Cuộc họp công bố kết quả kinh doanh Q3/2026 của Arthur J. Gallagher: Tăng trưởng doanh thu 18% và mở rộng biên lợi nhuận

Thông tin trọng tâm

• Arthur J. Gallagher & Co. cho biết doanh thu kết hợp từ mảng Môi giới và Quản trị rủi ro tăng 18% so với cùng kỳ năm ngoái trong quý 3/2026, bao gồm 5% tăng trưởng tự thân. Lợi nhuận ròng và EBITDAC điều chỉnh đều tăng 25%.
• Doanh thu mảng Môi giới tăng 19%, với mức tăng trưởng tự thân là 5%. Biên EBITDAC điều chỉnh đạt 35,3%, tăng 200 điểm cơ bản so với cùng kỳ năm ngoái.
• Doanh thu mảng Quản trị rủi ro tăng 14%, bao gồm 10% tăng trưởng tự thân. EBITDAC điều chỉnh tăng 17%, trong khi biên mở rộng 90 điểm cơ bản lên 22,8%.
• AssuredPartners đã tạo ra 285 triệu USD EBITDAC điều chỉnh trong quý. Gallagher vẫn đang đi đúng hướng để đạt 160 triệu USD hiệu ứng cộng hưởng theo tỷ lệ hàng năm vào cuối năm 2026 và 325 triệu USD vào đầu năm 2028.
• Ban lãnh đạo duy trì triển vọng tăng trưởng tự thân cả năm 2026 ở mức khoảng 6% cho các mảng Môi giới và Quản trị rủi ro kết hợp. Tăng trưởng tự thân của mảng Môi giới dự kiến sẽ duy trì ở mức khoảng 5% trong quý 4 và cho cả năm.
• Gallagher đã hoàn tất 5 thương vụ thâu tóm bổ sung đại diện cho khoảng 100 triệu USD doanh thu ước tính hàng năm trong quý. Danh mục thương vụ đang triển khai của công ty bao gồm hơn 30 biên bản thỏa thuận sơ bộ (term sheet) đại diện cho khoảng 300 triệu USD doanh thu hàng năm.

Dữ liệu tài chính cốt lõi

Không tính 76 triệu USD thu nhập từ lãi tiền gửi trong quý 3/2025 thu được từ số tiền giữ lại để thâu tóm AssuredPartners, ban lãnh đạo cho biết doanh thu điều chỉnh tăng 20%, EBITDAC điều chỉnh tăng 34%, EPS điều chỉnh tăng 37% và EBITDAC điều chỉnh trên mỗi cổ phiếu tăng 35%.

Kết quả kinh doanh và vận hành

Tăng trưởng tự thân mảng Môi giới được hỗ trợ bởi hoạt động kinh doanh mới, tỷ lệ giữ chân khách hàng và sự gia tăng quy mô rủi ro được bảo hiểm của khách hàng. Ban lãnh đạo ước tính việc định giá bảo hiểm hiện đóng góp khoảng 1 điểm phần trăm vào tăng trưởng tự thân, khiến hoạt động của khách hàng và cơ cấu kinh doanh trở thành các động lực lớn hơn.

Trong mảng bảo hiểm tài sản và thiệt hại bán lẻ toàn cầu, phí bảo hiểm tái tục bảo hiểm tài sản giảm 6%, so với mức giảm 10% trong quý 2. Ban lãnh đạo cho rằng sự thay đổi theo quý này chủ yếu do tính mùa vụ của việc tái tục hơn là sự chuyển dịch căn bản của thị trường tài sản. Phí bảo hiểm tái tục bảo hiểm thiệt hại tăng 4%, bảo hiểm trách nhiệm nghề nghiệp tăng 2%, bảo hiểm bồi thường cho người lao động tăng 1%, bảo hiểm cá nhân tăng 3% và kinh doanh trọn gói tăng 3%.

Ngoại trừ bảo hiểm tài sản, mức thay đổi phí bảo hiểm tái tục tăng 3%. Gallagher cho biết giá bảo hiểm tài sản thấp hơn đang khuyến khích một số khách hàng mua thêm phạm vi bảo hiểm, tăng hạn mức, giảm mức miễn thường hoặc tái cấu trúc các chương trình bảo hiểm. Ban lãnh đạo cũng báo cáo không có sự chuyển dịch đáng kể nào từ thị trường bảo hiểm phi chuẩn quay trở lại các công ty bảo hiểm được cấp phép trong danh mục tái tục của công ty.

Tăng trưởng tự thân mảng Tái bảo hiểm đạt 7%, do hoạt động kinh doanh mới và việc giữ chân khách hàng đã bù đắp cho mức giá cạnh tranh. Ban lãnh đạo mô tả giá bảo hiểm thảm họa tài sản có tính cạnh tranh cao, trong khi các điều kiện bảo hiểm thiệt hại vẫn phụ thuộc vào xu hướng chi phí tổn thất.

Tăng trưởng mảng Phúc lợi nhân viên bị ảnh hưởng bởi tiến độ của một số dự án tư vấn và khoản điều chỉnh hoa hồng phụ thuộc. Ban lãnh đạo ước tính khoảng 4 triệu USD thuộc các dự án tư vấn đã bị hoãn, cùng với 2 triệu đến 3 triệu USD khác gắn liền với một số dự án lớn. Công ty kỳ vọng tiến độ thực hiện sẽ quyết định liệu công việc có quay trở lại trong quý 4/2026 hay trong nửa đầu năm 2027.

Gallagher Bassett đạt mức tăng trưởng tự thân 10%, nhờ hoạt động kinh doanh mới và việc giữ chân khách hàng. Ban lãnh đạo cho biết các khoản đầu tư vào dữ liệu, công nghệ và năng lực dịch vụ đã hỗ trợ cả tăng trưởng lẫn hiệu quả vận hành.

Triển vọng và Hướng dẫn của Ban lãnh đạo

Ban lãnh đạo duy trì triển vọng tăng trưởng tự thân cả năm 2026 ở mức khoảng 6% trên toàn bộ các mảng Môi giới và Quản trị rủi ro kết hợp.

Đối với mảng Môi giới, công ty dự kiến tăng trưởng tự thân khoảng 5% trong quý 4 và cả năm 2026. AssuredPartners sẽ lần đầu tiên được đưa vào tính toán tăng trưởng tự thân trong quý 4, tạo ra lực cản ước tính khoảng 20 đến 25 điểm cơ bản.

Đối với mảng Quản trị rủi ro, ban lãnh đạo dự kiến tăng trưởng tự thân cả năm đạt khoảng 9%. Công ty cũng kỳ vọng biên EBITDAC điều chỉnh trong quý 4 và cả năm sẽ duy trì trên 22%.

Cho năm 2027, ban lãnh đạo cho biết tăng trưởng tự thân của mảng Môi giới truyền thống có thể tương tự mức năm 2026, giả định các điều kiện thị trường nhìn chung tương đồng. Việc đưa AssuredPartners vào có thể làm giảm tăng trưởng tự thân được báo cáo của mảng Môi giới khoảng 40 đến 50 điểm cơ bản. Việc cải thiện tăng trưởng tự thân cốt lõi của AssuredPartners không được đưa vào các giả định về hiệu ứng cộng hưởng của công ty.

Giám đốc Tài chính (CFO) Douglas Howell cho biết với mức tăng trưởng tự thân khoảng 5%, mảng Môi giới có thể mang lại mức mở rộng biên lợi nhuận cốt lõi từ 50 đến 75 điểm cơ bản vào năm 2027, trước khi tính đến các hiệu ứng cộng hưởng bổ sung từ AssuredPartners. Công nghệ, AI và việc tăng cường sử dụng các trung tâm năng lực xuất sắc của Gallagher có thể cung cấp thêm sự hỗ trợ.

