8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of

the Securities Exchange Act of 1934

October 28, 2014

Date of Report: (Date of earliest event reported)

ARTHUR J. GALLAGHER & CO.

(Exact name of registrant as specified in its charter)

Delaware	1-09761	36-2151613
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)

Two Pierce Place, Itasca, Illinois 60143-3141, (630) 773-3800

(Address, including zip code and telephone number, including area code, of registrant’s principal executive offices)

Not Applicable

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition

On October 28, 2014, Arthur J. Gallagher & Co. issued a press release setting forth the company’s financial results for the quarter ended September 30, 2014. A copy of the company’s press release is attached hereto as Exhibit 99.1.

Item 9.01. Financial Statements and Exhibits

99.1 Press release, dated October 28, 2014, issued by Arthur J. Gallagher & Co.

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

		Arthur J. Gallagher & Co.
Date: October 28, 2014	By:	/s/ Douglas K. Howell
		Douglas K. Howell
		Vice President and Chief Financial Officer

Arthur J. Gallagher & Co.

Current Report On Form 8-K

Exhibit Index

Exhibit No.	Description
99.1	Press release, dated October 28, 2014, issued by Arthur J. Gallagher & Co.

EX-99.1

Exhibit 99.1

NEWS RELEASE

ARTHUR J. GALLAGHER & CO. ANNOUNCES

THIRD QUARTER 2014 FINANCIAL RESULTS

ITASCA, IL, October 28, 2014 — Arthur J. Gallagher & Co. (NYSE: AJG) today reported its financial results for the quarter and nine-month period ended September 30, 2014. A printer-friendly format and supplemental quarterly data is available at www.ajg.com. For a description of the non-GAAP measures used to report financial results in this earnings release, please see “Information Regarding Non-GAAP Measures” beginning on page 7.

“We had an excellent quarter on all measures,” said J. Patrick Gallagher, Jr., Chairman, President and CEO. “Our combined Brokerage and Risk Management segments posted 38% growth in adjusted revenues, of which 7.1% was total organic growth. Our adjusted EBITDAC was up 43% and adjusted net earnings per share grew 15%. We also improved our adjusted EBITDAC margins 80 basis points compared to the third quarter of 2013.”

• Our Brokerage segment posted adjusted revenue growth of 45%, of which 5.8% was total organic. Our adjusted EBITDAC was up 46%, and we improved our adjusted EBITDAC margin 24 basis points compared to the third quarter of 2013 overcoming approximately 70 basis points of margin compression from seasonality inherent in our recent larger merger operations as discussed in our second quarter conference call.

• Our Risk Management segment posted organic revenue growth of 11.7%. We improved our adjusted EBITDAC margin 96 basis points compared to the third quarter of 2013, and we substantially surpassed our 16% margin target by approximately 80 basis points.

• Net earnings from our clean energy investments were up 144% compared to the third quarter of 2013.

“The integration of our larger mergers continues as planned and on schedule and we are continuing our proven strategy of smaller tuck-in mergers. Large or small, our teams are melding quickly and our combined capabilities are creating game-changing sales opportunities around the world. In the rating environment, we continue to see evidence that insurance pricing is rational and we are not seeing evidence of the carriers having any appetite for large rate swings seen in the past. We believe this is a healthy and sustainable environment for our customers, the brokers and the carriers.”

The following provides information that management believes is helpful when comparing 2014 revenues, EBITDAC and diluted net earnings per share with the same periods in 2013:

