The insurance brokerage world, right? Obviously, 50,000 odd brokers around the world, but a few dominant ones. Three very global companies, a ton of domestic companies, whether it's in the U.S. or elsewhere, Arthur J. Gallagher, which has a unique position as sort of international but not wholly global. I could be mischaracterizing it, so straighten me out if I'm wrong. What are the opportunities and the impediments that that particular footprint provides?
Oh, great. First of all, thanks for having us today, Meyer and KBW. It's terrific to be back again and have an opportunity to come out and tell our story. Thanks for everybody for listening. We actually do view ourselves as a global broker that can do any risk anywhere in the world at any time. Our model is slightly different. We're heavily concentrated in the U.K., U.S., Australia, New Zealand, and Canada, with nice other positions in geographically important areas such as Singapore, in certain areas of South America, that primarily trade back through our network. If you think about it, we're in five major countries, six major countries. We probably have 30 other locations, either wholly owned or partially owned.
What I think gets missed quite a bit is we actually have a correspondent network in another 100 countries where we have an affiliation, a trading relationship with maybe the top one or two independent brokers in those countries. In our case, the way our model is being developed, at this point, we think it's almost impossible to build out a full spectrum of services in every country. Our model would be is that if you need something in Mexico, you would go to our Grupo affiliate there, and we'll get the right experts there, and if they can't provide it, we'll go to someplace else. In our case, we will pick the best broker in that country to represent our client's interest at the time. In a way, we're trading in almost 150 countries around the world.
We just don't happen to own the brokerage in that exact country. Also, many of our multinationals like the ability to have us help them pick the best in that country and not necessarily be obligated to trade through the locally, or the 100% owned affiliate of the broker here in the U.S. We find the model actually works pretty well.
Okay, no dramatic need to say we need to have a Gallagher flag in, I'm going to say Mexico, maybe it's a bad choice.
No. We own 20% of the largest independent in Mexico.
Right.
We've got a pretty good spot there. I don't think there's a need to go out and plant a flag in every country. I think that gives us a lot of growth opportunity long term. If we find the right trading partner, if they have traded with us for a number of years in the U.S. or in the U.K., Canada, Australia, New Zealand, that's an opportunity for us to take a position. Typically, we'll take 35%, 40%, and then maybe we'll move to 65%. In most of those countries, we'd prefer not to own 100%.
We think it's important to have local management and local ownership there that will maintain the continuity of the local country. We're a stair-stepped approach to taking a larger position. It does give us a great growth opportunity, we're not rushing out just to plant a flag in every country.
Okay. Can those 65% owned brokerages do the same sort of bolt-on acquisitions that have been so important domestically, Australia, U.K.?
Yeah, I think that, in fact, having that 35% local country ownership and, or 25%, allows them to say, "We're still in. We're still interested. Your family and our family has traded together for a long time. Come join us." Sometimes we'll put in the necessary capital, so the ownership percentage will go from 35% down to 25% of the combined group. By and large, it hasn't hurt us yet, let me put it that way.
Right. Okay, fantastic. As always, if there are questions, then please let me know. Sean. In the back.
What type of turnover do you have in the international brokers? Is it once every five years you need to dump one and find a replacement, or is it five a year?
Good question. Just to make sure, of our correspondent broker network, our Gallagher Global Network group of folks, it's surprisingly stable. I think that the successful local brokers that have reached a top one, two, or three position in their local country, they're pretty stable. Of the 100, maybe there's five that we rotate out a year, but it's not a big number.
I wanted to ask a little bit about the acquisition strategy. Obviously, you continue to do a lot of tuck-ins. Can you talk a little bit about the pipeline and valuation and just the M&A environment out there?
