics resonate with international entrepreneurs, partners who are not satisfied remaining the same, who want to take their firms to the next level and to grow their books of business. Partnering with Gallagher can offer them great opportunities. I see more fourth quarter 2020 activity in the U.S. than internationally, but we have a really nice pipeline of merger prospects in the U.K., Canada, and Australia, many of which could be completed early next year. Moving to organic, margins and pricing environment, let me walk you around the world. Prior to COVID-19, our U.K. retail organic was running nearly 5%, and adjusted EBITDA margins were pushing the mid-20% range.
Exposure growth was modestly positive, and PC pricing was increasing about 4%. Through the first nine months of the year, organic is running a couple of points below pre-COVID levels, while EBITDA margin has improved with our cost savings. Within London specialty, pre-COVID organic growth was high single digits, and margins were nearly 30%. Price increases were 5%-10% across most lines of business. Year-to-date organic through September is mid-single digits, while margins have also improved. Moving to Australia and New Zealand, 2020 organic has been in the low single digits, down relative to 2019's organic of 7%. Most of the difference between years is market-driven. Australia and New Zealand are still seeing rate increases in 2020, but just not as much as 2019. EBITDA margins here are nicely above 30%.
Canada's, Pat alluded to earlier, continues to post excellent results, with 2020 organic in the high single digits through the first nine months of the year and margins above 30%. Rate increases are more than offsetting exposure declines, particularly in property, professional liability, and commercial auto. Let me finish up with some fourth-quarter observations, focusing on renewals. So far in the fourth quarter, price increases are broadly offsetting exposure declines. Canada is seeing the highest premium changes, driven both by property and professional liability. Australia and New Zealand premiums are also higher year over year. However, most lines of business are experiencing more modest premium increases, suggesting price increases are just about offsetting exposure declines. Moving to the U.K. retail, we are seeing renewal premiums up in property, casualty, and professional lines, offset by negative premium changes in commercial auto.
Overall, premiums are increasing, but here too, it feels that rate increases are modestly higher than exposure declines. In terms of new business, retention and midterm policy adjustments, overall, two months into the fourth quarter of 2020, I'm seeing new business a point higher than last year, retentions about a half a point lower, and no significant impact from midterm policy adjustments. By geography, our Canada business is better with excellent new business and similar retention levels this year compared to last. In the U.K., the U.K. retail business is posting slightly better new business and slightly lower retention levels relative to a year ago. When I look at our London specialty operations, I'm seeing new business up a bit and strong retentions. Restrictions have lifted in Australia, and new business and retention are trending better than last year at this time. Finally, New Zealand.
New business is similar to prior year, while retention is off just a little bit. A strong new business, solid retentions, and positive renewal premiums. Overall, I see fourth quarter organic of around 3%. If current fundamentals hold and these positive trends persist, we're hopeful full year 2021 organic will be better than 2020. In summary, we feel really good about our international business. I'm incredibly pleased with the team's new business sales, all while servicing and retaining existing clients while operating from home. Employees in some of our international offices are back in the office, and I'm excited to see how the teams are performing. Frankly, they're not losing a beat. The market is showing signs of improvement. Exposures are recovering off their lows, and midterm policy adjustments and cancellations remain immaterial.
While pricing is a net positive for us, it varies by line and geography, and our producers are working hard to offset increases for our clients. Bottom line, I am extremely optimistic about 2021 and beyond. Okay, I'll stop now and turn it over to Joel Cavaness, who's going to discuss our Domestic Wholesale Brokerage O perations, known as Risk Placement Services. Joel?
Thanks, Tom. Good morning to everyone. I'm Joel Cavaness, and I'm the leader of our U.S. Property Casualty Wholesale I ntermediary Risk Placement Services, or RPS for short. Similar to previous quarters, my comments today will focus on three topics. First, I'll provide an overview of the business. Second, I'll move on to some comments on P&C pricing. And third, I'll wrap up with some observations related to our fourth quarter and provide some high-level thoughts on 2021.
RPS was started from scratch in 1997 and has since grown to the fourth largest wholesale broker in the U.S. We have about 2,300 colleagues. We finished 2019 with approximately $425 million in annual revenues, and we place over $4 billion of premium on behalf of our clients. Unlike Mike's retail business, as a wholesaler, our customers are not businesses themselves, but rather the independent agents and brokers that need our capabilities, products, and our carrier relationships. About a quarter of our business comes from Gallagher retailers, while the remaining 75% comes from other non-Gallagher agents and brokers. Let me walk through our key businesses, starting with open brokerage. Within open brokerage, we're helping a retail broker who's having a difficult time placing a line of coverage or needs access to a specialty coverage or market that they don't have.
We generally go out into the market and negotiate with carriers on behalf of the retailer and their client. It's a very specialized business and can range from hard-to-place property like earthquake or flood or casualty like long-haul trucking or liquor liability. Many times, these placements are further complicated with multiple layers and multiple carriers involved. We have our MGA and our program business. Here, we actually underwrite, price, bind, collect premium, and issue the policy, but we don't take any underwriting risk. We have about 40 programs focusing on specific types of entities or coverage, including commercial and personal lines. For an example, our commercial lines programs range from public entities to country clubs to amateur sports, and our personal lines program includes things like non-standard auto, manufactured homes, and low-value dwellings.
We have standard lines aggregation where we provide retail agents access to admitted products from a particular carrier. For an example, a local agency in a small town might not have a direct contract with Chubb. However, that agency can still access Chubb through us. In essence, it gives that smaller agency more products for its customers. Our goal is to be the recognized leader in the intermediary market by providing a wide range of services across a very large distribution platform. We compete with many different wholesalers, and ultimately, we win because of our speed of response, our ease of doing business, our product breadth, and the strength of our carrier relationships. In the U.S. P&C market, rates are increasing, capacity is shrinking, and terms and conditions are becoming more difficult.
This environment is making RPS even more useful to retailers as they need our help with their placements. We are seeing more opportunities and submissions crossing our underwriters and our brokers' desks. We are seeing similar trends in our award-winning e-commerce platform as well. Our year-to-date policy counts bound on this platform are up more than 30% relative to prior year, benefiting from higher submissions and improving hit ratios. That is a combination of retailers becoming more familiar with our platform and the increasing breadth of our products. Today, we offer retail agents nearly 20 products, which we expect will continue to grow over time, making us even more of a one-stop shop for retailers. Going forward, as retailers and brokers shift more to instant gratification models utilizing a digital platform, RPS will continue to be there to meet their needs.
Outside of our leading digital strategy, our scalable and our flexible platform has led to consistent execution. We're designing programs, finding markets, and maintaining very fast turnaround times. We continue to win new business and support and retain our current customers. We too are a seasoned acquirer. In fact, RPS has completed more than 50 acquisitions since 2020. Most of our activity has been focused in the MGA and program space, largely because there are thousands of MGAs in the U.S., so that is where the opportunities are. We look for partners that will fit culturally, add expertise, or incremental products to our business, and provide us with additional M&A opportunities. M&A partners choose RPS because they realize that together we can make investments in data and open doors to over 13,000 retailers. Our wide distribution combined with current E&S market conditions is driving many more opportunities.
Moving to the pricing environment, wholesalers tend to see rate changes faster and more sharply than retailers. Add at least a couple of points to what Mike has seen. Our data is showing open brokerage rate increases of 14% in both October and November. This includes double-digit increases in property, professional liability, excess casualty, and marine, while workers' compensation remains flattish. In our binding operations, rate increases are a little less positive but have similar trends by line of business. Property has seen the largest increases, followed by professional liability, and workers' compensation is the weakest. Capacity continues to tighten, specifically for umbrella and professional liability, likely the result of social inflation and the increasing prevalence of litigation finance. Fewer carriers are willing to quote these lines of business, and those that do ultimately quote reducing limits that they're offering.
Overall, a very difficult market, but most risks can still get placed. Let me give you a sense of what we're seeing so far through the first two months of the fourth quarter. First, premiums on renewal business are up year over year in both October and November. Renewal premium increases continue to trend in the double digits within our open brokerage business, which would suggest pricing is exceeding exposure changes by a pretty healthy margin. On the binding side, renewal premium increases are up below single digits, suggesting rate increases are just about offsetting exposure changes. New business is down a bit over last year with better trends within brokerage relative to binding and programs. Retention rates are higher by two points relative to last year, and midterm policy adjustments, premium audits, and full policy cancellations are slightly better than pre-COVID levels.