Quarter Ended September 30																		Diluted Net
	Revenues								EBITDAC									Earnings Per Share
Segment	3rd Q 14		3rd Q 13			Chg			3rd Q 14			3rd Q 13			Chg			3rd Q 14			3rd Q 13			Chg
	(in millions)								(in millions)
Brokerage, as adjusted	$	798.9	$	550.8			45	%	$	214.3		$	146.4			46	%	$	0.59		$	0.50
Gains on book sales		0.9		—						0.9			—						—			—
Acquisition integration		—		—						(18.1	)		(9.3	)					(0.08	)		(0.04	)
Workforce & lease termination		—		—						(2.3	)		(0.9	)					(0.01	)		(0.01	)
Acquisition related adjustments		—		—						—			—						(0.01	)		0.02
Levelized foreign currency translation		—		(4.5	)					—			(0.8	)					—			—
Brokerage, as reported		799.8		546.3						194.8			135.4						0.49			0.47
Risk Management, as adjusted		168.3		150.1			12	%		28.3			23.8			19	%		0.09			0.09
Workforce & lease termination		—		—						(0.2	)		(0.2	)					—			—
Claim portfolio transfer ramp up		—		—						(2.0	)		—						(0.01	)		—
Levelized foreign currency translation		—		(0.4	)					—			—						—			—
Risk Management, as reported		168.3		149.7						26.1			23.6						0.08			0.09
Total Brokerage & Risk
Management, as reported		968.1		696.0						220.9			159.0						0.57			0.56
Corporate, as reported		318.7		139.8						(29.9	)		(15.7	)					0.01			0.01
Total Company, as reported	$	1,286.8	$	835.8					$	191.0		$	143.3					$	0.58		$	0.57
Total Brokerage & Risk
Management, as adjusted	$	967.2	$	700.9			38	%	$	242.6		$	170.2			43	%	$	0.68		$	0.59			15	%

(1 of 11)

Nine Months Ended September 30																		Diluted Net
	Revenues								EBITDAC									Earnings Per Share
Segment	9 Mths 14		9 Mths 13			Chg			9 Mths 14			9 Mths 13			Chg			9 Mths 14			9 Mths 13			Chg
	(in millions)								(in millions)
Brokerage, as adjusted	$	2,108.4	$	1,563.4			35	%	$	538.3		$	378.1			42	%	$	1.57		$	1.24
Gains on book sales		2.6		3.3						2.6			3.3						0.01			0.01
Acquisition integration		—		—						(40.6	)		(17.3	)					(0.19	)		(0.08	)
Workforce & lease termination		—		—						(6.2	)		(1.2	)					(0.03	)		—
Acquisition related adjustments		—		—						(1.1	)		—						(0.03	)		0.02
Levelized foreign currency translation		—		(15.1	)					—			(0.5	)					—			—
Brokerage, as reported		2,111.0		1,551.6						493.0			362.4						1.33			1.19
Risk Management, as adjusted		496.4		454.9			9	%		82.3			73.7			12	%		0.27			0.28
Workforce & lease termination		—		—						(0.6	)		(0.2	)					—			—
Claim portfolio transfer and South Australia ramp up		—		1.4						(4.7	)		1.3						(0.02	)		0.01
Levelized foreign currency translation		—		3.2						—			0.8						—			—
Risk Management, as reported		496.4		459.5						77.0			75.6						0.25			0.29
Total Brokerage & Risk
Management, as reported		2,607.4		2,011.1						570.0			438.0						1.58			1.48
Corporate, as reported		773.7		278.3						(63.7	)		(46.8	)					0.09			0.13
Total Company, as reported	$	3,381.1	$	2,289.4					$	506.3		$	391.2					$	1.67		$	1.61
Total Brokerage & Risk
Management, as adjusted	$	2,604.8	$	2,018.3			29	%	$	620.6		$	451.8			37	%	$	1.84		$	1.52			21	%

Brokerage Segment Third Quarter Highlights — The following tables provide information that management believes is helpful when comparing certain 2014 financial information with the same periods in 2013 (in millions):