Good question. We are a tuck-in acquisition strategy. Maybe we do 40, 50, 60 a year around the world. I think Meir said on the front end there's 30 to 40,000 independent agents and brokers out there. Those are companies, not just individuals, that might be available for a merger at some point. We like our tuck-in strategy. We like the ability to get to know an individual and the business that they've built, their family. We prefer that. We did some larger platform acquisitions, but that's already been over four years ago now. That gave us critical mass in Canada, Australia, New Zealand, and the U.K. in the retail space. We're seeing a nice number of small tuck-in family-owned agencies that want to join us. The pipeline's full.
I think we have 60 term sheets under either signed or in negotiation representing maybe another $300 million of revenue. We feel like it's a terrific way for us to do it one step at a time. We have, if you look at the regions and the number of people leading it, as we approach $5 billion in revenue, $4 billion on the brokerage side, we have a lot of people that are running $100 million-$150 million businesses that are quite capable about doing acquisitions with a local competitor, a particularly strong person in that community. We prefer not to buy retirements. We won't buy a broker that's in financial distress. These are successful family-owned agencies and brokerages that want to join us because they see the value of our capabilities that we can bring to them, so that together we can be better and sell more insurance.
That's really the story that's been going on since 1984, is the same thing. Your family, our family together can be a lot better together because we bring better capabilities to our customers. We're talking about $3 million, $5 million, $6 million worth of revenue type acquisition.
We've got a question in the back. You're okay up there.
Sorry. Thanks. Chubb just a minute ago was talking about the acceleration of automated underwriting in small commercial. Is that something that potentially threatens your business and margins as you look out over the next couple years?
Well, I think that I did hear a piece of that to this. I think there's a lot of work going on inside of Gallagher too, that allows us to quote many different carriers and provide the best product and coverage and service to our customers. The same thing, anything that the insurance carriers are doing to make themselves better, we'll be able to feed on that also. We'll be able to capitalize on it. I think with the efficiencies that we're bringing to just the quoting and brokerage space combined with their accelerated under, I'm all in for that. Will it displace the broker? Typically, our customers are buying at least $25,000 a year of insurance. For us, we still find that that $25,000 might be spent on four, five, six policies.
If we can get accelerated underwriting on each of those six policies, we'll be able to assemble a better risk management product and deliver it to our customers. Displacing us, there will be some small end of the spectrum lines that an accelerated underwriting or a direct distribution model could displace the need for a broker, but we don't have a ton of business in that spectrum. If somebody's spending $25,000 on their insurance, they want the valued business advisor that we can help them assemble their program. God bless, let them make it happen because I think anything we can do to make this industry more efficient, we're all in on.
I have two follow-ups to that.
Okay.
Jason, you're all set. Okay. One, you've talked in the past, I think this is true, when we look at the public companies where our vision is distorted, you're not competing primarily against Marsh & Aon. You're competing against these thousands of smaller players.
You've got greater resources. I was hoping you could sort of concretize the resource advantage that you have relative to these smaller brokers, because I would imagine that would only get accelerated by better technologies.
I think it's a good point. I think that our recent statistics, and I'll quote basically here in the U.S., that 93% of the time we compete with somebody that's substantially smaller than us in terms of that. Most of the smaller brokers have terrific relationships with their customers. They're really great service people. They've got good technical knowledge about a product or two or three or four. The place that Gallagher distinguishes itself is that when we come in and we speak to a client or a prospect that's been traditionally serviced and brokered by a smaller competitor, there are gaps in what they should be buying or how they should be buying their insurance that better demonstrates our capabilities. Remember, the risk of insurance is not necessarily the insurance that you buy. The risk is the insurance that you don't buy.
What we do is we come in, we bring our niche expertise in that know their industry, real estate, construction, hospitality, higher ed. We know their business across a large number of customers that the local broker may not have in the same thing. We can talk their language. Second of all, we can talk about the experiences of losses that haven't been covered by traditionally smaller brokers. That smaller broker, and a lot of them we buy, they may be really great at what they do. They may have covered all six or seven lines of cover that they need, and that's why we buy them because they're really a good broker, and they've got that relationship. For a lot of them, they're doing their very best. They're providing the best insurance they can give to their customer on three, four lines.