Gallagher kỳ vọng các hiệu ứng cộng hưởng theo tỷ lệ hàng năm của AssuredPartners sẽ đạt 160 triệu USD vào cuối năm 2026 và 325 triệu USD vào đầu năm 2028. Công ty cũng ước tính rằng các thương vụ thâu tóm được hoàn tất tính đến ngày họp trực tuyến có thể đóng góp khoảng 65 triệu USD vào doanh thu mảng Môi giới và 5 triệu USD vào doanh thu mảng Quản trị rủi ro trong quý 4.

Rủi ro và Các yếu tố cần theo dõi

• Giá bảo hiểm tài sản vẫn mang tính cạnh tranh cao, đặc biệt đối với các rủi ro liên quan đến thảm họa, làm hạn chế sự đóng góp từ giá phí bảo hiểm.
• Triển vọng sớm cho năm 2027 của ban lãnh đạo giả định các điều kiện thị trường nhìn chung tương tự năm 2026; sự suy giảm đáng kể trong định giá bảo hiểm thiệt hại có thể gây áp lực lên tăng trưởng tự thân.
• Tình trạng lạm phát chi phí y tế và thuốc theo đơn tăng nhanh đang làm chậm trễ một số dự án tư vấn Phúc lợi nhân viên do khách hàng ưu tiên kiểm soát chi phí ngắn hạn.
• AssuredPartners hiện tăng trưởng chậm hơn khoảng 1 đến 1,5 điểm phần trăm so với các hoạt động tương đương của Gallagher, tạo ra lực cản nhỏ trong ngắn hạn đối với tăng trưởng tự thân được báo cáo.
• Ban lãnh đạo cho biết hoạt động M&A trong lĩnh vực môi giới bảo hiểm đang chậm lại và bội số giao dịch đã giảm, mặc dù danh mục thâu tóm của Gallagher vẫn hoạt động tích cực.
• Kết quả của mảng Tái bảo hiểm và bảo hiểm chuyên biệt có thể biến động theo thời điểm và thời hạn của các hợp đồng lớn, bao gồm các hợp đồng 12 tháng so với 18 tháng.

Điểm nổi bật trong phần Q&A với chuyên gia phân tích

Ban lãnh đạo dự kiến mức đóng góp khoảng 1 điểm phần trăm từ việc định giá bảo hiểm vào tăng trưởng tự thân sẽ tiếp tục duy trì ổn định trong năm 2027. Tuy nhiên, họ nhấn mạnh rằng định giá không chuyển hóa trực tiếp thành doanh thu vì khách hàng có thể thay đổi hạn mức, phạm vi bảo hiểm, mức miễn thường và rủi ro giữ lại.

Về AssuredPartners, Gallagher cho biết việc tăng mục tiêu hiệu ứng cộng hưởng lên 325 triệu USD chủ yếu xuất phát từ chi phí. Giả định về hiệu ứng cộng hưởng doanh thu nhìn chung không đổi, trong khi việc cải thiện tăng trưởng tự thân của AssuredPartners hướng tới mức của Gallagher sẽ đại diện cho tiềm năng tăng trưởng bổ sung so với kế hoạch hiện tại.

Gallagher cho rằng tăng trưởng tự thân ổn định của mình là nhờ vào văn hóa bán hàng, các công cụ cho người khai thác bảo hiểm, sự chuyên môn hóa theo ngành và bán chéo sản phẩm. Ban lãnh đạo cho biết việc sử dụng các công cụ của mình đã nâng tỷ lệ chốt hợp đồng thành công từ mức lịch sử trong vùng cao của khoảng 20% đến vùng thấp của khoảng 30% lên khoảng 40% đến 50%.

Công ty cũng nhấn mạnh việc tiếp tục đầu tư vào các trung tâm năng lực xuất sắc ở nước ngoài. Ban lãnh đạo coi chi phí thù lao so với doanh thu có giá trị thông tin hơn số lượng nhân sự tuyệt đối và kỳ vọng các trung tâm này sẽ hỗ trợ chuẩn hóa dữ liệu, triển khai AI và đòn bẩy hoạt động.

Toàn văn Biên bản Cuộc họp Báo cáo Kết quả Kinh doanh

Toàn văn cuộc gọi công bố kết quả kinh doanh

Phần trình bày của ban lãnh đạo

Operator

Good afternoon, and welcome to Arthur J. Gallagher & Co's. Third Quarter 2026 Earnings Conference Call. [Operator Instructions] Today's call is being recorded. If you have any objections, you may disconnect at this time. Some of the comments made during this conference call, including answers given in response to questions, may constitute forward-looking statements within the meaning of the securities laws. The company does not assume any obligation to update or forward-looking statements provided on this call. These forward-looking statements are subject to risks and uncertainties that could cause actual results to differ materially.

Please refer to the information concerning forward-looking statements and Risk Factors sections contained in the company's most recent 10-K, 10-Q and 8-K filings for more details on such risks and uncertainties. In addition, for reconciliations of non-GAAP measures discussed on this call as well as other information regarding these measures, please refer to the earnings release and other materials in the Investor Relations section of the company's website.

It is now my pleasure to introduce J. Patrick Gallagher, Jr., Chairman and CEO of Arthur J. Gallagher & Company. Mr. Gallagher, you may begin.

J. Gallagher

Thank you. Good afternoon. Thank you for joining us for our third quarter '26 earnings call. On the call today is Doug Howell, our CFO; and other members of our management team.

We had an outstanding third quarter. Our team delivered strong revenue growth and excellent profitability. For our combined Brokerage and Risk Management segments, our two-pronged revenue growth strategy, growing both organically and through acquisitions delivering total revenue growth of 18% in the third quarter. Organic growth was also strong at 5%, reflecting excellent new business, strong retention, positive exposure growth and the diversity of our business. We continue to generate outstanding profits.

Net earnings grew 25%, and adjusted EBITDAC also grew 25%. That marks 26 consecutive quarters of double-digit adjusted EBITDAC growth, along with another quarter of margin expansion. Doug will break that down for you in a few minutes. On a segment basis, brokerage revenues were up 19%, of which organic was 5%. We saw excellent growth across our retail PC, wholesale and reinsurance businesses. We're now more than a year into the AssuredPartners combination. The business is living up to our high expectations. Client retention remains strong, and the teams are working very well together.

Our Risk Management segment, Gallagher Bassett, posted revenue growth of 14%, which includes organic of 10% driven by excellent new business and strong client retention. Our consistent top and bottom line growth is driven by the 4 strategic pillars that have guided Gallagher for decades, growing organically, growing through M&A, improving our productivity and quality and maintaining our culture, I'll comment on each of these.

First, organic growth. We have a diversified revenue model, but common across that our client retention remains strong, new business is excellent, and our clients' underlying business activity continues to be positive. It is well known that insurance rates are currently contributing less to growth than they have over the past several years. [indiscernible] about 1 point of organic growth today is tied to rates. This reinforces that rates are just 1 part of the equation.

The bigger drivers of organic growth continue to be new business, strong retention, exposure growth as well as the diversity of our model across PC, benefits, reinsurance and claims. So this shows our business performs well through a wide range of economic interest rates and insurance price environments. And we believe our diversified model and breadth of capabilities position us well to continue growing as the market conditions evolve.

We're also benefiting from favorable macro tailwinds. The need for insurance is growing around the world and risks are becoming more complex, thus requiring broader capabilities and more sophisticated solutions. Think about construction, infrastructure, energy and data centers as well as the growing need for clients to understand, mitigate and ensure emerging risks from AI, just to name a few examples.

These are the areas where clients need more advice and deeper expertise that plays directly to Gallagher's advisory strength and creates a tailwind for durable organic growth. Let me go back to rates for a few minutes. Overall, we continue to see a very segmented PC market, properties competitive, casualty varies considerably by line and account and there's plenty of capacity looking for attractive risks. Carriers want to grow, but they still need to write risks at the right returns. And for us, that creates opportunities to help clients navigate more choices and find the right solutions.