Now, remember, there remains a lot of economic uncertainty, and December is a decent-sized month for us, but as we sit here today, it feels like the fourth quarter organic will be in the mid-single digits, and that would be a really strong result. As I look ahead to 2021, I am encouraged by a few trends. First, from my vantage point, the economy seems to be on an upswing, although a little choppy from month to month. I spoke with you about commercial trucking trends three months ago, and let me tell you, we're seeing even better trends today. Trucks are back on the road, which means they're being added back to policies. In fact, we've seen more positive policy endorsements so far in the fourth quarter than we saw a year ago.
Second, policy cancellations are trending a touch more favorable than last year's fourth quarter, so it seems like our clients' businesses are relatively healthy for now. Third, U.S. wholesale pricing is showing no signs of losing momentum. Whether it's cyber risk, professional liability, healthcare, or umbrella, we're hearing from carriers that they continue to need more rate. Anecdotally, workers' compensation could also start to show some sustained increase next year, which would also add to the pricing story. As I said last quarter, I think the business is in just great shape. We're seeing strong organic growth in open brokerage, while organic in the MGA and program binding business is trending better. We have solid new business, excellent retention, and we aren't seeing significant weaknesses in the health of our clients' insurance. We have an efficient and a scalable platform. We continue to invest in content and capabilities.
I feel really good about our business, our strategy, and our competitive position, and needless to say, I'm extremely optimistic about our future. Okay, I'll stop now, and I'm going to turn it over to Bill Ziebell, who's going to discuss our employee benefit consulting operations. Bill?
Thanks, Joel. Good morning, everyone. I am Bill Ziebell, and I lead our employee benefits and HR consulting business known as Gallagher Benefit Services, or GBS for short. My comments this morning will focus on a few topics. First, I'll provide an overview of GBS, and then I'll walk you through some takeaways from the first two months of the fourth quarter and some early thoughts on 2021. GBS began in the mid-1970s and has grown to the fourth largest benefits brokerage and HR consultant in the world, with 4,400 colleagues and more than $1.2 billion of revenue generated during 2019.
We have about 100 different locations spread across the U.S., the U.K., Canada, and Australia. However, about 90% of our revenues are domestic, with the other 10% international. Our producers sell traditional insurance products like medical, dental, vision, and voluntary insurance products that employers provide to their employees. We also advise on employer benefit plan design, financial projections of these plans, and potential funding alternatives. That's the bulk of our revenues. Call it about 75%. The other 25% comes from HR and compensation plan consulting, pharmacy benefit management consulting, work on retirement plans, executive benefits, and other services that help employers address their human capital needs. Similar to our retail property casualty counterparts, we too target middle-market employers, which we define as organizations that have somewhere between 100 and 5,000 employees.
Most of the time, we are competing against local or regional benefits firms, and we provide our clients resources and capabilities that most smaller competitors just do not have. We also serve larger corporate enterprises by offering a fresh alternative to some of our bigger competitors. Earlier, you heard Mike and Tom talk about CORE360, our property casualty value proposition that analyzes and addresses clients' total cost of risk. Within Gallagher Benefit Services, our value proposition is called Gallagher Better Works, which examines all the levers that an employer has to attract, engage, and retain talent. Gallagher Better Works explores the full spectrum of organizational well-being, from how to maximize a workforce by investing in physical and emotional health to financial well-being and how employers can offer career growth opportunities to their employees. We tailor solutions that address and maximize all of these.
Our clients value our holistic approach to human capital and recommend us for our resources, our thought leadership, our strategic thinking, and our high level of service. Our pre-COVID-19 benefits strategy and benchmarking surveys showed that attracting and retaining talent was the top priority for most employers, while lowering costs was secondary. Not surprisingly, our 2020 survey showed business continuity and cost control jumping ahead as the two top objectives for many businesses. While our goal through Gallagher Better Works is to help employers maximize productivity for the workforce, cost is always a factor, and so we also focus on strategies to lower costs. In 2019, our benefits business was growing mid-single digits organically, with mid-90% retention and high single-digit new business growth. Like our property and casualty businesses, it was growing with a high level of profitability. Adjusted EBITDA margins were in the mid to high 20s.
Moving to mergers and acquisitions, we too are actively engaged in mergers, and we have a long successful track record. Our numerous specialized practice groups, niche experts, marketing initiatives, thought leadership, and technology are resources that our merger prospects want and need to be successful. Our pipeline of potential merger partners continues to grow. We have completed a handful of mergers already in the fourth quarter and think we could complete a couple more before year-end. Now, almost nine months into the global pandemic, and nearly all of our colleagues are still working from home. I believe our people have settled in on their new work environment, and operationally, we have not missed a beat. Mike spoke about how his team has been able to deliver even more expertise at the point of sale, and we're having the same success in the virtual selling environment.
We have numerous examples where experts were brought in virtually to help win new business. A couple of recent examples include a win on an executive benefit deal with a healthcare client in Kansas where the expert was brought in virtually from North Carolina. We also had a multinational benefits consultant from Chicago brought into Texas to help win a tech company as a new client. We also had a life and disability expert from Illinois help save a national physicians group 22%, including a three-year rate guarantee. These are the kinds of things that are happening all the time now in this virtual environment. By the way, it's very exciting to see our producers successfully win new business in this new world.
These successes in the virtual environment were aided by a virtual playbook that was created by our production force that consolidates best practices on such things as camera angle, lighting, backgrounds, sound checks, rehearsals, and so forth. It reinforces the numerous resources available and aids in identifying prospects and goal setting. We're getting a lot of positive feedback and results from our producers. We recently released our 2020 and 2021 U.S. salary planning survey, which collected data from nearly 1,300 organizations during the summer of 2020. It's a nice accompaniment to our larger annual benefit survey I mentioned earlier. We have seen many new leads following the 1,000 downloads of the survey, and some of them have already translated into new business. Our team continues to host monthly town hall discussions, bringing our thought leadership to a wide group of clients and prospects.
These topics have ranged from returning to the workplace to compliance updates to managing open enrollment in a virtual setting. These informative and interactive sessions have drawn a lot of interest, with well over 10,000 clients and prospects participating. Whether it's leveraging our niche experts, thought leadership, or hosting in-depth industry discussions, all of these efforts separate Gallagher from the small or regional brokers and consultants we are competing with on a regular basis. Let me finish up with some thoughts on October and November. I'll start in the U.S. Recall this is about 90% of our revenue and about 80% of the typical coverages you get via your paycheck from your employer: medical, dental, life, disability, and so forth. Although the U.S. unemployment rate is nearly 7% and remains elevated relative to historical levels, it has improved from the April peak of nearly 15%. Our U.S.
Traditional benefits business is feeling some of that pressure. However, we have been a little more insulated from the domestic labor market weakness than headline unemployment might imply for three main reasons. First, unemployment figures include workers that have been furloughed, and the vast majority of furloughed employees continue to receive their benefits through employer-sponsored plans. These furloughed workers remain covered lives. Second, terminated employees can purchase COBRA and remain on their old employer health plans. Again, still a covered life. Finally, third, our business mix. We focus on the higher end of middle market, and our business includes more resilient employers like higher education, public entities, and religious institutions. We tend to be a little underweight on harder-hit industries like retail, restaurants, hotels, and hospitality. A couple more observations worth making about the fourth quarter.
So far, our clients' businesses are holding up, and we just aren't seeing many companies go out of business. This is very encouraging. We are also seeing a partial rebound in elective procedures amongst our clients in October and November, following a slowdown earlier in the year. Overall, the medical trend remains positive, even with a slight benefit related to COVID-19. Lastly, clients don't appear to be making significant changes to their 2021 benefit plans. If anything, we're seeing some clients shift a little more of the cost to their employees, but overall, the employers are keeping their plans the same. Now, moving to the other 20% of our U.S. revenues, which is our fee-for-service business. Most of our practice groups have been only mildly impacted by the pandemic and are holding up quite well.
Our more project-oriented HR consulting practice group is down about 30% year-over-year from April to November. Here, we continue to see discretionary assignments and other one-off consulting engagements being delayed or reduced in scope. Looking forward, we do expect to benefit from a recovering labor market next year. This should lead to more traditional insurance product revenues, but also some additional consulting work as employers engage in projects to attract and retain talent. Now, moving outside the U.S., which is again about 10% of our total revenues. In the U.K., we are forecasting fourth quarter organic to be down mid-single digits. This softness is likely to be offset by Canada, where new business wins should again lead to positive organic in the fourth quarter. We continue to expect slight organic growth in Australia.