It's the fifth, sixth, or seventh line of cover that that customer might not realize that they need. You'd be amazed at the number of customers that are not buying cyber, and you'd be amazed by the number of them that didn't even know that they could buy it. That's where we bring in industry expertise, product expertise. It rounds out the consultative relationship with that customer, and that's typically how we will displace the smaller broker, and they will realize you get more from Gallagher basically for the same price.
Okay. That leads me sort of to the second question, and that is, you talk about how the insurance industry is woefully in need of increased efficiency. Even in the U.S., is there an affordability constraint where we would have more insurance sold if the distribution of it wasn't as complicated and wasn't as expensive? What's the growth potential for the industry for Gallagher if that corrects itself?
I think there's two things in there. I think there's the I call it the bewilderment factor. At some time, I can't understand what I'm going to buy, therefore, I freeze and I won't buy it. Our ability to explain why cyber is important for the small business owner or active shooter insurance is important for the small pub or restaurant, you've got to migrate them from bewilderment to understanding. The answer, to the extent that you can make it simple, with simpler application questions, underwriting questions, criteria, that's what we do, is we try to reduce that. I do believe the simpler we can make it, the more insurance we can sell, and the better service we can provide to our customers. I think there is value in that.
On the other hand, the more sophisticated a customer you get, the less willing they are to be grouped in with everybody else if they really believe they perform better. That's the criteria. A four-question app on cyber might be perfectly fine until a person gets to a certain point and he says, "But I'm paying higher rates because it's a four-question app. I'm willing to answer eight questions if I can get a cheaper price." It works in the spectrum. Simplification will sell more insurance. More complex insurance will allow you to go upmarket, in my opinion. I think it's okay to spend time being more technically inquisitive or questioning the customer if that brings them a better product or a better price.
I'm happy to hear that because one of my concerns is that cyber insurance is brand new, the historical information is less predictive, which basically just means that eventually I feel like it's going to blow up. To the extent that the more sophisticated, this is my simplification, more sophisticated customers are better protected because the underwriting is more detailed, there's some inflation against that.
I think cyber is a great point in that, because we actually have technical experts in the company that can tell you, "Listen, you can buy your insurance based on all this, but here's the real thing that you need to do in order to harden your environment." Let's try not to worry about getting coverage. Let's try to eliminate the possibility or as many of the possibilities from that. That's where the value add, our niche technical experts will come in and advise even a small client about, "Here's what you need to do to harden your environment so that the cyber insurance you buy really pays for the big unknown risk versus just paying for something that you could have fixed yourself." That is a differentiator if you go back, the difference between a broker of our size versus a smaller competitor.
We can bring those resources to bear, and it's not that costly to do that.
Okay. Fantastic. Again, if there are questions in the room, please let me know. I want to explore a comment that Pat has made in the past. He's talked about, and I think he's right, that in general, for customer stability, having modest rate increases on an annual basis is much better than wildly swinging pricing. Superficially, that's what we have now, right? We look at the various surveys, and they talk about modest overall increases, but really what we're seeing are workers' compensation decreases of X, commercial auto increases of, I don't know, 10%, 12%. Is that any different if it aggregates up to +2.5%? My number, not yours. Does that matter? Or are we still seeing some swings that could be better contained?
I think that the swings that you say there on our side, commercial auto might be up mid-single digits, so 5%, call it. I think that workers' comp is down 5%. Property in exposed coastal spots might be up 10%, but basically 5%. What we say is this, as a customer, if we're bringing in a renewal and they're up 2% or 3% or down 2% or 3%, that's basically a flat and stable market. Really for the brokers and for the underwriters who now have greater transparency into their loss cost trends, not only what's happening today or what's going to happen in the future, is that it brings a more stable professional conversation to the customer that allows brokers to differentiate themselves.