Let me break this down by business, I'll start with our global retail PC business. Property remains competitive with renewal premiums declining 6% compared with down 10% in the second quarter. As we discussed in September, that sequential improvement, largely reflects the mix of seasonality of renewals rather than a change in the underlying property market. However, casualty remained firmer overall.

Even with competition slightly increasing, conditions still vary considerably by line, account and geography. In the third quarter, casualty renewal premiums, which includes general liability, commercial, auto and umbrella, were up 4% overall. Professional lines, including D&O and cyber were up 2%. Workers' comp was up 1%, personal Lines was up 3% and package was also up 3%.

Excluding property, renewal premium changes increased 3% in the third quarter, with higher increases in the U.S. versus international markets. And it's important to remember, premium changes in Gallagher's revenues do not move one for one. Renewal premium changes include exposures, changes in limits, coverage and mix, not just rate. In other words, as property pricing eases, we're seeing clients opting in and using the savings to buy back coverage, increase limits or improved structure after several years of opting out than making difficult trade-offs.

They're also revisiting how much risk they retain with the transfer and how they structure their overall programs, and that makes the value of our advice, advocacy and market access even more important. In the U.S. excess and surplus property remains very competitive, particularly cat-exposed property. But lower pricing doesn't necessarily mean the business leaves E&S.

Rates are clearly down. But for us, our teams continue to win new business, helping to offset rate decline. Within casualty, capacity is increasing, the loss costs remain an important consideration. So conditions vary by line and risk. In this case, we continue to see tailwinds -- rate tailwinds and strong growth in casualty.

In our renewal book, we are not seeing any meaningful movement back to the admitted market. And we're seeing new business still using the E&S market at levels broadly consistent with what we saw over the last couple of years. This shows that it's a different marketplace today. For us, the E&S market is here to stay, provides important capacity and deep expertise with flexibility on terms and creative structures. All that is critical to delivering customized solutions to our customers.

We're seeing a similar story in London Specialty. Competitive North American cat property has been more than offset by certain marine, aviation and political violence risks. These risks remain more challenging, and they require careful structure and coordinated execution across markets. In reinsurance, the market has plenty of capacity. Property cat pricing remains competitive, while casualty is more nuanced to the loss cost trends. Reinsurance is another example where price is only one part of the story.

New business, the amount of protection clients buy and how they structure their programs all matter. Our expert capabilities across faculty casualty, life and capital advisory give Gallagher Re multiple ways to grow. Moving to Employee Benefits. We've seen solid organic growth in our core health and welfare business so far this year. But in the third quarter, however, a few larger consulting projects were pushed out as clients focused on controlling rapidly rising medical and prescription costs. Employers still want competitive benefits to attract and retain people.

But managing those rapidly rising costs is the immediate priority. And that's where our people really help, working side-by-side with clients to manage costs and keep their benefits competitive. Let me turn to Gallagher Basset. It was another terrific quarter with organic growth of 10%, driven by excellent new business and strong client retention. Our investments in GB are paying off in both growth and margins. Clients are benefiting from our expanded capabilities, deeper data and more robust technology.

And each of these improves our advice and service and helps drive better claim outcomes. Those investments, together with the depth and experience of our people, continue to strengthen GB's competitive position. With a good pipeline of opportunities, we feel terrific about where the business is positioned.

Now a quick comment on what we're seeing in the economy. Our daily revenue indications from our clients' underlying insurance activity such as audits, endorsements and cancellations, have historically given us a good and practically real-time window into broader economic conditions. When I look at yesterday's report, those indicators continue to be nicely positive, pointing to solid business activity and steady underlying exposure growth.

So to wrap up my thoughts on organic growth, property pricing moderating and that's well understood. The property is only one part of our very large and very diverse business. The tension remains strong. The business is excellent and client activity continues to be positive. And as pricing changes, clients are buying more coverage, increasing limits, lowering deductibles and turning to us for advice on how to structure their risk programs.

Those are bigger drivers of organic growth even as pricing continues to change. We also have a very diverses. Our growth is not tied to 1 product, 1 geography or 1 client segment, and we have many ways to grow across BC, benefits, reinsurance and claims. We are large, and we still have had very little market share. And we operate in an industry where demand for advice expertise and risk solutions continues to expand.

And I look forward, I remain confident in our 2026 full year organic growth outlook of approximately 6% for our combined Brokerage and Risk Management segments. And looking to 2027, we see many of the same drivers. Strong new business, excellent client retention, positive exposure growth and our diversified business mix, those support another year of strong organic growth.

Now shifting to our second strategic pillar, mergers and acquisitions. We continue to see good opportunities. And as always, we're staying disciplined on strategic fit, culture valuation and returns. During the third quarter, we completed 5 new tuck-in acquisitions, representing approximately $100 million of estimated annualized revenue. That brings us to 21 so far this year with approximately $225 million of estimated annualized revenue.

Our pipeline remains active with over 30 term sheets signed or being prepared, representing around $300 million of annualized revenue. And these mergers continue to add terrific people and capabilities across our businesses and geographies.

AssuredPartners, Woodruff Sawyer and dozens of others that have joined us are great examples of that strategy at work. We're connecting teams, sharing capabilities and bringing Gallagher's tools, Data and expertise across the combined team. And in turn, these mergers accelerate our opportunities for future organic growth as we become better together. To all of our new merger partners, I'd like to extend a very warm welcome to the Gallagher family of performance.

Turning to our third strategic pillar, continuously improving our productivity and quality. For more than 2 decades, we've been focused on improving productivity and quality through standardized workflows and a common data and digital strategy across the company and building out our centers of excellence. And today, our centers of excellence are 20,000 colleagues strong, and our goal has remained the same, reduce repaint work, improve quality and give our people more time to serve and advise clients.

AI and automation helps to accelerate that journey and helps us capitalize on our scale. We're continuing to invest where it strengthens client service and growth while improving efficiency and margins over time. Let me wrap up with our fourth strategic pillar, our culture. We're a team-first company, our people helping to share their expertise and work together to do the right thing for our clients.

That's what makes Gallagher special. As we grow, that matters even more, bringing new colleagues into Gallagher, giving them more people, more expertise and more capabilities to help their clients and win new business. The 25 tenets of the Gallagher Way guide how we work and how we treat 1 another. It's about serving our clients, supporting each other and growing together. That's the Gallagher Way. So another outstanding quarter behind us. strategy is working, our team is executing and the opportunities ahead of Gallagher have never been greater. I'll stop now. I'll turn it over to Doug to walk through the financial details. Doug?

Douglas Howell

Thanks, Pat, and hello, everyone. We had a fantastic quarter. Nearly every metric was at or better than the outlook we provided at our September Investor Day. Incredible total revenue growth, strong organic growth, excellent margin expansion and terrific earnings growth.

So let's go to Page 1 of the earnings release. Our 2-pronged revenue growth strategy continued to deliver. When you do the math, you'll see our combined Brokerage and Risk Management segments posted adjusted revenue growth of 17%, adjusted EBITDA growth of 25% and adjusted EPS growth of 26%. Then it gets even better when you levelize to remove the $76 million of interest income we earned in the third quarter '25 on the funds we are holding to buy AssuredPartners.

On that basis, adjusted revenues were up 20%. Adjusted EBITDA grew 34%, adjusted EPS grew 37% and adjusted EBITDA per share grew 35%. Like I said earlier, in a word, it's incredible. Flipping to Page 2. Again, levelizing for the interest income earned on the fund held to buy AP for our combined Brokerage Risk Management segment's 9-month adjusted revenues were up 27%. Adjustment EBITDAC grew 32%, adjusted EPS grew 34% and adjusted EBITDAC per share grew 33%. So the strength we've seen isn't just a 1-quarter story, I'll call it a fantastic 9 months, too.