When I combine domestic and international, fourth quarter organic feels like it could be down low single digits. That is similar to second quarter organic, but a bit below what we reported last quarter. You will recall third quarter organic included a large life insurance pension funding product sale. Overall, we are not seeing any new trends here. While economic uncertainty remains, unemployment is trending a bit better. With a few encouraging green shoots in select practice areas, we are very optimistic heading into 2021. In summary, we feel really good about the fundamentals of our business and our competitive position. We believe labor markets and the economy will recover. When they do, I am sure more than 4,000 global colleagues will be there to help them navigate the human capital challenges of the day. Needless to say, I remain very excited about our future.
All right, I'll stop now and turn it over to Scott Hudson, who's going to discuss our risk management segment, or Gallagher Bassett. Scott?
Thanks, Bill. Good morning, everyone. As Bill said, my name is Scott Hudson, and I lead our third-party claims administration business known as Gallagher Bassett and shown in our financial statements as the risk management segment. This morning, I'll provide you an overview of Gallagher Bassett's business, give some comments on what we're seeing in the fourth quarter, and finish with some early thoughts on 2021. Gallagher Bassett, or GB for short, was formed in 1962 by the Gallagher brothers and Sterling Bassett. Today, we're one of the world's largest PC third-party claims administrators. In 2009, we generated over $800 million of revenue, about 83% of that is domestic and 17% international, mostly in Australia.
Additionally, we do operate in the U.K., New Zealand, and Canada. We have about 5,600 employees worldwide, almost all of whom are working from home, although many of them, as I've said before, worked from home prior to COVID. We do not take underwriting risk, but rather adjust claims for our clients. In fact, we handle about 10 million—excuse me—about a million claims per year and pay out in excess of $10 billion annually on behalf of our clients. This would make us the eighth-largest P&C insurance company in the U.S. if we were measured by total claims paid. About 80% of our revenue is from workers' comp, 20% liability, and 10% property claims, though very little of our property is storm chasing. We also have specialty offerings in lines like medical malpractice, products liability, environmental, professional liability, and cyber.
We have a well-rounded set of offerings, including services in the areas of environmental health and safety, building sciences, forensic engineering, engineering, and construction, which lines up very nicely with our clients' exposures. We serve four client segments. First, our largest client segment is commercial clients who self-insure or have large deductible programs and then outsource the claims resolution process to us. Think of these as primarily global or Fortune 500-type businesses. Secondly, public sector clients, which include local municipalities, school districts, state entities, and some federal governments. For example, a significant portion of our clients in Australia are state-sponsored work comp schemes. Our third client segment is alternative market or group captive clients. These are generally pooled entities that utilize GB for their claims infrastructure. Fourth, we serve directly insurance carriers.
This is our fastest-growing segment and represents carriers that are both large and small, for which we do an outsourcing or a portion of their claims handling. Clients choose Gallagher Bassett because of our expertise and execution, which results in the best claim outcomes for their businesses. Best claim outcome does not always mean the lowest-cost way to handle a claim. It can vary by client. Each insurance carrier or commercial entity wants their claims handled in a certain way. We do customize our services to align with our clients' expectations. That could mean back to work sooner, brand protection or customer loyalty, or even lower cost in some cases. That is how we provide the best outcome for clients. Our revenue retention generally runs in the mid to upper 90%, so the business is highly recurring, and that has not changed with the pandemic.
In fact, our customer retention remains similar to historic levels. New business generation tends to be a bit lumpier, varying from quarter to quarter because many of our prospects have very large volumes. As a result, from 2017 to 2019, our quarterly organic growth bounced between 2% and 10%, but annually ended up running at around 5%. We were running about that in the first quarter of 2020 before the pandemic. In the second quarter, as you recall, organic was down almost 10% but did recover a bit in the third quarter, let's say down around minus 5%. I'll have more to say about the fourth quarter organic shortly, but it is looking better than the third quarter, which should lead to full year 2020 organic of about minus 3%. M&A is also a growth driver at Gallagher Bassett, but not to the same extent as the brokerage businesses.
Our industry is already highly consolidated, and few large customers are using local TPAs. We have plenty of scale in our core products, services, and geographies, so our strategy is to look for highly specialized and complementary claim adjusting and risk consulting entities that give us a new capability, a new product, or deeper technical expertise. Ultimately, an acquisition should help us deliver better claim results for our clients. We have a really nice pipeline of opportunities and could see a couple of acquisitions completed early on in 2020. We believe our margins are industry-leading, and over the last several pre-pandemic years, margins have been in the 17%-17.5% range. Even at that level of margin, we've been making substantial investments in the business in order to improve our products, platform, and service levels in order to get better outcomes for our clients.
For example, we received the TPA of the Year award at the 2020 U.S. Captive Review Awards in October. This is the third year in a row that we have received this recognition, which highlights our focus on innovation and staying ahead of our competitors. Following the onset of the pandemic, early on in the second quarter, we revised our 2020 financial goals, tasking ourselves with making sure our EBITDA didn't slip versus 2019. With November behind us, we are very confident that we will deliver on that goal and do even better than last year's $145 million of EBITDA. How are we doing? How are we doing it? The resiliency of our EBITDA profits is a direct result of our cost containment efforts.
The team is doing an amazing job proactively managing our workforce and implementing expense controls such as reducing non-client spending, altering our procurement strategy, and further leveraging our offshore centers of excellence. We have saved $14 million and $11 million during the second and third quarters, respectively, and expect further savings in the fourth quarter. Longer term, as we see some light at the end of the pandemic tunnel, we do believe there are some expense learnings from operating in this environment. For example, while nearly 40% of our colleagues worked from home prior to COVID-19, we see that number approaching more like 70% going forward. This has positive implications on future real estate and other building occupancy costs. Further, I think we will see more permanent savings from travel.
Prior to COVID-19, clients expected, and in some cases, demanded us to complete claim reviews or stewardship meetings in person and sometimes in their offices. The pandemic has proven that we can provide clients with a similar level and, in many cases, a greater level of service and expertise in a virtual environment. It would be a little premature for us to quantify the long-term potential savings right now, but those are just a couple of examples of how we see our future expense structure a bit differently. Let me shift gears and walk you through what we are seeing through the end of November. First, client retention continues to trend at historic levels, and amongst our clients, we haven't seen any significant permanent closings.
Secondly, with regards to new business, new business continues to be very strong, and year-to-date new business revenues are ahead of last year by close to $20 million. Third, with regards to new claims arisings, we have seen an improvement in new claims arisings from May to November. However, the monthly trend of core workers' comp and general liability claims has been flattish since September, with recent activity still below last year's fourth quarter. I think that makes sense since businesses continue to operate at partial capacity. If you think about restaurants, hotels, movie theaters, that really hasn't changed much over the last couple of months. Let me break down in a little bit more detail what our fourth quarter organic might look like, starting with the $215 million we posted in the fourth quarter of 2019.
First, let me remind you that a little over half of that revenue represents our Australian-based public entity businesses, our U.S. specialty liability business, and our U.S. cost-plus contracts. These revenues are generally not tied directly to claim volume. More specifically, a lot of them are cost-plus contracts. A portion of these clients have chosen not to reduce the level of resources they have deployed, like our Australian public entity businesses. Revenues have remained resilient over the past nine months, and we've seen some increase in activity within the specialty liability lines, so revenues in this area are pretty stable. The next largest portion of our revenue is complex higher-fee claim business. In the fourth quarter of 2019, revenue related to this cohort of business was pushing close to $100 million. Now, COVID new arising claims are down high single digits, similar to the third quarter. Excuse me.
Those are non-COVID new arising claims are down high single digits, similar to the third quarter. However, we have seen more COVID-19-related comp claims, which is almost completely offsetting this decline. Taken together, I think revenues related to these types of claims will still be down relative to last year, but not a whole lot. Call it, let's say, approximately $1 million here in the fourth quarter. The remaining $10 million or so of quarterly revenue relates to our high-frequency, low-severity comp claims. While the smallest portion of our revenue, claims here are still off close to 30%. We expect another $3 million headwind from these types of claims during the fourth quarter. When you add all of these up, I see somewhere around a $3 million-$4 million organic headwind in the fourth quarter, or about a 1%-2% decline compared to 2019.
If we save another $10 million-$15 million expenses like we did in the second and third quarters, we will more than offset all of that revenue decline. Looking forward to 2021, we are optimistic that organic will rebound closer to historic levels. Let me explain why I'm upbeat. First, we continue to sell new business. As I mentioned before, 2020 new business revenues are well ahead of 2019, clearly indicating that our story and our offerings are resonating with potential customers. Throughout the pandemic, we've been engaging with prospects and proving we can deliver superior outcomes. Secondly, client retention has remained at historic levels. Our service and quality remains outstanding, highlighted by the third year in a row having been named Captive TPA of the Year. Third, an organizational focus on innovation and excellence. Continued product refinement enhancements are in our DNA.