If I come in and talk to a client that's staring a 30% increase in their face, and they say, "I haven't had a loss in five years," they're frustrated, they're angry. It's more likely that they're going to take a call from a computer broker, they're going to shoot the messenger, i.e., the broker. For us to be able to have a rational conversation about their loss cost and be able to equate that to what's happening with their premium cost, we can demonstrate our wares a lot better in that environment. Call it a flat market, call it up a point, call it down a point. Brokers are there to help their customers. If they want to spend $100,000 on insurance this year, what's the best way to spend that $100,000? You could take a deductible up. You could take limits down.
You could buy the sixth, seventh, or eighth policy that you opted out on in years past when rates were a little bit higher. The broker is there to advise and say, "What's the best and optimal use of what your budget is to give you the insurance and the protection that you need?" For us, this rate environment that we have now, up a little bit, down a little bit, little mini cycles by line of business, is a much better environment for brokers, underwriters, and really customers. In fact, it's in our presentation. We say it's the perfect spot for all three along the value creation chain. This is a perfect time, in my opinion. If rates start going up 30%, it's a cheap thrill a little bit, and it's a real problem to make your clients comfortable with your expertise.
Okay. Peeking over the shoulders of the risk management business, are you seeing any inflections in loss trend that could, in two years, translate into not 30% rate increases, but 15%?
Are you talking about our Gallagher Bassett business?
I am.
Okay. On our Gallagher Bassett claim paying business that we call the risk management, we basically provide outsourced tailored claims settlement services. We don't take risk. It's like on the brokerage side. We are experts, and we're the largest P&C administrator for workers' comp and general liability. What we do is we customize a solution for that customer that delivers superior claim outcomes. A classic example is how you treat a loss for a coffee spill might not be the same way that someone slips on, might not be the same as when a long haul trucker slips off the road in the truck and goes into the ditch and hurts himself. That customizable claim delivery service, we're seeing growth for a couple of reasons.
First, there's probably a just natural, as we reach more full employment, more people on the job, second and third shifts opening up, the actual frequency of claims is rising by customer. That actually fuels our growth. I think in the last year, maybe that's one and a half or two points of kind of same store customer, just natural claim growth. We also are having terrific growth. We've been in the alternative capital market for years. Captives, pools, just new money, new carriers coming into the market, new funds coming out. We provide the claim operation for that new money that's coming into the business, or it's been around a long time.
Carriers are increasingly more and more realizing that in a certain vertical or at a certain loss pick, we can actually provide a custom claim delivery model that delivers them superior outcomes. Some of the people that have been on the stage today in this room use Gallagher Bassett for a certain portion of their claim settlement activity, it's because in that vertical or across a certain loss pick, we can customize and deliver. Our analytics in this business have delivered superior. In fact, we just won an Innovator's Award at Gallagher Bassett because we've been able to predict claim outcomes better than anybody ever before. It's an exciting business for us. It's about $1 billion of revenue.
We don't talk about it very much, it's a terrific business, and we're paying $10 billion of claims a year, which I think would make us the seventh largest insurance company in the U.S. in terms of claims paid. The volume, the scale, and the fact that we've focused it into several verticals really allows us to deliver absolutely superior claim outcomes.
What are the growth opportunities? Are they new verticals, new lines of business, new geographies where you could explore this?
Yeah, I think as alternative capital comes into the market more, that's a great growth opportunity for us. Our penetration into the carrier market is very small at this point. It's with some great household names. That's an opportunity for growth. Just as the economy grows, they'll create more claims. Also internationally, we went from 15 years ago, 12 years ago, we had basically nothing in Australia, now it's over $100 million business. Our U.K. operation's growing. We're starting to get some opportunities in mainland Europe in order to do it. Because we have a global system that can process a claim the same way in the U.S. as it does in Australia, New Zealand, London, it's a terrific way for us to go in and pitch multinationals on letting us do their claim business in those countries.