So let's move to Page 3. Brokerage organic growth was up 5% in the third quarter, right in line with our September IR day forecast and a strong result in a competitive pricing environment. We posted solid organic growth in our base commissions and fees, plus another strong quarter of combined supplemental and contingent revenue growth.

Moving to the brokerage margin table at the top of Page 5. Our adjusted EBITDAC margin was 35.3% in the third quarter. At the upper end of the range we noted on our September IR Day. Headline margin expansion of 200 basis points and the underlying expansion story is really terrific. I'll unpack that a little bit more when we get to Page 7 of the CFO commentary document.

So let's move now to the bottom of Page 5. Risk Management organic growth was 10% in the third quarter, again, right in line with our September IR Day forecast. It's another excellent quarter, reflecting strong new business, excellent client retention and continued momentum across Gallagher Bassett. When you flip over to Page 6, Risk Management third quarter adjusted EBITDAC grew 17% with margin landing at 22.8%, up 90 basis points over last year that reflects strong organic growth and continued operating efficiencies.

Looking ahead, we see fourth quarter and full year '26 adjusted EBITDAC margin again, north of 22%. That would cap off another very strong year for Gallagher Bassett. Flipping now to the Corporate segment on Page 7. Not really much here. Adjusted corporate results were a bit better than our September Investor Day outlook, but that's primarily because of the noncash unrealized FX loss came in smaller than estimated.

When you turn to Page 7, about halfway down, you'll read that we repurchased about 400,000 shares for approximately $100 million in the third quarter. That brings repurchases to about $580 million through September 30. Okay. Let's leave the earnings release and turn to the CFO commentary document. This document includes details that can meaningfully affect your models.

So I'd encourage you to give it a careful luck. Starting on Page 3. Most third quarter items came in very close to what we provided in September. As you model the fourth quarter, please consider the FX impact and noncash expenses as these have been updated to reflect the latest exchange rates.

Turning to Page 4, a few business level organic growth highlights than the outlook. Third quarter brokerage organic was 5% meeting our September midpoint estimate. And a few business level callouts. Reinsurance growth was 7%, reflecting another quarter of strong new business and retention more than overcoming the competitive pricing environment.

Our U.K. and EMEA businesses had a great quarter, which was somewhat benefited from more risk premiums. Benefits did come in a bit below our September forecast. Most of that reflects a contingent commission true-up and the timing of several consulting projects that I mentioned earlier and admittedly, a little relates to some rounding in the percentages. Underlying core health and welfare growth remained solid and in line with our expectations.

And then again, you'll see on this page, another outstanding quarter for Gallagher Bassett's third quarter coming in at 10% organic growth. So moving right on this page, our outlook. We continue to see fourth quarter and full year '26 brokerage organic growth of around 5%. And it's worth a quick reminder of what we discussed in September at our IR Day. Fourth quarter brokerage organic will include AP for the first time.

The math behind that inclusion gives you roughly only 20 to 25 basis points of headwind. So that's another really good story here. And our early view of '27 is also encouraging. Our early planning indicates legacy brokerage organic growth could look a lot like '26. And it's also indicating that our early successes of being better together, the roll-in of AP is looking like maybe only impacting that by about 40 to 50 basis points for the full year '27.

And as I provide all this information, please know we're assuming broadly similar conditions -- or market conditions in '27 as we saw in '26. And then one other soundbite here: Improving AP, AssuredPartners, base organic growth was not and is still not included in our synergy assumptions. So progress towards Gallagher growth levels over the coming year to 2 years would represent additional upside.

Moving down on a few lines of the Risk Management segment. You'll see our outlook remains strong. A 9% organic year would be another impressive result for Gallagher Bassett and reflects the momentum from our continued investments in the business. As for '27, look at the pipeline suggest momentum should continue. So '27 also could look a lot like this year for Gallagher Bassett.

Moving to the investment income table at the top of Page 5. Our fourth quarter investment income estimates reflect current exchange rates, estimated fiduciary cash balances and the September rate increase.

And staying on this page, but shifting down to the rollover revenue table. Third quarter rollover revenues came in pretty close to our estimates provided in September. For the fourth quarter, acquisitions closed through yesterday could add about $65 million to brokerage revenue and about $5 million to risk management revenues. We also need to make a pick for future M&A. However, realize we're already well into the quarter. So practically speaking, that fourth quarter number shouldn't meaningfully increase all that much.

This seems to be another place for the closer look in your models. And finally, as a reminder, 5th line up from the bottom, please remember to adjust the prior year revenue base for this divestiture and other line before applying your fourth quarter organic growth assumption. Let's turn over to talk about AssuredPartners on Page 6.

We discussed in our last few Investor Days that integration is progressing very well. So there's no need to repeat today. other than to add that all back office systems are integrated and up and running by year-end, close to half of AP's revenues will be up and running on their designated agency management system. That's great work by the team. So just a few call-outs from this page.

AP did deliver $285 million of adjusted EBITDAC in the quarter. That's right in line with our September estimate. We remain on track for $160 million of annualized run rate synergies by year-end '26 and that goes up to $325 million by early 2028.

And just 1 modeling helper here. When I get to Page 7 in a second, we give you our estimated fourth quarter margin expansion from AP synergies. So don't again add synergies from this page. If you do that, you'll double count. So let's go now to Page 7. This really shows the power of our model when it comes to our margins. First, underlying brokerage margins expanded 60 basis points in the quarter. That's at the top end of our September range. That's our vigilant work on process standardization, great use of our centers of excellence, deploying technology and other productivity initiatives, all continuing to show up in our underlying results practically every quarter for the last 5 or more years.

Second, AP added another 310 points of margin lift in the quarter. First line shows 220 basis points related to AP pre-synergies understand that 180 basis points of that relates to having full quarter of AP this year versus only a partial quarter of last year third quarter. Then the next line shows another 90 basis points came from synergies. That's the integration work now showing up in our results. And there's more ahead.

As we look out to '27, we see strong margin momentum and multiple levers to drive further improvement. Additional AP synergies, greater reuse of our lower cost centers of excellence and continued technology and productivity initiatives. So we're not just a revenue growth story, we're also a profitability growth story too.

Let's move to Page 8 to our corporate segment. Our fourth quarter outlook is very close to what we presented in September, and you'll see again in the right lower box, it's just a reminder that we have $3.4 billion of future tax savings from tax credits and tax deductible intangible amortization. That shows up in our cash flow statement rather than in the P&L. So for modeling, set your cash taxes paid at about 10% of EBITDAC, and that should get you close.

And remember, those tax benefits give us more cash to put to work. Combined with cash on hand, expected free cash flow and future investment-grade borrowing. We estimate more than $12 billion of acquisition capacity to deploy over the next 2 years. That's substantial capacity to continue executing our M&A strategy. Our pipeline remains strong. We stay disciplined on fit and price. We continue to favor M&A, but we'll continue to repurchase shares opportunistically. So another great quarter across the businesses were on track for a terrific full year.

We're growing organically executing on a strong M&A pipeline. Expanding margins, realizing the benefits of AP and deploying our capital to create long-term shareholder value. We have good momentum heading into '27, and we're very excited about what's ahead. So those are my comments. Back to you, Pat.

J. Gallagher

Thanks, Doug. Sure, I think we're ready for some questions and answers.

Operator

[Operator Instructions] Our first question is from Elyse Greenspan with Wells Fargo.

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Elyse Greenspan

My first question, Pat, you said that you guys are generating, I think, around 1% organic and brokerage from the rating environment right now, right? When you think about 2027 and the pricing environment like getting more competitive, when you guys say that you're looking for kind of a similar level of brokerage organic growth next year, are you assuming that 1% persists? Or are you assuming maybe a little bit of a slowdown and then you get some additional contribution from some of the other factors that you mentioned new business retention exposure, et cetera?

J. Gallagher

No, I think the 1% will be consistent.