I mentioned our InsurTech Initiative Award for the clinical guidance last quarter, but there are many other examples like this that are strengthening our offerings, including our award-winning RMIS platform, Luminos, which positions us to deliver superior claim outcomes and improve the efficiency of our claims resolution managers. Lastly, our expansion into specialty liability claim handling and environmental health and safety have been well received by clients and prospects. The rounding out of our offerings has created new business opportunities but also served as a balance to high-frequency, low-severity work comp claim declines. When work comp claim activity recovers to pre-pandemic levels, I think we'll see a nice tailwind from these growing practice areas. Needless to say, 2020 has been a challenging year for growth, but the team is executing on our financial targets, all while continuing to deliver the very best claim outcomes for our clients.
I am extremely pleased with the fundamentals of our business: strong retention and excellent new business accompanied by solid execution. While the relative health of our clients seems to be improving, I am hopeful that core workers' comp and general liability claim activity will rebound closer to pre-COVID levels over the coming quarters. Longer term, I'm confident we will return to our historic levels of organic growth of mid to high single digits or higher. Okay. I'll stop now and turn it over to our CFO, Doug Howell. Doug?
Thanks, Scott. Hello, everyone. Thanks for joining today's call. We hope we've found today's commentary helpful and leaves you with a better understanding of our businesses, our strategies, and how we're executing in the current environment. Today, I have four topics. First, I'll recap what was said about our fourth quarter.
Second, I'll provide some early thoughts on 2021. Third, I'll point out a few items on the CFO commentary document that we post on our website. Finally, I'll wrap up with some comments on overall liquidity, and then we'll go to Q&A. All right. First, our view of the fourth quarter again. Let me just recap. Mike and Tom told you this morning that our global property and casualty business continues to show really strong fundamentals. New business, retention, and midterm policy adjustments are all similar to pre-COVID metrics. Renewal premium changes are also generally positive, which suggests price increases are more than offsetting declining exposures. It feels like our global P&C fourth quarter organic will come in around 4%, with the U.S. just a bit better than international. Remember, this is coming off a really strong fourth quarter in 2019, so it's a tough compare.
Joel then spoke about our domestic wholesale businesses. When I look at the two parts of that unit, our open brokerage wholesale operations continue to post great organic results, with rates being up double digits on most lines. Our binding and program businesses are a bit more flattish, as new business startups and some amateur sports programs are slower to recover. Stack it together, however, it looks like wholesale is also up about 4% in the fourth quarter. Building covered employee benefits businesses. Our traditional health and welfare brokerage—that is, medical, dental, vision, and voluntary coverages—are hanging in there much better than the headline unemployment numbers might make you think. Call it about flat this quarter. However, offsetting that, and then some, has been a decline in special project and HR consulting work as customers postpone their special efforts into next year.
Together, it's looking like our benefits division will be something like a - 2% or -3% here in the fourth quarter. When I sum it all up for our brokerage segment, it looks like we'll be in that 2%-3% organic growth range for the fourth quarter, which is really what we were saying six weeks ago during our earnings conference call. If that happens, it would cap off a full year of around 3% organic growth in our brokerage segment, which is pretty darn good given the global pandemic for the last 10 months. When I look at our risk management segment, it's been a roller coaster year for sure: up 4%-5% in the first quarter, down nearly 10% in the second, improved to - 5% in the third, and now looking down perhaps - 1% in the fourth.
That's a really nice climb out of the bottom and would be a terrific recovery story. As for fourth quarter EBITDA, it's looking like the quarterly benefit from our cost savings initiatives will continue to be in that $70 million savings range relative to last year's fourth quarter, of course, adjusting for the pro forma effect of rolling mergers. That will be split with $55 million-$60 million in our brokerage segment and the balance in our risk management segment. That's similar to the level of savings the team delivered in the second and third quarters, despite small increases in marketing, travel, and employee benefit costs that we're seeing here in the fourth quarter. Being able to deliver more than $200 million of cost savings over the last nine months is fantastic work by the team and demonstrates our ability to execute on our recession playbook.
Now, when I'm looking towards 2021, Pep said that he felt that full-year organic would be stronger in 2021 than in 2020. You heard similar thoughts from each of the division leaders as well. Let me try to break that down by quarter, which is a little bit more difficult to pin down. Oddly, as I sit here today, I feel like first and fourth quarters 2021 might be easier to envision than how second and third quarters will play out. Let me give it a try. All right. First quarter 2021 feels a lot like fourth quarter 2020. I say that because it doesn't seem like a vaccine rollout will impact the vast majority of the world over the next 100 days. It will help some for sure, but overall, I just don't see that really boosting our customers' businesses that quickly.
Let's say first quarter organic, somewhere around 3%, and maybe another quarter of expense savings in the $60 million-$70 million range. That seems like a reasonable pick for first quarter 2021. When I jump out to fourth quarter 2021, if the vaccine is widely rolled out by the end of the summer and we get another round of stimulus over the next few months here in the U.S., that would keep some businesses alive and help consumers keep spending. We could see in the fourth quarter a large portion of businesses back up and running at, say, 80%-90% of pre-pandemic levels. Might even be better than that if it releases some pent-up activity in the economy.
When you combine that with PC rates still holding firm, it could mean by the fourth quarter we are back in that 5%-6% range we were seeing pre-pandemic. I am feeling that we should be able to hold half of the post-COVID expense savings too. Perhaps maybe only $30 million of costs return in the fourth quarter relative to the fourth quarter here in 2020. That would be a terrific result at this time next year. That leaves the outlook for where second and third quarter 2021 might end up. It seems like we would be someplace in between, both in terms of organic and the level of expense savings we hold. I do not know necessarily whether it will be linear or not, but it certainly will fall somewhere between the first and the fourth quarter that I just gave you.
As for the risk management segment, we continue to sell new business, which we expect to incept next year. It is looking like full-year 2021 organic could be closer to mid to upper single digit levels, which was about where we were running pre-COVID. Perhaps a little lower in the fourth quarter than ramping up over the year, as many businesses could still be operating at partial capacity in the first half. A faster surge towards full capacity and reopenings could get us back to historical levels even faster. Now, before I move on, I do want to go back to the expense savings dialogue.
Imagine last February we had told you in one of our IR days that we had projects underway that gave us line of sight to saving $125 million-$150 million of costs in 2022 relative to what we were spending in 2019, true expense savings. I think everyone would have been very bullish on that news. That is what we are still seeing here today. We are on track to saving $125 million-$150 million in full-year 2022 relative to what we were spending in 2019. Sure, that is a little bit lower than what we are saving now, but it does not change that we will still have substantial savings in 2022. We are fortunate that a very bad situation served as a catalyst to try and admittedly quickly adapt to new ways of selling, consulting, and servicing our clients. These new learnings will provide lasting benefit for a decade to come.
To me, that's still a very bullish story. Moving to the CFO commentary document that we post on our IR website. Flipping to page two, not much change in any of the numbers from what we provided at the end of October other than foreign exchange, given the dollar has weakened against all other major currencies. That flips it to a small revenue tailwind for both our brokerage and risk management segments, but still minimal impact on EPS. Moving to page three of the CFO commentary to the corporate segment outlook. Again, not much change other than a favorable tweak to our fourth quarter interest and banking line costs due to stronger cash flows. On page four, you'll see our 2021 range for clean energy earnings hasn't changed in that $60 million-$75 million of after-tax earnings range.
A robust recovery could push that more towards the upper end of the range. Moving to page five to rollover revenues. With only two weeks left in the quarter, page five should be very close, so please take a look at your rollover assumptions as you fine-tune your estimates. Let me end my comments today with some thoughts on liquidity and debt. First, we just haven't seen a slip in our customers being able to pay their insurance premiums or fund their claim payment accounts. Cash receipts in October and November and almost halfway through December are trending similar to pre-COVID levels. This illustrates what many of us are reading in some of the financial press. Mid to large-sized companies are weathering the pandemic better than smaller companies and certain consumers. Second, our expense savings and CapEx rationing playbook is generating strong cash flow.