Organic Revenues (non-GAAP)		3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Base Commissions and Fees
Commissions as reported		$	572.5		$	399.1		$	1,523.5		$	1,126.8
Fees as reported			169.6			120.5			416.7			320.5
Less commissions and fees from acquisitions			(194.6	)		—			(430.5	)		—
Less disposed of operations			—			(1.6	)		—			(6.2	)
Levelized foreign currency translation			—			4.1			—			13.5
Organic base commissions and fees		$	547.5		$	522.1		$	1,509.7		$	1,454.6
Organic change in base commissions and fees	*		4.9	%					3.8	%
Supplemental Commissions
Supplemental commissions as reported		$	24.2		$	17.8		$	77.5		$	53.4
Less supplemental commissions from acquisitions			(5.4	)		—			(20.6	)		—
Organic supplemental commissions		$	18.8		$	17.8		$	56.9		$	53.4
Organic change in supplemental commissions			5.6	%					6.6	%
Contingent Commissions
Contingent commissions as reported		$	14.4		$	6.5		$	68.4		$	43.5
Less contingent commissions from acquisitions			(2.7	)		—			(13.5	)		—
Organic contingent commissions		$	11.7		$	6.5		$	54.9		$	43.5
Organic change in contingent commissions			80.0	%					26.2	%
Organic change in base commissions and fees, supplemental commissions and contingent commissions			5.8	%					4.5	%

* Third quarter 2014 base commission and fee organic growth was favorably impacted by net larger account sales activity which is not consistent with historical patterns and may not repeat in the future. Base commission and fee organic growth would have been approximately 4% if net larger account sales activity was more consistent with historical patterns.

(2 of 11)

Brokerage Segment Third Quarter Highlights (continued)

Adjusted Compensation Expense and Ratio (non-GAAP)		3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Reported amounts		$	459.2		$	318.6		$	1,239.1		$	920.3
Acquisition integration			(13.4	)		(2.9	)		(29.2	)		(6.4	)
Workforce and lease termination related charges			(2.2	)		(0.8	)		(5.6	)		(1.1	)
Acquisition related adjustments			—			—			(1.1	)		—
Levelized foreign currency translation			—			3.5			—			11.4
Adjusted amounts		$	443.6		$	318.4		$	1,203.2		$	924.2
Adjusted ratios using adjusted revenues on pages 1 and 2	*		55.5	%		57.8	%		57.1	%		59.1	%

* Adjusted third quarter compensation ratio was 2.3 pts lower than the same period in 2013. This ratio was primarily impacted by lower overall compensation levels of the combined four larger recent acquisitions of Giles, Oval, Crombie/OAMPS and Noraxis of 0.8 pts, salary decreases of 0.8 pts, reduction in incentive compensation of 0.4 pts and employee benefits savings of 0.3 pts.

Adjusted Operating Expense and Ratio (non-GAAP)		3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Reported amounts		$	145.8		$	92.3		$	378.9		$	268.9
Acquisition integration			(4.7	)		(6.4	)		(11.4	)		(10.9	)
Workforce and lease termination related charges			(0.1	)		(0.1	)		(0.6	)		(0.1	)
Levelized foreign currency translation			—			0.2			—			3.2
Adjusted amounts		$	141.0		$	86.0		$	366.9		$	261.1
Adjusted ratios using adjusted revenues on pages 1 and 2	*		17.7	%		15.6	%		17.4	%		16.7	%

* Adjusted third quarter operating expense ratio was 2.1 pts higher than the same period in 2013. This ratio was primarily impacted by higher overall operating expense levels of the combined four larger recent acquisitions of Giles, Oval, Crombie/OAMPS and Noraxis of 1.5 pts, increases in meeting expenses of 0.2 pts, increases in professional fees of 0.2 pts and an increase in business insurance of 0.2 pts.

Adjusted EBITDAC (non-GAAP)		3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Total EBITDAC — see page 9 for computation		$	194.8		$	135.4		$	493.0		$	362.4
Gains from books of business sales			(0.9	)		—			(2.6	)		(3.3	)
Acquisition integration **			18.1			9.3			40.6			17.3
Acquisition related adjustments			—			—			1.1			—
Workforce and lease termination related charges			2.3			0.9			6.2			1.2
Levelized foreign currency translation			—			0.8			—			0.5
Adjusted EBITDAC		$	214.3		$	146.4		$	538.3		$	378.1
Adjusted EBITDAC change			46.4	%		19.6	%		42.4	%		21.6	%
Adjusted EBITDAC margin	*		26.8	%		26.6	%		25.5	%		24.2	%

* Adjusted third quarter EBITDAC margin was 0.2 pts higher than the same period in 2013. This ratio was primarily impacted by seasonally lower overall EBITDAC margins of the combined four larger recent acquisitions of Giles, Oval, Crombie/OAMPS and Noraxis that reduced overall margin by 0.7 pts and higher overall EBITDAC margins of Gallagher’s other businesses of 0.9 pts.