Elyse Greenspan

Okay. And then my second question is on margin for next year, right? As we think about just synergies from AP coming on, right, kind of organic growth, what seems like it might be within range of 5%, maybe a little bit of a headwind from AP brings that down a little bit. But how are you thinking about just the level of margin improvement that you guys could see next year? Is it back to like baseline, Doug? And then put the synergies in on top, so like 50 basis points on organic and then synergies? Or how should we be thinking about that for 2027 for brokerage?

Douglas Howell

So I don't see it any different than we talked about before. I see margin expansion starting around that 4% range. And if so we're at 5%, you might see 50 to 75 basis points of expansion, and then you would get more synergies coming out of AP. We also have AI starting to use. We also have other technologies. We're continuing to use our offshore centers of excellence. So I feel pretty good about next year, kind of looking like this year.

Operator

Our next question is from Mark Hughes with Truist Securities.

Mark Hughes

Yes. Thank you very much. Doug, the divestitures, the $73 million in the quarter, was that -- or what you expect for the fourth quarter, I'm sorry. Is that a little elevated? Or is that kind of something we should think about for a run rate?

Douglas Howell

Yes. Good catch on that, Mark. I probably should have baked that into my script. So this is a modeling helper that really helps you reset your baseline for last year.

So let me break that down just from memory or a second. The easiest component to understand is we removed from last year in that number, what we sold and is what is in runoff. Yes, it is a bit higher in the fourth quarter than we're showing here because when we bought AP, some of their business was already in runoff. And you know that from time to time, we also sell or run off some units too.

Generally, that creates a book gain that we adjust out. We don't include that in our organic. So maybe in that $73 million, there's call it, $25 million of runoff. And again, I'm going a little bit from memory here of runoff and sold businesses. Then we also put in this line that kind of the impact of 606 accounting in the prior year quarter. We don't have as much of that in Q4 '25. Maybe that was $15 million to $20 million of that number. And we shouldn't be applying organic growth to nonrecurring accounting adjustments.

We put that in that line. We do also put the large life, that's actually performing pretty well this year, but I think maybe in the fourth quarter last year, we had $10 million or $15 million of that. We've actually had a pretty good year on that in that business, particularly earlier in the year. But again, in order to level set your baseline for next year to apply organic growth, you need to kind of factor that out in terms of doing that.

And then, of course, what we've been talking about, if I remember the fourth component of this is that when we convert onto our AP systems, we're getting more granular around gross revenues and co-brokerage amounts that are netted against each other. So for apples-to-apples, there's an adjustment down in that number. It's not a big item. I think it's around $10 million. So you're right to highlight, I mentioned that in my script, but those are kind of the 4 components that, that come to mind that add up to that $73 million.

Mark Hughes

Okay. I appreciate that. And then anything on commission rates in the software market as everybody -- carriers are competing for premium. Is that good for you all?

Douglas Howell

Well, listen, I think our supplementals and contingents are showing that carriers value the volume and the good business that we give them. So we're not seeing compression in our base rates at all.

Mark Hughes

Yes, about underlying commissions, so my thought was maybe they're going up a little bit?

Douglas Howell

No. We try hard at that, but right now we're okay.

J. Gallagher

Commission rates are pretty steady. And what we do try to do is talk to customers about why we should take a pay cut and basically say, because we're very transparent on every dollar we make, we did a good job for you. Last year, we had $10,000. If we stick with this, we're going to make $8,000, we'd like to put a fee on it, and we sell that to some degree, but it's not across the board.

Operator

Our next question is from Dean Criscitiello with Wolfe Research.

Dean Criscitiello

When you guys announced the AP deal, you said there would be $160 million in run rate synergies with $60 million or a bit more than 1/3 of that coming from revenue. Now your guidance today is for $325 million of run rate synergies, but I don't think you split out the revenue and cost of that, so sort of hoping for an update on there. And then you guys sounding kind of bullish on some upside from the $325 million. So just curious what would get you to upside from that.

Douglas Howell

All right. Let's work backwards. Just remember, when we bought, we bought a really nice growing business in AssuredPartners, but it was running 1 point to 1.5 points less than like-for-like business inside of Gallagher. And there in lies some of the -- a big opportunity as the producer -- the great producers inside of AP, get our tools and capability over a 1- to 3-year period, you should -- our goal is to get that up, so that's performing at the same level as the producers inside of Gallagher overall.

All right. We're on track for that. We also know that we can get some enhanced compensation as we start using AP distribution force. It gives a great opportunity for our wholesalers and our binding and our programs folks to start calling on those folks all pick up some there. But by and large, the revenue that we're talking about is the same in the $325 million number. as it was when we did the secondary offering. We have not throttled revenue to get to that number. It's mostly in the expense line.

Dean Criscitiello

Got it. That's helpful. And then last 4Q, I know your organic, you had headwinds from like the large life sales and the deferred revenue assumption changes. And I know that's not in your guidance for this year, but curious if you expect that to be a tailwind to the reported organic number in 4Q.

Douglas Howell

Well, no, it's not in our organic anymore the way we report it. I don't believe there's going to be a significant change in that accrual number when we come into the year-end. I'll have an update on that, we update most of our 606 factors here basically beginning now. So when we get together, our December IR day, I'll be able to give you the impact of that it shouldn't influence at all anything that you're seeing on Page 4 in our organic growth numbers.

Operator

Our next question is from Mike Zaremski with BMO Capital Markets.

Michael Zaremski

Maybe just a quick clarification on the organic growth outlook for brokerage. I think, Doug, you said that 40 to 50 basis point impact for next year. Is that -- should we be since we're going to be including AP in the full year next year, are we saying -- you're thinking it's the same as [ '26 on legacy ] but then be minus 40 to 50 basis points to take into account AP.

Douglas Howell

That's what I'm saying as we go into the year. I think that the -- that would be the level of a little bit of headwind. If AP continues to run in that point have difference in organic than us, that would mathematically produce about a 40 to 50 basis point headwind in total Gallagher organic growth next year.

I would say it's almost a rounding when you get down to it.

Michael Zaremski

And not to belabor, but AP has only been part of you guys for a short period of time. But would that be coming with APs lower organic after a year or so of being with you all, it's not really part of -- it's not fully integrated. So there are new businesses running kind of below the what you all like to see also are able to do? Or is there another component?

J. Gallagher

That's exactly right. And typically, when we do acquisitions like this, those people with our tools our capabilities and our vertical or niche capabilities, in particular, see a nice lift. And I think that they're slightly behind us inorganic, and I think we will see a pickup.

They're very -- they're coming on to the tools and the capabilities as well as working together. We keep talking about we're better together. Well, we're seeing that over and over. We're not going to sit here and give you a list of new production for the month for the year, but it's very strong, and it's really exciting. I think that to me is 1 of the most exciting things about the whole deal because we are selling a lot of stuff together. .

Douglas Howell

Yes. If you think about like timing wise, we didn't close until August by the time that came up very quickly for us because we actually did push through the segment request very quickly. So we get it done. -- we get into the fall and start doing the hearts and minds campaign.

That stretches into January and February. We have our sales conferences where we continue to roll out more tools. The tools are on their desk, but using that -- the way I look at it from the CFO's desk, we really only had the sales excitement going on for about 8 -- 7 or 8 months. And if you think about P&C business being and a bit of it being kind of an 18-month sales cycle, I think that we're just coming into our own on that. So I think the '27 and '28 those are the test years to basically take these tools and bring them up to our level.

So very excited about where we are right now, but understanding how this -- this isn't a call center type operation, where you increase advertising today and sales come in tomorrow. So takes a while, but we are getting really great feedback from the field on how these tools and capabilities can make them better. And that's what we saw in the other 1,000 acquisitions that we've done over the last 20 years, too. It takes a while, they'll learn it, get it up and running and then leverage it.