Third, a modest slowdown of M&A has helped cash balances too. At the end of November, we had around $800 million of available cash on hand. Plus, we have more than $1 billion of available capacity on our revolving credit facility. With very little debt maturing through the end of 2022, we are really well positioned to continue our bolt-on M&A strategy. Let me wrap up and say, from my vantage point as CFO, it's looking like a strong fourth quarter and an even better year in 2021. We're really well positioned to grow organically, do a lot of bolt-on M&A, continue our productivity and quality initiatives, hold on to a decent amount of expense savings, and have another solid year of clean energy earnings. Even more exciting is our team is really energized about coming out of the pandemic stronger than ever before.
Those are my comments. Happy holidays to everyone. Back to you, Pat.
Thanks, Doug. I think, Operator, it's time for some questions and answers.
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 are 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 is star one for questions. One moment while we pull for questions. Our first question comes from the line of Mike Zaremski with Credit Suisse. You may proceed with your question.
Hey, great. Good morning. Can you hear me?
Yep. Good morning, Mike. This is Pat.
Oh, great.
Our first question probably for Doug on thinking about free cash flow and M&A capacity. Maybe, Doug, you can kind of provide us some update on the numbers on kind of how much M&A capacity you're going to have for 2021. Because if I look at 2020, it looks like there was a lull for a while, and it seems like there's going to be some kind of leftover free cash and capacity. Should we kind of be thinking that there could be a kind of catch-up in 2021 if you guys can do a lot of deals, or should we kind of err on the side of conservatism in terms of the M&A spend?
Yeah. Listen, I think the market's ripe right now for M&A. I think there's a lot of sellers out there that realize they've come through the pandemic.
They've stabilized their business. They've also learned that being a part of a strategic could deliver substantial value to them, either in the growth era or if there's another downturn way out in the future. I think right now we're seeing a lot of pent-up supply of opportunities. I believe that between the cash that we have on hand, our borrowing capacity, and the cash generation next year, we could be in that $2 billion-$2.5 billion of M&A capacity in total. Will there be a catch-up? I don't know if we're going to rush in to just try to do things to catch up. That certainly wouldn't be our nature. I think there's a lot of opportunities out there, and I think that our capabilities are compelling to a lot of sellers.
We could see $2 billion or more without substantially increasing our debt ratios nor having to use stock.
Okay. Helpful. Moving on to some of the comments on workers' comp throughout the prepared remarks. On one hand, we heard some commentary about work comp pricing is flattish to up a little bit, and that could be sustained. I feel like, on the other hand, we heard that work comp claim levels are still negative. I mean, which would imply profitability is still high. Is the kind of momentum on the work comp pricing, is it mostly, you think, coming from a low-interest rate environment, or am I missing—are we missing something?
No, I think this is Pat. I think that's a very good point.
I think the low-interest rate environment really hurts comp, which takes, as you know, six, seven, eight years many times to pay out. That is crimping things. Also, it has been very competitive. Carriers have made a lot of money on it, and they are going after that line, as other lines obviously have not performed as well. In terms of where the business is going, we will go back around. Scott, why do you not talk a little bit more about what you are seeing in terms of claims arising because they are growing?
Yeah, Pat. You have to—when you talk about work comp claims, you have to talk about COVID-related claims, which is obviously a reflection of the pandemic. The core comp claims are probably down closer to 10%-15%.
When you bring in the higher-frequency ones, it goes as high as 30%, as I mentioned in my comments. But then when you bring in the COVID-related claims, which are actually picking up in the last two to three weeks here, it looks about flattish overall. Not quite growing yet, but it's still a positive trend relative a little bit to where we were in the third quarter, and we're kind of holding our own because of the COVID-related claims.
Yeah. I wouldn't be betting on workers' comp pricing based on a lull in claims here for a six-month period during the pandemic. Long-term pricing on this interest rates, I think that just the headwinds against that line would say that continued cuts probably can't happen, and modest increases are probably likely to happen.
One quick follow-up maybe for Scott.
Any thought on whether if work from home is more prevalent is kind of you guys are saying your surveys are showing, and also even at Gallagher, is the work from home—I think I've asked this in the past. I know it's tough to answer, but any sense of whether any more data points where the work-from-home environment leads to more or less claims in the future for comp?
I don't think we have enough data to have a strong opinion on that. We're taking a—we're monitoring it. The bulk of our claims don't necessarily come from a kind of a white-collar work environment to begin with.
The people out doing delivery, people inside restaurants, I mean, to the extent that restaurants recover, to the extent that hotels, all of that recovers to some meaningful level, then I think you'll see comp probably get back to similar levels in the past. It is something we're paying attention to. The fact is, I mean, there probably will still be back strains and carpal tunnel, whether you're sitting here in an office or whether you're sitting there at home. I do not think it's necessarily a major shift, but we'll keep you guys updated if we see something of significance.
Okay. Maybe just one last one on a higher level for Pat or if anyone wants to chime in. You guys have a very strong culture.
As you guys kind of shift more work from home, are you guys thinking or cautious about the changes it could have on culture and the growth aspect and kind of—or is it simply if your employees like it, then maybe it's a better culture if they want to work from home more? Just trying to—
I think, Mike, the pandemic is clearly something that's brought us together in a strong, strong way. Your topic is a good one because it's a major point of discussion with my senior leadership team. As we all know, there's pandemic weariness in the field. I think people—we've seen an uptick, as most employers have, of utilization of our employee assistance programs.
You've seen a lot of articles, which applies to our people as well, about folks just really having a difficult time kind of being stuck in lockdowns, and some of our places around the world have been really locked down. We are talking as a team about what happens as we get done with this pandemic, and how do we make sure that the culture that we've all grown up in to a large degree is maintained. Some of that is going to be around how do we have reasons to get people together. There's a number of us that believe that's a big part of what created the culture. I don't have any answers for you right now as to how we're going to do that, but I can tell you it's top of mind.
Thank you.
Our next question comes from the line of Greg Peters with Raymond James. You may proceed with your question.
Good morning, everyone.
Hi, Greg. Good morning.
How about a couple of questions for you? Pat, in your comments, when you were talking about the pricing environment, you said a firm and market, and then I think you said some lines there's a full-blown hard market. When I think about a full-blown hard market, I feel like that could put pressure on things like commission rates, supplemental commissions, contingent commissions, etc., because the carriers just are drawing a line in the sand. Maybe you could provide us some perspective on what's going on with commission rates from carriers as the market conditions have firmed. Are they becoming less generous with things like contingents, etc.?
No, actually, I've been very, very pleased, and that's a big topic of conversation, of course, for our people that would typically go to the CIAB in October, which was held virtually. I think that we've been able to make a very good case with our carrier partners that the compensation that we're receiving, the rewards we're receiving, whatever form they're in, are well-deserved. In fact, I'm not feeling a major pressure to see the contingent commissions or supplemental commissions cut. That is a good thing. In addition, you will find in a typical hard market, there's a lot of really head-butting discussion at the underwriting desk about what you're taking out of the transaction and what the commission rate was the prior year. So far, commission rates are holding up. You're right. That's a point of negotiation.
At the present time, we're seeing that those commission rates are holding. I don't think the underwriting community is finding it at this point that the way they're going to get healthy is to cut their distribution channel.
There are certain lines of business that they're obviously feeling a lot of pressure on. Your answer makes sense. I was listening to the comments of your management team, and I don't want to be disrespectful, but I mean, literally, everything's great. The outlook's great, and your management team is as optimistic this quarter as they were last quarter, if not a little bit more. Your stock's at a 52-week high. Obviously, the market agrees. Pat, there's no way that everything's going great at your company right now. There's something going wrong at the company right now that you're focused on fixing.
Can you give us some perspectives of what right now is a challenge to the company and how is your management team addressing it?
Yeah. I think, Greg, you're right. Nothing's always—we're not living in Nirvana—perfect situation. I think the biggest challenge right now is the question that Mike asked before, which is around the culture. We're doing a lot of things. I don't know about you, but I'm sick of Zooms. I end up my day with what I call conference call headache. The other thing that I find disappointing is that, frankly, nothing's really funny on a conference call. You know me well enough. I like when I'm in front of you as investors to hear you throw a quib out. I'll throw one out. It's just a moment in time, but you get a chuckle. There's not a lot of that.
I think there's pressure in the field of people feeling like, "Man, I'm stuck at home. I've got kids crawling all over me. My wife's working. I'm working." I think the human resource challenge is a real one. I think keeping people connected—we've had some defections. Nothing that would ever creep up to the level that you'd see it in our numbers, but disappointing. When you say, "Why would you—you're a successful person here at Gallagher. You've had a decent career." When I say defections, I'm talking, frankly, less than a dozen. Nonetheless, you sit there and you shake your head. You go, "Why? What are you seeing somewhere else?" I think there's a real focus from HR and our leadership team to make sure that people do understand that this pandemic situation is temporary. We will get back together.