** Acquisition integration costs were primarily related to the on-boarding of over 4,700 employees related to the Bollinger, Giles, Oval, Crombie/OAMPS and Noraxis acquisitions, communication system conversion costs and related performance compensation. Integration costs in third quarter 2013 relate to the Heath Lambert and Bollinger acquisitions only.

The following is a summary of Brokerage segment acquisition activity for 2014 and 2013:

	3rd Q 14		3rd Q 13		9 Mths 14		9 Mths 13
Shares issued for acquisitions & earnouts (excluding secondary offering)		1,941,000		3,400,000		4,083,000		3,438,000
Number of acquisitions closed		19		8		45		17
Annualized revenues acquired (in millions)	$	178.7	$	135.5	$	693.6	$	176.4

(3 of 11)

Risk Management Segment Third Quarter Highlights — The following tables provide information that management believes is helpful when comparing certain 2014 financial information with the same periods in 2013 (in millions):

Organic Revenues (non-GAAP)	3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Fees	$	162.4		$	146.0		$	481.3		$	441.4
International performance bonus fees		5.7			3.5			14.3			16.7
Fees as reported		168.1			149.5			495.6			458.1
Less fees from acquisitions		(0.6	)		—			(3.7	)		—
Less South Australia ramp up fees		—			—			—			(1.4	)
Less New Zealand earthquake claims administration		—			—			—			(0.1	)
Levelized foreign currency translation		—			0.4			—			(3.0	)
Organic fees	$	167.5		$	149.9		$	491.9		$	453.6
Organic change in fees		11.7	%		8.5	%		8.4	%		9.9	%

Adjusted Compensation Expense and Ratio (non-GAAP)		3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Reported amounts		$	100.4		$	90.6		$	300.7		$	273.5
Claim portfolio transfer ramp up costs			(0.8	)		—			(2.4	)		—
Workforce and lease termination related charges			(0.2	)		(0.2	)		(0.6	)		(0.2	)
Levelized foreign currency translation			—			0.3			—			(2.0	)
Adjusted amounts		$	99.4		$	90.7		$	297.7		$	271.3
Adjusted ratios using adjusted revenues on pages 1 and 2	*		59.1	%		60.4	%		60.0	%		59.6	%

* Adjusted third quarter compensation ratio was 1.3 pts lower than the same period in 2013. This ratio was primarily impacted by salary decreases of 2.1 pts and savings in employee benefits of 0.7 pts, partially offset by an increase in incentive compensation of 1.5 pts.

Adjusted Operating Expense and Ratio (non-GAAP)		3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Reported amounts		$	41.8		$	35.5		$	118.7		$	110.4
Claim portfolio transfer and South Australia ramp up costs			(1.2	)		—			(2.3	)		(0.1	)
Levelized foreign currency translation			—			0.1			—			(0.4	)
Adjusted amounts		$	40.6		$	35.6		$	116.4		$	109.9
Adjusted ratios using adjusted revenues on pages 1 and 2	*		24.1	%		23.7	%		23.5	%		24.2	%

* Adjusted third quarter operating expense ratio was 0.4 pts higher than the same period in 2013 due to higher professional fees.