Michael Zaremski

Got it. And just really quickly, reinsurance, you guys continue to take market share, a great story there. Just you guys probably -- your outlook is probably more bottom-up and top-down. But top-down levels if we were to say that the reinsurance -- the overall reinsurance marketplace was going to grow by 2 to 3 points less year-on-year, '27 versus '26. Does that do you think that, that would be taken into account in terms of your thought process on reinsurance next year? Or you guys don't think about it that way. .

J. Gallagher

We don't think about it that way. I think 1 of the things about reinsurance is very chunky. So these are big deals and they have a life of their own, and our team is very, very good. So we feel good about next year. .

Operator

Our next question is from Andrew Kligerman with TD Cowen.

Andrew Kligerman

This is a basic question, but it's important because I've been getting the question from investors, particularly newer ones. And it's a question about differentiation. As I see a number of your competitors, both private and public, starting to stumble in organic growth. And yet I look at Gallagher and year-to-date, it's just, in brokerage, 5%, 5%, 5%, just solid all the way across. And I know on this call, you've touched on a bunch of stuff. Doug just said a word tools and capabilities Pat, you were talking about productivity and quality with the digital and the center for excellent then you rounded it out with culture. But I hear that same kind of commentary from your competitors. -- maybe there's something even more tangible that you could give me here when I get that question because I've been getting it quite a bit amidst the softening market.

J. Gallagher

All right. I'll go out on a limb on this one, Andrew, I think that the differentiation is in the culture. I mean I think there's -- I'm the one guy that's just -- they don't [indiscernible] but at 600 interims last summer. I don't know what the industry is doing, but nobody is even coming close to that. Year in year out, bringing 600 people. We have young people in to learn about our business. We don't hire them all. We get a good percentage of the ones we want, and they're damn good. I mean this idea that the younger generation can't make, they always need a trophy. That's just not even close.

So that starts with that. ripples through the whole organization. We are focus at our heart. We love to sell insurance, everyone at this table today, would jump on an airplane a mile to go sell an account. We know what we're talking about when it comes to that stuff. We leave our global capabilities, and this team works together. So I think it's just one of those things that we are very sales oriented, we're working hard to keep our -- we're working out to keep the pipeline up.

We understand the sales gain. We're not overcomplicating it. If you don't get in front of people, you don't make sales. We get in front of people and you've got a good story to tell about how you can actually help them then you have a better than it's on chance. And I'll tell you our pools, when I started a long time ago, our hit ratio was probably high 20s, low 30s on our opportunities we went out [indiscernible] propose.

And I'd say, 10 years ago, that was probably the same, too. our tools today, we have empirical evidence that if you'll use the tools, those hit ratios are moving over 40% and up towards 50%. That just tells you the power of the tools combined with the power of the structure. And by that, I mean our vertical capabilities and then the culture to work to. I haven't had to get involved commission split argument in over 10 years. They're just worse. And guess what? We have fun doing it.

Andrew Kligerman

Got it. So the 8 plus team and the major leagues, I would like to know about M&A as my second question. You talked about a $300 million pipeline. And I'd like you to square it with what I've been hearing this M&A in the brokerage area is starting to slow down?

J. Gallagher

Yes. I think it is starting to slow down. And frankly, that $300 million is probably off with the numbers that we've told you in past years. The fact is you've got a group of entrepreneurs out there that don't have to sell. They do a very good job of making money for their family. We don't need to have a $100 million agency to do that. Clearly, multiples are down. pressure on revenues. People aren't necessarily. There's not as much demand for those properties.

And I think that there's just a typical well. Now if the tax law begins to look like it might change, if in fact, the aging population realizes that they've got to do something for their people and to capitalize their asset, we'll be back into what we saw in 2006, '07, '08, '09, '10, with people.

We're out there helping them from the grips with the fact that this isn't going to change back to the '18, '19 multiples overnight. We're not going to be able to babysit this thing and then end up getting the growth that you want. Let's get together and build it together. That going to take some time. Now at the same time, there are still lots of opportunities. When we did the Assure Partners deal, there were about 300-or-more acquisitions they did. You recall that we had looked at 6% of them. 94%, we never got to call the race.

One year, 15 months after the acquisition, I have met thousands of their people, not hundreds, thousands, and I'm telling you they all fit in this organization. It's incredible. And they're salespeople, they love taking care of their clients. We would have done those deals. We just have to be better at getting out and telling our story. And I think when we do that, we compete very, very well.

Operator

Our next question is from Greg Peters with Raymond James.

Charles Peters

At every quarter and every management meeting, you gave us an update on endorsements and audit is sort of an indicator of what the underlying health of the businesses your clients look like. Could you spend a second and just give us -- I think you said nicely positive for what you're seeing most recently. Can you give us a sort of snapshot of how that's trended this year versus last year? Is it keeping pace? Is it down a little bit? Is it up a little bit? Just sort of the cadence of what's going on there?

J. Gallagher

Doug's got the sheetin front of him. I'll let him take it. .

Douglas Howell

Boy, I need glasses for it, too. So all right. So here's the way to think about it. If you think on a quarter-by-quarter basis, right, in 2025, let's just say, first quarter was x. First quarter of '26, it's x. If I do that again, it's -- the second quarter, it's x; then -- the second quarter '26, it was 150% of x.

Let me go back to the first quarter. Sorry, I think a bad number. First quarter, it was 85% of X, second quarter is 150% of X. Third quarter here, it's almost 2X guys. So I mean, we're seeing the positive trend in the last couple of quarters, kind of the net-net of all this together, it's still is very positive, and it's still -- does it move our organic at all in terms of these numbers?

No. But I'm saying the indications when you add it all up, and that's kind of globally. I could probably go down by division. Let me work on that a little bit more and maybe give you a vignette in December. But it is pretty telling, and it's been pretty consistent. When the world was saying that there was a recession coming, we weren't seeing it. And our underlying -- our clients' activity is a terrific almost daily indicator of what's happening with our remember, this is our middle market.

This is not personal lines in that. It wouldn't be that -- the fee-based clients wouldn't be necessarily as big in here, but this is our core business. And I think the health around the world is based in that mid-market that mid-market buckets. So thus far, a pretty damn good correlations in my opinion.

Charles Peters

Yes. And just to clarify, this is middle market globally for your business, but it's got to skew heavily towards North America. Is that correct?

Douglas Howell

Yes, that we have at like-for-like. I mean we capture -- we get rid of the stuff that isn't like-for-like. But yes, we scrape this. We've got a single global data collection strategy, and this is what we're getting from our agency management systems around the world. Now that's primarily Canada, the U.K., Australia, New Zealand and the U.S. Yes.

Charles Peters

Yes. Great. The other question, just getting back to your record of expanding margins. In the September management meeting, you rolled out the concept of using technology, I think, to get a gross margin expansion of [ 600 basis points after $200 million of spend ] maybe net 400 basis points of margin expansion over the 3 to 5 years. And you're talking about AP raising it. Is part of that margin expansion inside AP part of this tech type initiatives that you were thinking about? Or. Maybe you can just help square the 2 different programs. .

Douglas Howell

AP margins -- AP synergies that provide you have very little impact from technology, right? So the AP, you got to kind of level set for AP and then we'll be on our margin journey that between technologies and everything, we'll do that. So I would say there's very little duplication in that. .

Operator

Our next question is from Yaron Kinar with Mizuho Securities.

Yaron Kinar

First question, I apologize in advance, it may be a little bit of a nitpicky one. But when I look at the AssuredPartners organic, like a quarter ago in second quarter, you talked about roughly 4% then in the Investor meeting last month, you were talking about 3.5% to 4%. Now it sounds like it's 3.5%. Can you maybe talk about what is driving the pressure relative to expectations only a quarter ago?

Douglas Howell

It's just quarter-by-quarter mix of the business, Yaron, I wouldn't say that there's a -- there's no systemic shift in what the producers in AP are facing today versus what they are facing before. Again, you said there was a nitpicky question. I don't believe it is. I think it's a fair question, but I think it's a pretty small differential on that.