Currently, are these multinationals buying first dollar insurance that you can take?
Well, no, actually, most of the customer, the multinationals are actually self-insuring either completely or they'll take a high self-retention. Many of our commercial customers, multinationals might say, "I'll retain up to the first $5 million worth of loss on any one claim. Anything over $5 million, I'll get excess cover on it." We'll settle the claim from dollar zero to $10 million, $12 million. If we get into those layers, we might co-administer the claim with the carrier that's on the underwriting risk. By and large, it is first dollar the way you would think about it. There is insurance when you get over the top at some point.
Okay, perfect. Again, if there are questions in the room, please let me know. Tom?
Over the last few years, valuations for brokerage and acquisitions has continued to migrate up, they seem to be both in public and private, kind of, they're getting to standard deviations above averages or highs. What have you guys done or what are you doing to try to mitigate overpaying for your acquisitions if there is still a cycle where they will eventually cycle back to more historic valuations?
I think maybe to set the stage is we're doing, let's say, 50 mergers around the world in the course of a year, we're probably looking at maybe 500 of them. There is a selection process in there. Second of all, at the level of broker that we're merging with, three, four, five, six, $10 million worth of revenue, they're really not commanding the multiples that you would see if somebody had $100 million or $200 million worth of revenue. The larger the broker, the higher the multiple, the smaller the broker, there's a more moderate expectation. Frankly, many of the folks that join us, they have a choice.
They could sell to PE, they could sell to a PE-owned strategic , they could sell to another strategic, they like the Gallagher message that our capabilities is what matters after the sale more than the dollars on the front end. We'll pay a fair price for it. We'll have a nice fair earn out on it. I think if you add up the last three years, we're still around eight, seven and a half to eight times. Because I think they realize that they can do better with us. It's not always about the money. It seems hard when I look out at this audience here that there's something other than money that matters. We typically don't buy retirements.
We don't buy people that can't make money because we say if they can't make money for their own family, they're never going to make money as being part of our family. We want professionals that really like the idea of getting up every day and selling insurance or providing employee benefit consulting or paying claims. There is a number there that they'll get a business broker to help them make sure they're getting a fair price, but it's not always price that causes them to join Gallagher. Our message today is that many things are going to change, but change for the better. If they join Gallagher, they want our capabilities, they want our internship, they want to use our offshore centers of excellence. They want to use our sales management tools. They want our systems.
They want our access to special product where we might have special endorsements that they can't get or special amendments onto those policies, if you're not familiar with what an endorsement is, where they can actually deliver a better product to their client. Because most of these folks are client first, employee second, their pocketbook third type mentality folks. We can buy at a fair price, and they never look back, and they like being home. They like being owned by a broker, run by brokers. They like the business that we're in, that we're committed to it. They don't want to be shopped again. They want to be home. We're trying to pick off 50 to 70 of those a year, and if we have to look at 500 of them to get it right, we will. What are we doing to keep that?
There's just discipline. Sure, maybe if you go back at the end of the recession, we were paying six and a half, something like that. What were we trading in there? Seven and a half? The arbitrage is still there, and they know that our capabilities will help them be better. Many of our regional folks came through the acquisition process. Their children that were in the business are now regional leaders in our organization. This is a collection of family-owned agencies that believe that they can be better with their partner down the street than they can going it alone or being a part of a financial sponsor.
Okay. Again, questions, just let me know. Yeah, Jeff.
Doug, given that you've built a pretty good scale, what percentage of that 50 per year is actually being acquired by another local broker, like you're helping facilitate that local broker to acquire a business? Or is it standalone, they get acquired, and they run their book?
Say again, just ask the question again.
What percentage of the 50 are you helping to facilitate another local broker to buy it and then manage it?