We all have to get through it. I think they do appreciate the fact that we started off by saying our main concern is their health and safety. Boy, I'll tell you, I knock on wood every month that we go through without having someone really get sick. I don't know about you, but I feel like this pandemic is getting closer and closer to me all the time. Family members here, friends there. Luckily, nobody dying from it, but I've had some really sick friends. I think that's weighing on people. Frankly, I think that weighs on clients. The other thing you've heard me talk about for years, I don't like hard markets. I don't like this market. Now, that's—oh, God, how can you say that? Stocks up all-time high. Yeah. You know what? It ain't easy on our customers. It pisses them off.
This is my fourth one. Had a question from an investor on one of our calls. He said, "Can you explain a hard market to me? The last time you had one I was in high school." All right. Let's start from that. Guess what? When this thing softens, and it will, every one of those clients is going to be pissed off for two or three years. That is going to cause even more consternation. It is not perfect, Greg, but in another world, I look at it and go, "Where else would you rather be?" I mean, this industry is the most unbelievably resilient. That goes back—I am not talking about this crisis, 2008, 2009. Once again, our clients will pay their premiums before they pay their people. It is that important. In the scheme of things, I am glad we are not running a restaurant chain.
Good answer. Zoom fatigue is real. It's in our business, and we're getting tired of it as well. That cuts across all industries, I suspect.
Yes, it does.
I'd like to pivot to acquisitions. You've done a number of acquisitions this year, less in the benefit space this year than the prior year. We're hearing the private equity vehicles just haven't missed a beat. They're going full guns blazes, just going after this stuff. I feel like acquisition multiples are going up. Even if I look at your own multiple, I mean, four or five years ago, you were trading at 10x EBITDA, and now you're at 14x on a 12-month basis. With that said, it feels like there's room for you to pay more for acquisitions.
Maybe you could just give us a flavor of how the pricing has changed over the last couple of years and what's going on from the private equity side.
Sure. I'll be glad to. Then we'll let Bill comment on benefits in particular. I think, first of all, Greg, you're exactly right. Private equity has come into our business since the KKR Willis acquisition proved to be so successful, and they've been proved right. You go back to the early days of private equity investments, and who knew if it was a good idea or not? They've proved to be very astute. That's very smart, funny. As they have, in fact, pushed multiples up, our pricing has gone up. You're exactly right. If we want to be—by the way, you take a $5 million broker out for bid right now.
If you want to just run a real process and really bid it, you could have 20. You could have 20 offers. What we're always trying to do is differentiate ourselves based on culture and future. There are some people that just want to capitalize and move on or not change anything. It is a very competitive landscape. I've been through this before. The banks did this in the 1970s and 1980s. Banks pushed up multiples. I used to start my conversation with sellers in the middle 1980s that if you want the most money and that's all you want, we're interested in your business. Just go tell the banks locally that you're talking to us. You'll get a high price and take it. That went its way.
I don't know if private equity will go its way or not, but they've pushed the multiples up. When I look at our multiple, to be perfectly blunt, I think it's disparagingly low. I look at the crap that's selling on the New York Stock Exchange in our business at multiples that are ridiculous. I'd say, "Where the hell else you c an invest but Gallagher?"
Oh, come on. You don't like lemonade?
Oh, don't mention any names, Greg.
Anyways, thanks for that answer. I guess the final question. On page four of your CFO commentary, Doug, you give us the guidance on the clean coal energy. I know I ask this every quarter, just confirming. When I think of 2022, which you haven't said anything about, I'm going to see sunset in 2021, and I'm going to see zeros across all of those columns.
Is that correct?
Yep. That's right. Do you want me to pile in on that, or was there a follow-up on it? Because I do have some thoughts on that.
No. That's it. That's all my—I'm done. That's my last question.
No, no. You bring up a good point. 2021, absent an extension of the law, 2021 will end what I consider the credit production era. At that time, we'll have about $1 billion of credits receivable from the government. It's a deferred tax asset. You can see that on page 14 of our earnings release in the balance sheet in the deferred tax line. We highlight that. That will then turn into cash over, call it, seven years.
If you got a billion won that you realize over, let's say, seven years, call it $125 million of cash flows in 2022, grading up to maybe $175 million of cash flows in 2028. Right, GAAP earnings of $60 million-$75 million will disappear, but then there will be cash of $125 million grading up to $175 million coming in over the next seven years. It moves from a GAAP number to a cash number, and that creates additional cash flows that we can use in M&A. You are right that it sunsets at the end of 2021, absent an extension that could happen. The extension could happen a year from now, right? We are on the gates of being done. You could end up with some more production afterwards, but it turns into a cash harvesting era starting in 2022, assuming nothing changes.
That's what we've done in terms of working hard over the number of years to make energy better. It will be rewarding that we're going to soon reap the benefits of those efforts. I think that we've invested a lot of money in this to make energy better and cleaner. I think it'll be nice to enter into that cash harvesting era. It's a great question, Greg. You're right to ask it.
All right. Got it. Thanks for your answers, eve ryone. Happy holidays.
Thanks, Mark. Greg, happy holidays.
Our next question comes from the line of Mark Hughes with Truist Securities. We'll proceed with your question.
Thank you very much. Good morning.
Good morning.
Doug, with all those moving parts you talked about in terms of profitability, I think one of the points coming out of the last conference call was that the 2021 margin could be generally steady relative to 2020. Is that still the way to look at it?
Yeah. I think that, listen, if you think about what I said, first quarter feels a lot like the fourth quarter, organic in that, I do not know, 3% ± range and maybe harvesting another $60 million-$70 million worth of savings because we were not in the pandemic era in the first quarter last year. We will see similar savings.
If we can hold on to that throughout the year, if you grade up to—I'm going to say this—if you think we're going to go from 3% in the first quarter to 6% like we were pre-pandemic in the fourth quarter, and you hold on to, let's say, $60 million in the first and grade that down to $30 million in the fourth, you actually could see margin expansion next year. Now, I'm not committing to that because I don't know if we're going to be able to hold on to that. This is new ground for us to cover here. If you get organic rebounding next year, you're going to get expenses rebounding. Overall, you could see at least flat margins next year in a lot of different scenarios.
What we're excited about is the fact that we really do have line of sight to saving that $125 million-$150 million when we get into 2022. A little tougher to figure out second and third quarter. I don't know if it's going to be if slope is basically constant or whether you're going to have a positive slope or a little bit more of a faster positive slope on that recovery. I think that either way, the story we feel very comfortable that there's a lot of good learnings that have gone on during this crisis, so to speak.
Very good. In the wholesale business, I think your organic outlook is mid-single digit. You talked about 4%. I think last quarter you were at 8%. Is there anything different about the market this quarter compared to 3Q in wholesale?
Yeah. This is Joel.
Again, we run a very diversified business. You got to take programs into account. We do have some COVID exposure that is dragging that organic down. Wholesale in general, if you took just to a wholesale brokerage, we could tell you to really run at that pace. You take our small business sector, which is a very large piece of our business. Those are small accounts, typically more economic and COVID-related, like restaurants and bars and taverns and things like that. That drags it down a little bit. The open brokerage wholesale business continues to trend at those current type levels.
Okay. For Scott Hudson, the new business wins, you talked about the P&C carrier segment as being your fastest growing. Is that new outsourcing, or are you taking that business from somebody else?
Mark, as it relates to the carrier stuff, it's probably more new. Some of it is transferring it. I would say where we're seeing the greatest growth is probably in our traditional risk management segment, the large commercial here in the U.S. Joe Zinga and his team have been doing a phenomenal job of kind of getting our story out there and winning new meaningful business, which obviously in that segment, we're taking that from an existing TPA. The carrier stuff is probably mixed in terms of kind of new versus taking some from some of our competitors.
On the workers' comp, is it fair to assume I think you were talking about frequency being relatively stable the last couple of months compared to 3Q, but I think it seems like frequency is down. That's not just a payroll issue.
Sounds like you're not getting any kind of late-reported claims or anything like that. It's just, for whatever reason, comp claims. You're just getting fewer of them. Not only is it the employee headcount, but frequency is down as well, and it seems like it's staying down. Is that a fair summary?
Just to clarify, I just want—so we were breaking it between COVID-related claims and kind of the traditional work comp claims, both medical-only indemnity that we see. We're still, compared to last year, the traditional or core claims are down on the indemnity claims probably 10+%, on the medical-only maybe down 30%. You bring in these COVID-related claims, ones that we're getting where people are in the workplace, whether it's a healthcare organization, whether it's a food service organization, people are contracting the virus.