If you think about $2.9 billion, [ 1.5 points ] difference on $3.5 billion. Let's just say, they revert to Gallagher, right? We get an extra 1.5 points of organic. That's $50 million more in revenue. Let's say, we make 30 points on it. That's $15 million of [ EBITDA ] compared to $5.5 billion or $6 billion company next year on EBITDA. It's a pretty small incremental. I think what it does is it signals more of giving producers a better home to toil and take care of their clients.

So for me, getting it up to Gallagher is not really a financial huge win for us. What it is, it's a cultural win. It proves that we can be better together. So for me, that journey is as much about getting the culture right, as it is to drop another $15 million of profit in the business. So it's kind of -- as you think about it that way, whether it's [ 0.25 to 0.5 point different ] on $700 million, it's $3.5 million of -- if I'm doing mental math here on that.

Yaron Kinar

Right. But on the quarter, I thought that the commentary you provided earlier was really about maybe the headwinds that we can see for full year '27. So that wouldn't be a quarterly issues, but that's...

Douglas Howell

I think that when you roll in AP into us next year, maybe it's -- maybe if we didn't have AP, what we'll report by organic growth would be 40 basis points higher. On the other hand, we're not going to -- we'd be missing $1.3 billion or $1.4 billion of EBITDAC, too. So it's a pretty good trade-off. At a multiple that we thought was really a fair and reasonable multiple to pay for a business like AssuredPartners. So this is a terrific acquisition, but we buy EBITDAC growth. We don't buy necessarily revenue growth. I know you guys think about it a little bit differently from time to time...

Yaron Kinar

All fair. And then my second question, going to Page 4 of the organic revenue breakdown. So just looking at the sequential change in third quarter numbers, the fourth quarter expectations see a bit of a slowdown in our national brokerage acceleration reinsurance and rebounded benefits brokerage. Can you maybe quickly touch on what is driving the expectations for the changes sequentially.

Douglas Howell

Right. So let's catch up -- just say your question, again.

Why the excitement in international? Is that what your question?

Yaron Kinar

Well, we're seeing a bit of a slowdown, right, from third quarter to fourth quarter from 9% and 6% in the third quarter for the 2 international region down to approximately 3%. Against that, you've seen acceleration in reinsurance from 7% going up to 11%.

Douglas Howell

Yes, I understand your question now. I think that 1 of the things about it is that -- you've got to look at like the aero business in that business and sometimes, it'll be 18-month policies versus year policies. We're getting some good lift offsetting those -- I think we had a handful of 18-month policies back in 2025, if I remember right, in the aero business. But I wouldn't say that there's any different and excitement. I think what's going on, and I think this is where value comes to play. .

When you're talking about war risk, when you're talking about marine hull, when you're talking about aviation, it is a complicated business and our pros are pros. And I got to tell you, the fact that they write an 18-month policy in 1 year and it's a 12 month and another that can have a little bit of impact. But these guys are doing a very good job, and we are benefiting a little bit on -- with more risk premiums. We didn't really assume all that much for the fourth quarter. We were kind of open for some piece there. So who knows, maybe we'll get a positive surprise on that. SP1758886554 I hope you're right .

Operator

Our next question is from David Motemaden with Evercore ISI.

David Motemaden

I just wanted to circle back to the rates contributing 1 point to the brokerage organic growth this year. and the expectation for that to continue next year. I guess I'm just curious what is the level of pure rate that is contributing to that point.

Douglas Howell

What is the level of what? Sorry, you just broke up, David.

David Motemaden

What is the level of pure rate that is driving that [ 1.2 ] organic growth?

Douglas Howell

you're saying pure rates, or are you talking about it, or you're asking about if we look at what rate was this year in aggregate and we know that it decreased, especially in property, right? Cat-exposed property. Are you asking how much have we assumed another step down in that next year? Is that what's asked?

David Motemaden

Yes. I mean, I guess what I'm trying to get at is like, let's just say, I mean, you gave the RPC that obviously includes exposure -- so if I look at like RPC ex property is 3, and I assume that like, hey, that maybe means rates is like 1 within that, and that's driving 1 point of growth. Is it linear? Like, if rates were to go down, again, from like 1 to 0 or to negative 1, like how much of an impact could that have on the organic.

I'm just trying to figure out like if -- at what point does the -- does that rate contribution, the one point to organic growth? At what point does that become -- does that flip to be 0 or actually become a drag to growth?

J. Gallagher

David, that's a really tough one. You've got -- as we said in our prepared comments, what's going on with the rates do not directly relate to what happens to our revenue. So our people are going to buy more insurance. We're trying to make sure that happens. Our people going to -- we've got inflation in the country. Inflation actually bumps all those exposure units up. So what has to happen to get rates to 0, well, the casualty market falls on its face, .

And goes the way of the cat property market, there'll be a drag. But at this time, it doesn't look like that. If anything, it seems like property is bottoming out. People do have good business going. They are buying buildings and those buildings are going up in value. So it's hard to answer you when you get as detailed as 1 percentage point, which relates to the fact that pricing in general is going up. If that pricing drops and goes from rising 3% ex the cat property to falling 3%, it will probably be a drag. I mean it's just hard to answer because it's not directly alignable.

David Motemaden

Yes. Yes. No, I hear you. I thought it was worth a shot, though. I guess my follow-up question is just you spoke about the consulting business getting delayed within benefits I guess I'm wondering how much of a drag that had on the organic this quarter. I think you guys had been sort of lowering that expectation for third quarter benefits organic in July and then September. But if we were to think about that consulting business just not coming back, I guess how much of a drag could that be if we think about next year? .

Douglas Howell

All right? So the way we look at it is this. First, let's explain why. Right now, rapid inflation is consuming all the time for human resource leaders and CFOs as they're trying to figure out their rates and what they're going to pay for their insurance next year. .

They're going to have to decide how much they pass along that rapidly rising inflation to their employees. It keeps them from looking at other voluntary benefit opportunities and keep them from looking for health and welfare opportunities for their employees. It helps keep them from looking at how to recruit and retain people better. So that's the reason why there is a distraction because medical inflation has skyrocketed from what employers are seeing over the last 6 to 9 months. I mean, the fact is. And then really, right now, as people are doing their '26 picks the last 60 days, it's really, really coming to bear. The actuarial studies show that.

So what does that mean. Okay. Maybe there's $4 million of consulting projects that got deferred. We hope to see that in the fourth quarter or the first quarter of next year as we come into next year. There are a couple of large projects, call that another $2 million or $3 million. So the nature of this is we're talking about -- even if you threw a hat over and said it's $10 million of revenue differential in a quarter. the profit on that is $3 million, something like that. So it's not a huge impact to our profitability.

And it is timing in my opinion. Now the timing is that fourth quarter is the first or second quarter next year, we'll see. But it is -- we right or propose a great job helping to and CFO folks figure out their benefit costs, and that naturally distracts them from doing other projects. So I don't know that helps you dimension a little bit, but I want to make sure you understand the why ..

David Motemaden

Yes. That makes sense. Yes. That's pretty small. I guess maybe if I could just sneak one... .

Douglas Howell

Realize one other thing, and I'm sorry. Our first quarter is our largest quarter, right? And so when it comes to benefits. So the amount of revenue that we recognized in the third and fourth quarters is dramatically smaller than full year. We think the full year number is a better number to take a look at necessarily than necessarily quarter-over-quarter. In this quarter, there was a few million dollar contingent commission we didn't hit because of the volume levels, too. So there was a little noise in that.

David Motemaden

Right. Okay. That's helpful. And then if I could just sneak 1 more in on Gallagher Bassett, about 60%, I believe, of that business is from [ Worker ] comp. And I guess I'm just wondering what you guys are seeing on a frequency basis, like exposure adjusted what you guys are seeing in that book?