Actually, here's the thing. Most of our acquisitions, we only probably have five or six kind of full-time bird dogs that go out and try to make introductions and meet brokers. Most of our acquisitions come from the local business. Coming from Iowa, the Des Moines, Iowa branch, Bob Jacobs is there. He's running the business there. He's calling on his local competitor to say that together we can be better. Together we can grow. Why don't we join forces? You're at this certain point in your career where you want to do this, I want to do that. Then we have regional guys that sit over the top of that might identify a slightly larger broker. Most of our acquisitions are grassroots sourced.
Like I said, there is a group of business brokers that specialize in the insurance brokerage space, I can see a couple of them out here today, that specialize in bringing us brokers that we may not have known before. It's hard to get to know 37,000 different brokers around there. Introductions will come to us, and that's how we source them. The local guy is the one that does the integration. The local person's the one that makes sure that everything's happening. We have support from the corporate office, but it's grassroots M&A really.
Is it really a partnership, or is it that local guy just buying out the other person and just taking the book of business and doing it?
No, it's a partner. Most of the time we really just don't like buying a book of business. Like I said, we don't buy retirements. If somebody's at a point where they want to retire in five to seven years, okay, fine. If they want to retire right at the end of the deal, no, we typically won't do that. We typically want an earn-out of three years to make sure that those customers stay because these customers have developed a relationship. Remember what I said earlier, that smaller local broker might be damn good at what they do, right? We want them to be a part of the team, and we don't lose many of those folks after the deal. They stay on, and they want to sell insurance for another 15 years. They want to be the branch manager.
They want to be a regional manager. They may have career aspirations to move up in the organization, or they just might want to sell insurance. Some of them just say, "I'll just go back to taking care of my book of business. I don't want to deal with anything in the office.
I do want to-
We've done about 500 of them that have worked out pretty well.
Far, so good. I do want to slide in one question, if I can, on margins, right? We've talked in the past, some 3%, 3.5%, 4% organic growth is appropriate for margin expansion. Any insight you can provide in terms of what we're seeing now on the organic growth and on the margin expansion side?
Yeah, I think for anybody that's been around the story for a long time, we've said it's hard to expand margins unless you've got 3% or more organic growth. Now, I've said also, if you get 3% organic growth for the next 10 quarters, you'll have margin expansion even at that level. When you get to over 4%, it's kind of hard not to have margin expansion.
There's this place in between, and you say why? Why is there a variability? How much margin expansion are you going to get for, let's say, another half a point of organic growth on $4 billion? That's $20 million more, right? Well, $20 million, just since we've all been together since the last time we spoke or a couple of years ago, we're spending probably $5 million a year more on data. We're probably spending another $5 million-$10 million a year more in hardening our IT environment. We're spending more on recruiting. We had 500 young folks in our internship this summer that will come on, and we'll bring youth into the business. There was another speaker that was on that talked about the value of bringing youth into the business and training them in the way of selling insurance. It works.
I mean, if you look at many of our senior leaders, they were either interns or they came through a smaller broker that had the equivalent of an internship program. We're investing always in additional capabilities. Why can't you expand margin at three and a half? Well, I probably could, but I think that it's important to spend a little of that money and that growth on continuing to become a better organic grower. I see margin as an opportunity to grow. Our margins are very good. If you go back 3 years ago to this story, we said that there's opportunities to improve margin in Australia, Canada, and the U.K. We're halfway through with that, I think there might be another $20 million-$30 million of margin expansion opportunity there. When you get into- At 4%, you'll have margin expansion.
In between, there's a deployment of resources and investment question that we have to wrestle with. We'll start our budget process next week, and I'll have a better feel for it by the time we talk at the end of October.
Okay. We'll follow up. Yep, Jamie.
Doug, you said that if you grow 3%, 4%, whatever, you can increase your margins over time. If you think out over the long term, what is the sand in the gears that doesn't allow the margins to keep going up and up and up and up? Because if you go back, whatever, 10 years, let's say, you've grown that fast.
Yeah, they even go back.