The uptick in those claims, or just the number of those claims, have kind of offset the decline in the other two areas to the point that we're roughly flattish, probably down a few percentage points in the comp area. In terms of whether it's payroll versus frequency, I probably can't say specifically what it is. I would say it's generally payroll. I mean, where the decline is, it's just a hotel chain that just doesn't have guests, and there's nobody working. It's not that there's people working and it's safer or anything like that. I think it's just payrolls being down. The number of people that are in the workplace or out on the road or whatever is just fewer.
And then just one final question. Construction is an important end market for you, I think.
Do you have any view on how that's shaping up for next year? Just what the level of business activity that—as you see it or you're hearing it, what's construction going to look like in 2021?
I'd have to probably get back to you with something a little more definitive. We aren't seeing any noticeable difference from the last four to five to six months. Where we're probably seeing the most activity, Mark, is our environmental health and safety business that we acquired more recently is specifically in the construction space, and some of our specialty claim activity is in the construction space. Those have been relatively strong, and there's nothing that we're looking forward to in the future that's noticeably different. We are seeing a bit of an uptick there.
I think our hope would be, as you look at the potential for infrastructure projects and so forth, we would like to be getting our fair share of those. I would expect to potentially see some growth there as well.
Thank you ver y much.
Sure.
Thanks, Mark.
Our next question comes from the line of Elyse Greenspan with Wells Fargo. You may proceed with your question.
Hi, thanks. Good morning. My first question, going back to the M&A pipeline, you started off the discussion by giving us the usual kind of term sheets that you guys have right now. It sounds like there's quadrant line of revenue on those term sheets that you're looking at. Can you give us a sense of the size of deals in the pipeline?
Then building on that question, I think last quarter with earnings, you had alluded to a couple of $25 million revenue deals as being in the pipeline and potentially close to getting done. Were those some of the deals that were announced so far this quarter, or are those part of the active end of December you were alluding to?
Yeah. All right. Let me break that down. Let me go back and answer one question that was asked earlier. Slower down on the benefit space. I think it's just kind of hit or miss. There's nothing systemic there that I would look through and say. It just hasn't been as many coming to the market right now. Sellers like to sell when things are hot and growing, and right now, things are kind of stagnant on the growth for a lot of these independent brokers.
There's holding tight. Right. What do we have in our pipeline coming forward? We actually have three deals. One was announced last week in just a terrific franchise in upstate New York in Albany, the Cool Agency. That's been announced. That's a nice regional where we're right down the middle, exactly what we're looking for that Mike Pesch's business bought there. We've got two other ones, one in the southeast and one in the southwest, that are kind of in that range that we've got signed letter of intent. We're just working towards close that we should tighten it. Those are all kind of in that, I'm going to call it, $20 million+ revenue type shots. We've got handfuls of smaller, really nice local brokers that are bolting into our structure that you see around.
The pipeline going forward, there's 30 deals that are around $400 million. There's a couple of meatier ones in there, but by and large, it's very similar to what we've been doing before. I'd rather not go deep into each one of those just because we're at that point of signing letters of intent in the pipeline and working through negotiations. Bear with me, but all those will become apparent by the time we speak with you in six weeks on our conference call. They're nice, right down the middle of the fairway, bolt into our organization, use our systems, want our capabilities, see that there's a reason to join Gallagher because it's the right spot for their employees, the right spot for their customers, and they think they can be better together with us.
We've said this for years, that we're taking one and one and making it four and two and two and making it six. I think that's exactly what we're looking for. They recognize that being home with a strategic is where they want to be. There's others that won't. They'll decide that they want to go into a PE firm and be left alone and do their own deal and just kind of harvest their cash out of the front end. That's really not what we're looking for. There are 39,000 in the U.S. alone and 30,000 globally around Canada, the U.K., Australia, New Zealand, elsewhere. We'll get our fair share of those 60,000-70,000 brokers that decide they want to be with a strategic. If they don't, please sell to a PE firm.
Doug's comments tee me up for a thought that I think is good for this group to hear. Oftentimes, we talk about the acquisition process just in terms of multiples, dollars, who's doing this, who's active there. That's all well and good. The truth is, when you hear us talk about what we're building relative to data capabilities, CORE360, Gallagher Better Works, these are things that are offerings in the market that differentiate us every day. We're competing 90% of the time with people that do not have that. When you're a seller, listen, it makes a lot of sense short term, doesn't matter. XYZ PE firm's money's just as green as ours. Long term, it makes a huge difference. I think that differentiation is going to continue to play out and even become stronger.
People look and go, "Oh my God, the PE firms are driving up the multiple." Part of that's because they have to. They can't compete on those other things that we bring to the table. Add to that, if you want to have a place where you land your people, where we speak their language, we understand what they do, we're a broker run by brokers, and we have career paths, we're going to continue to attract the best units in the marketplace.
Yeah. Think about the opportunity too of the catalysts for selling. All right. Baby boomers own a lot of these agencies, and they want to continue doing what they're doing. That's a natural supply creator for us.
The second thing too that we're really seeing, and I've had some great conversations with Mike Pesch about this over the last six months, a smaller person doesn't have their person that they can drop into a sales meeting or a renewal meeting that has as deep an industry expertise or niche expertise that we can. Pat said it early on. It's not offensive for us to video conference in one of our experts from around the world to bring it right to the point of sale. Whereas before, you'd have to get on an airplane, maybe have a dinner and a lunch. There was a long dance process that consumed days of time for our industry leaders and experts that now they can drop into a meeting and spend a half hour on the phone at the point of sale.
That is a differentiator that will cause more and more local people to say, "I want to join Gallagher. I've got great clients. I've got great prospects, but I need that industry expert to drop in and really help me take the conversion rate on my opportunities from one in three sales to one out of two sales." That is happening right now as we speak. We've seen it happen in other industries where industry expertise at the point of sale wins. That is going to create another huge supply factor in the M&A opportunities over the next two, three, five years. Sure, there's a few other firms that can do that, but not the way we can at Gallagher, and certainly not the way a roll-up could do it.
Right. In terms of just deal flow, right?
It sounds like I think there was an earlier question where maybe not everything comes back in 2021, or maybe I misunderstood the answer. I guess the way it sounds like how you're discussing is 2021 is shaping up to be a pretty active year, but you won't necessarily, I guess, see the deals that you didn't close in 2020. Or am I missing something in putting that together from some of your prior comments?
I think I should say there could be a catch-up in 2021 based on what may have been slightly delayed here in 2020. There could be a catch-up. If you look at our cash flows over the next three years, four years, if we can do $2 billion this year, we can do $2 billion in a year. We can do $2 billion the following year.
There is plenty of cash flow capacity in order to continue to fund our M&A strategy. Could you remind us on the leverage side how high you would let your leverage go depending upon what transactions materialize? Safely in the investment grade ratios. This is not something we are intending on throttling our debt ratio to fund an M&A.
Okay. One last question on the margin side. On your conference call last quarter, you alluded to your EBITDA margins within brokerage and over the long term settling in a 30%-32% range.
The reason I ask this is because based off of the disclosures that you guys gave today in terms of savings that you could see in the fourth quarter and just kind of throwing in some core margin improvement on Q4 organic, I could see you guys ending the year at around 32.6% from an EBITDA margin perspective. I guess what I'm alluding to is you just said that there's a chance your margins could be flat in 2021. I would assume in 2022, we're back to pre-COVID levels. There could be some core level of expansion. I just kind of want to tie together those comments. It sounds like perhaps margins could settle out above this 30%-32% range, perhaps driven off of some of these expense saves. Could you help me reconcile those numbers? Thank you.
All right.
For 2020, you'd think that we're going to land somewhere in the brokerage space of 32.6. That's kind of your pick, but I wouldn't say it's off too much, right? The question is relative in 2021, what do you think would happen? I think that if we don't get to a full year organic of 3% next year, holding that margin flat would be really terrific work. If we start seeing it ramp up like we did pre-COVID and you get to a fourth quarter in 2021 of, let's say, 6%, you would have another point of even a margin expansion on that number. It just happens because as you hold the expenses in the first half of the year, it happens. What do you get in 2022?
I think that there could be a, if you're running 6% organic, you could hold it and step it up slightly, but I wouldn't expect it to be throttled more over 2021. Does that help? Yes, that helps.
Thanks, Doug. And Pat, I appreciate all the color.
Thank you. Happy holidays.
Have a nice holiday.
Our next question comes from the line of Yaron Kinar with Goldman Sachs. You may proceed with your question.