Douglas Howell

Frequency in our book for our clients because of our loss control isn't up dramatically. We're teaching our employees to keep accidents from happening. And that loss control units have been very successful. Like-for-like yes, frequency is up. For others, it's up. When it comes to the inflation, the gross number of medical costs is impacting, but many times, workers' comp is controlled on how much -- how much medical costs can be passed along those cases. We don't pay that and it pays out of the file. Frequency in our book of business is stable. It's not declining, but you're not seeing like across the industry, frequency and workers companies up in the United States. .

Operator

Our next question is from Alex Scott with Barclays.

Unknown Analyst

This is Justin on for Alex. My first question, I wanted to ask sort of about your new business opportunity. You mentioned that clients are buying more coverage as pricing is coming down. So as we think about sort of sustaining organic growth into 2027, like maybe there were some additional opportunities to expand relationships with existing clients. So I was just wondering if you can kind of help us break down new business into like the opportunities you see in terms of expanding relations with existing clients versus winning new logos and how you're positioning your producers to sort of capture both.

J. Gallagher

Well, I don't have a number on that, but let me tell you how it works. We look every single account and what we call white space. So what we provide that account? And every study going like 100 years will tell every industry that if we're doing one line, we have less of a chance to retain that account. If we do 3, 4, 5, 6 lines of cover, we're going to get stronger and stronger retention.

So every single account we look at what's the white space, what are they doing with someone else? Who is at somebody else? And literally, less than 15% of the time when we compete, we're competing with our peers of the same size. I put a name out. We compete with Marsh, Aon Willis about 10% of the time, maybe 12%. So 80-plus percent of the time, that white space is held by somebody that's not Gallagher.

And I'm telling you there's not a line, there's not an industry, there's not a geography that we're not tougher than the incumbent. Do we get that business every time? No. And of course, we are a new business machine. And that is just straightforward marketing efforts. We're doing -- we put campaigns out thousands of contacts every week by very specific areas that we have expertise.

We have webinars, people come to those. We record that in Salesforce, which we call Gallagher Wind, and we watch that business come through the pipeline. So I feel really good about the velocity in terms of what we write against what was written last year. I feel very good about our capability of closing accounts out. Do we win them all? No. As I said earlier, our hit ratio is improving. But I can't give you a number that 5 comes from this and 6 comes from that, it all adds up to 7.

Douglas Howell

One thing I will say in the nonchaotic market, our [ wares ] are better -- we can show our ware better. When it's a chaotic market of going up 20%, 30% always, it's hard to have a client sit down and sit there and say, let's talk about your risk score. When things are more stable, it gives us an opportunity to prove that you get more from Gallagher than you do from where your incumbent broker is. So the tools and capabilities that we have in the non-chaotic rate environment are easier to show and I believe that leads to a higher new business win. .

Unknown Analyst

Understood. And maybe just a quick follow-up, perhaps around headcount. I did notice that you guys hosted that number in the release. And it seems like most of the increase came from sort of the centers of excellence. So I was just wondering maybe as we look into 2027, if we should sort of expect sort of the same composition of headcount year-over-year changes across the sort of people on the business side versus folks on the COE side?

Douglas Howell

So here's the thing. I think, first and foremost, I think the comp ratio is a better number to look at the headcount. I think the headcount per dollar of revenue is a little bit of an antiquated measure, and it's certainly -- maybe across the industry, but certainly at Gallagher.

As these are offshore centers of excellence, it's a compensation ratio number that's better than headcount. But yes, I think that one of the things that you can see is if you look at Gallagher Bassett, their headcount is growing because of acquisitions, calling a couple of hundred and the net hires around 500, which is a lesser number. That growth against the base is less than the organic growth.

So you can take a look at that. When you look at the brokerage headcount, we acquired maybe about 1,500 people since September of last year. I don't know exactly what the numbers that you're taking a look at. And then we've also had almost a direct correlation between as attrition in our middle and back office happens, we tend to hire in our offshore centers of excellence, and that's almost a head-for-head type basis. So you're looking at something very smart, I think that the juggernaut that we have in our offshore centers of excellence, those are our folks. They only work on our clients and our business. I think that is an amazing story.

And that's what enables us to deploy consistent data expectations around the world. So that's how we get the information to be consistent. That's how we can deploy AI into the business and further leverage what we're doing here onshore to make our folks better informed at the point of sale and renewal. So you want to see that offshore number increasing.

And I think that it shows that the investments we've made over 20 years, just every year, steady by steady, building that center out it is an impressive series of operations that I think we have more CPCUs in our offshore centers of excellence that we do an aggregate around the rest of the country. So it is an impressive and I'd say, strategically important asset for us to have .

Operator

Our final question comes from Meyer Shields with KBW.

Meyer Shields

Great. I only have 1 question. I know we're not seeing it at all in the specialty organic growth numbers. But behind the scenes, is there any trend of admitted markets coming back and taking business out of the E&S channel.

Douglas Howell

All right. So listen, I think in Pat's prepared remarks, it's interesting. In our renewal book of business right now, the answer is no. if Gallagher retailer is putting the business in -- is selling the business, they're using the E&S market equal to what they were in the past. So here's why. E&S isn't the market of last resort anymore. It is a different market today than it was in the last soft market.

Sure. There are some small business that will whipsaw kind of the tail of the dog. But when you get to the actual purpose of what E&S, it offers creativity, it offers a solution, it gives our middle market customers access to different sources of expert capital, and we're seeing that our retailers value that. You're also seeing it on the supply side, the carriers, many carriers have an E&S carrier. So they're not all that excited about pulling that business back into their admitted carrier.

So we're not seeing the supply side encouraging it. The demand is still there for the creativity of it. So we're not seeing new business submissions still about the same percentage, maybe 5% less, something like that is going to the E&S market than before. So the E&S market is here to stay. It is an important source of capital and risk taking capital in the market. So we're just not seeing the migration back into the admitted carriers in our book and then also -- and we do trade with a lot of smaller agents and brokers out there, and they're still receptive to using the E&S market.

J. Gallagher

I think also, we're getting the benefit and AP, Woodruff Sawyer and the deals we've done, these new partners have embraced RPS in particular. And we're seeing great submission activity. Those firms did not have the same restrictions on using a whole host of outside brokers, you might recall, years ago, we consolidated down to 5 wholesale wholesalers.

And these people have embraced that, and RPS win is a very big chunk of that. So not only is it sticky. And also remember, a lot of these are specialty programs. So when we put something together, we created a facility called a [indiscernible], and it does share and layer coverage around the country, around the world. And that is a very sticky proposition.

If you put it into one of our facilities or an advantage program where we've negotiated better rates but also better cover. Those are not programs that you lose business in. So I think there is a change in how that market is reacting to renewals.

Well, good. I think we're at the end of questions here, and I appreciate you being here today. It's been a lot of good questions. And I really think reminding everyone, we just had a great quarter thank you for being with us to listen to it. We feel terrific about the future. We've got plenty of opportunities ahead, and I couldn't be prouder of the team.

A year ago right now, we spent $13 billion and brought 11,000 new colleagues into the business with $3 billion in revenue, and it's performing beyond our expectation. My grandfather opened our agency in Chicago in 1927, today, we are 74,000 colleagues strong, serving clients in more than 130 countries. We got here because our colleagues year after year did the right thing for clients and for each other. And '27 will be our 100th anniversary, and we're going to celebrate that.

We're going to celebrate the people that built it, and we're going to celebrate all year long. Not many companies get to say that they turned to 100. So really to all our colleagues around the world that I hope are listening to this, thank you for everything you do for your clients and for each other. That's what makes Gallagher special. That is Gallagher way. Thank you for being with us today, and have a good evening.

Operator

Thank you. This will conclude today's conference. You may disconnect your lines at this time, and thank you for your participation.