I hope you do the next 10. My point is, what inhibits the margins from just continuing to go on up?
Well, I guess mathematically, nothing. I mean, to answer the question, I think that practically speaking, we've been pretty lucky over the last 10 years, if you want to call it that, to be in an environment where wage inflation has basically been nonexistent. We still are a people business. 60% of our costs go to people. We saw in 2005, part of the genesis of us creating offshore centers of excellence is, one, we wanted to improve our quality, second of all, we wanted to contain our costs. Third, that we don't talk about very much, is be able to have an abundant supply of labor, right? Fast-forward now, 13 years later, as we reach nearly full employment in many locations, our safety valve is our offshore centers of excellence.
We've grown from six people in 2005 to 4,000 there now. I could see us growing to 5,000 or 6,000 very quickly because same number of hands on the oars, just in an environment where we can hire and retain at a lower cost. If wage inflation were to be benign for the next four years, you might see similar margin expansion that you did in the last couple of years. Also, if you look at all the brokers, there was a wave starting in 2003, 2004, where efficiency was brought to the brokerage business, where the scale finally got large enough, where the technologies became cheap enough. The science around operational management became better. Deming didn't come into the insurance business until the 2000s somewhere, right? It came in the 1970s to the auto manufacturing business. Those technologies are more robust now.
I think you've got a correction initially, Jamie, for maybe three years, where you just have gone from being kind of inefficient to more efficient, and now you're more in that continuous improvement. The slope isn't going to be quite as big. Yeah, if you get 4% organic growth forever and you choose not to invest in youth or in more organic growth, then you'd have margin expansion. I think the era that we're in right now, and I'm sensing it from many of the other brokers, is we think that there's a great opportunity to capture a lot of market over the next 10 years. Getting more boots on the ground, getting more technology that can sell insurance, I think that is the place where you'll see us spending some of that margin that you might see expanding.
If that translates into organic growth, fantastic, right? I'd rather grow faster with just slightly less margin expansion than be stagnant and have some margin expansion.
If I can throw in one final question before our time comes to a close. The answer probably takes an hour, but can you talk about how last year's tax law changes impacted the tax credit generation and utilization within Gallagher Financial Services?
Actually, I think I can do it in three minutes.
Okay.
Very good. First of all, tax reform preserved the value of our tax credits. $750 million sitting on our balance sheet at the end of June will allow us to shelter our taxes in the U.S. for the next decade. All right? We preserve that in the U.S. Now, in the past, you could take your tax rate with these credits from 35% down to 20%. Now you can take it from 21% down to 5.25%. That's a 15-point delta off the tax rate.
Right.
What used to be is 35% down to 20% is now 21% down to 5%. In addition, it's accelerated the utilization of AMT credits. It's preserved the opportunity to produce more credits, certainly over the next three to four years. We think we can generate maybe another $700 or $800 million worth of credits through our clean energy efforts. It preserved it. It didn't reduce the benefit of it. The cost to create the credits are maybe a little bit more expensive, but when you're paying $2 to create $7, whether you're paying $2.50 to create $7, $7 worth of credits for about $2.50 spend on an equivalent basis. We still have a couple plants that we could put in place yet. We'll see whether that makes sense since there's an expiry of this program in 2021, by and large.
Really when it comes down to it, our global cash taxes paid for the next three years will be about 3% to 5% of our EBITDA globally. Just take EBITDA times 3% to 5%, you get pretty close to the cash taxes we're going to pay. The rate might bounce around because of change and stuff, but it doesn't matter, we just use credits against it. In 2022 and beyond, that might go from 6% to 9%. The point is, the entire purpose of our clean energy efforts is, first of all, we do good with what it does. Second of all, we get a tax credit. Third, it creates more cash flow for us to go out and buy more brokers or do share repurchases if we can't buy enough brokers out there.
It's a cash generation vehicle that's going to reduce our taxes, and tax reform was a terrific outcome for us.
Okay, fantastic.