Thank you and good morning.
Good morning.
My first question, going back to M&A and comments around 2021 and beyond, maybe having capacity to do about $2 billion of deals, maybe even $2.5 billion. I think in the past you talked about a sweet spot of like $10 million of revenues for deals.
If I look at that, if I'm doing the math correctly, we're talking about like 60-80 deals that would be in your sweet spot to get to the $2 billion-$2.5 billion. Do you have the manpower and the resources to execute on so many deals, or do you think that some of that $2 billion-$2.5 billion comes from larger deals?
No, I think we could double that amount. I mean, you've got people now in this organization that have been doing transactions for 20+ years, and we've got people in their 30s doing deals. When you get down to tuck-ins, you got to make sure you check all the boxes. We're not just rolling people up. That's not our style. By the time it gets to Doug's desk for sign-off, these people know how to dot the i's, cross the t's.
They've got the culture down. There was a time when we were stretching to do four deals in a year. Today, we can click off 50-60 of them. These are not big deals. Do not get me wrong. We are not cavalier. Most of the time, these are emanating up from our field force who are talking to competitors they like that are getting to an age where they should capitalize their life's work and land their people where they should be. I think we could do 60-80 deals easily.
Let's put that in perspective. We are a grassroots M&A company. We are not a top-down M&A. It starts at the grassroots, and it works its way up. There will be some larger ones that the larger investment banks strut out there, and we get involved in those.
By and large, it's grassroots. How do we do it at grassroots? You heard Mike Pesch say that he's operating nine different regions. Each of those nine regions would be a top 20 broker in and by themselves. Bill Ziebell, same thing. He's got seven different regions sitting out there. Right there, you've got 16 people that could do. Look at Joel Cavaness's business. He's got $400 million or more of revenue. There's probably eight guys that can do deals across that. You get into our international region between Australia, New Zealand, Canada, the U.K. Gee, Tom, we've got—look at Tom—we've got 12 different regions within that. Canada's got a couple. By the time you stack it all up, we've got enough people. There's 50 or 60 people in our organizations that are experienced at M&A and running sizable businesses.
For them to click off one acquisition a year among them, it's very doable. Our systems are architected to allow entrants. That's very easy. In the U.S., we do only asset deals. We roll the business onto our standardized system. We put them on our common HR system. We roll them into our sales platform systems. The ledger is all common across the globe. We spent 15 years working on standardizing work, customizing work. It's better to say customizing work that meets our customers' needs that we can use offshore so we can roll that business there. We have good relationships with our markets and carriers so you can roll in the carrier relationships and that. This is something we've done, 1,000 acquisitions over the last 30 years. It's in our DNA.
Having our smart folks in the field be able to do one acquisition a year is not a bandwidth consumer. Did I miss anybody, Tom? I think that's our bandwidth.
That's helpful. I appreciate the context there. My second question, probably for Scott, I heard social inflation, the term thrown out a couple of times, more than a couple of times in the prepared comments. I'm just curious, from Gallagher Bassett's perspective, what are you seeing on the social inflation side when it comes to the liability claims, the carrier business? Are you seeing the manifestation of social inflation? If so, maybe you could describe in what ways.
We are seeing it. Rob Blasio runs our—it's the complex liability claims where there's issues, medical malpractice, some of it in the professional lines, and so forth. It's definitely happening. Actually, we just started up a unit.
We've got a—in our trucking area, we've got a complex claim group that we just started up. We're doing things specifically to kind of address that. A lot of it is kind of getting on the cases as early as possible. I don't know that there's anything that we've necessarily seen that's going to kind of stall that. The fact is we're just trying to be out there in front with our clients so it doesn't—you're getting away in some of these runaway verdict situations and so forth. It's getting into the claims as early as possible, managing the litigation very tightly. We've been doing a lot of things with respect to that. I think for the most part, we're doing pretty well. The fact is it's prevalent. It's happening to us, and it's happening to our clients just like everybody else at the moment.
Okay.
Are you seeing the impact of litigation financing? Are you seeing more attorney involvement in claims?
Yes. I mean, there has been a little bit of an uptick. I wouldn't say it's significant. The other thing that's been interesting this year is there's just been somewhat of a slowdown overall because of the pandemic in some jurisdictions in terms of being able to move cases forward, which hasn't necessarily helped. We're seeing a slight uptick, I would say, in terms of just overall litigation rates. A lot of what we're doing with our litigation management offering, Gallagher Bassett's litigation practice, is specifically to get on these cases in a far more proactive way to try to tamp that litigation rate down. It hasn't taken off or kind of gotten out of control in any way. There's a little bit of an uptick.
Got it. Thank you.
Our next question comes from the line of Phil Stefano with Deutsche Bank. You may proceed with your question.
Yeah. Thanks. And good morning. Probably two quick ones just focused on the expense saves. We've gotten a couple of questions already. The commentary of the line of sight of $125 million-$150 million of expense saves in 2022, it feels like the prior commentary was about $30 million a quarter. I wonder, are we parsing words too finely, or does it feel like there's some incremental optimism around what the expense saves could be as we look forward?
Maybe a little of both. Maybe I think when we're looking at it, this is new to us too. I can appreciate that it's tough for you to get it into a mindset and a model.
As we look through this, remember, we're going to follow what our customers want. We can sit here and say that we have line of sight to X, Y, or Z. If our clients go back to expecting to see us 100% full-time face-to-face, we're going to follow that. We're a little dependent on how there's an evolution of customer expectation in some of our forward-looking guesses on it. $30 million a quarter sounds like $120 million, $125 million-$150 million, probably just because we're starting to peel back the opportunities a little bit more. Would I be surprised if someday we get to $25 million a quarter versus $30 million? It still would be another $100 million of savings here. We'll take it and we'll move on.
The advantage, though, going back to the M&A, is that by the time we really get through this learning, we could have another over the next three or four years, let's say we're 40% or 50% bigger than we are today. Those learnings that we're getting on our existing business will come back and pay dividends on the acquired business too. The fact that we do have considerable opportunity to bolt on, we can add those earnings to that. It will bring more value to those acquisitions. We could be sitting here saying that the learnings today in five years are leading $300 million of savings because we're twice as big. The point is it's still substantial savings because they're going onto our platforms and using the expertise that we have internally on our operations.
Yeah, maybe parsing the words a little bit, the numbers, but the intent is still there or the ability to.
No, understood. I looked at that clearly there. I completely agree. I think my follow-up question to that would be, when we think about the need for potential reinvestment in the business and the line of sight of expense saves, I mean, I guess whenever we think about broker restructuring, not that this is a restructuring, but there's always this concept of gross versus net savings. In my mind, the delta of what you're talking about for line of sight in a sense, in expense savings, there wouldn't be much of a difference there. Is that a fair way to think about it?
I think we have plenty of room for investment even with achieving those results.
Perfect. Thank you.
Our last question comes from the line of Mark Hughes with Truist Securities. You may proceed with your question.
Yeah. I just had a quick follow-up on the digital platform. I think, Joel, you had mentioned that as being a good grower. Who is utilizing that platform? For what lines of business is it relevant? How big could that get? Just a little more on that.
Yeah. Sure, Mark. We have a large group of retailers that access that system. Some of them actually every day. Our goal across the platform is to have those retailers access the system and buy more than just one product. Cyber is our leading product offering on that. We have a very specialized private D&O product. I mean, we have all kinds.
We have, like I said, commentary, 20+ programs and products that we have on the platform that generally a retail producer can go in and get a very, very quick indication, a few more questions. They get a firm bindable quote. In a binding situation, they actually bind the account. They pay for it online, and they get a policy issued in their offices. It is a platform that we began investing in back in 2016. We were an early adopter in this particular platform, and we continue to invest in it today. It is really throwing off a nice amount of revenue and a whole lot of premium. We see that future as being very bright in our particular e-commerce platform.
Appreciate that. Thank you.
Thanks, Mark. Thanks, everybody, for joining us this morning. Mark brought it up.
As you can tell from today, we're pretty confident. We're confident we can deliver the results we talked about in the near term, and we're very excited about the future. I would like to thank the team here at Gallagher for just a really tough but outstanding year this year. We look forward to speaking with you again in the new year after our fourth quarter earnings are complete. I want to wish everybody on the call a very nice holiday season and hopefully a great new year as we get into 2021 and hopefully get this pandemic behind us. Thank you again for being with us this morning. Have a great h oliday.
This does conclude today's conference call. You may disconnect your lines at this time. Thank you for your participation and enjoy the rest of your evening.