Adjusted EBITDAC (non-GAAP)	3rd Q 14			3rd Q 13			9 Mths 14			9 Mths 13
Total EBITDAC — see page 9 for computation	$	26.1		$	23.6		$	77.0		$	75.6
Workforce and lease termination related charges		0.2			0.2			0.6			0.2
Claim portfolio transfer and South Australia ramp up		2.0			—			4.7			(1.3	)
Levelized foreign currency translation		—			—			—			(0.8	)
Adjusted EBITDAC	$	28.3		$	23.8		$	82.3		$	73.7
Adjusted EBITDAC change		18.9	%		5.3	%		11.7	%		10.7	%
Adjusted EBITDAC margin		16.8	%		15.9	%		16.6	%		16.2	%

(4 of 11)

Corporate Segment Third Quarter Highlights — The following table provides information that management believes is helpful when comparing 2014 operating results for the Corporate Segment with the same periods in 2013 (in millions):

	2014									2013
	Pretax Earnings (Loss)			Income Tax Benefit			Net Earnings (Loss)			Pretax Earnings (Loss)			Income Tax Benefit			Net Earnings (Loss)
3rd Quarter
Interest and banking costs	$	(26.5	)	$	10.6		$	(15.9	)	$	(13.8	)	$	5.5		$	(8.3	)
Clean energy investments		(21.8	)		47.7			25.9			(16.2	)		26.8			10.6
Acquisition costs		(4.2	)		0.2			(4.0	)		3.5			(1.7	)		1.8
Corporate		(4.2	)		(0.3	)		(4.5	)		(3.2	)		1.4			(1.8	)
	$	(56.7	)	$	58.2		$	1.5		$	(29.7	)	$	32.0		$	2.3
Nine Months
Interest and banking costs	$	(64.8	)	$	25.9		$	(38.9	)	$	(38.5	)	$	15.4		$	(23.1	)
Clean energy investments		(36.3	)		118.1			81.8			(33.8	)		81.7			47.9
Acquisition costs		(16.2	)		1.1			(15.1	)		0.6			(1.3	)		(0.7	)
Corporate		(12.5	)		(1.9	)		(14.4	)		(13.2	)		5.9			(7.3	)
	$	(129.8	)	$	143.2		$	13.4		$	(84.9	)	$	101.7		$	16.8

Debt, interest and banking — At September 30, 2014, Gallagher had $2,125.0 million of borrowings from private placements and $147.0 million of short-term borrowings under its line of credit facility. On June 16, 2014 we entered into a revolving loan facility that provides funding for the three acquired Australian and New Zealand premium finance subsidiaries. This facility comprises four tranches which total approximately $195.0 million, of which $149.2 million was outstanding at September 30, 2014.

At-the-market equity program — Gallagher has an at-the-market equity program under which it may sell up to $196.0 million of its common stock through Morgan Stanley & Co. LLC as sales agent. During third quarter 2014, Gallagher did not sell shares of its common stock under the program.

Clean energy investments — The following provides certain information related to Gallagher’s investments in limited liability companies that own 34 clean coal production plants, which produce refined coal using proprietary technologies owned by Chem-Mod. We believe that the production and sale of refined coal at these plants qualifies to receive refined coal tax credits under IRC Section 45 through 2019 for the fourteen 2009 Era Plants and through 2021 for the twenty 2011 Era Plants. The underlying operations of those investments where Gallagher has a controlling ownership interest are consolidated.

			Gallagher’s Portion of Estimated
($ in millions)	Gallagher’s Tax-Effected Book Value At September 30, 2014		Additional Required Tax-Effected Capital Investment		Ultimate Annual After-tax Earnings *
Investments that own 2009 Era Plants
12 Under long-term production contracts	$	13.2	$	—	$	35.0
2 In negotiations for long-term production contracts		0.7		Not Estimable		Not Estimable
Investments that own 2011 Era Plants
15 Under long-term production contracts		33.1		—		60.0
5 In negotiations for long-term production contracts		1.8		Not Estimable		Not Estimable

* Reflects management’s current best estimate of the ultimate future potential annual after-tax earnings based on production estimates from the host utilities. However, host utilities do not consistently utilize the refined fuel plants at ultimate production levels due to seasonal electricity demand, as well as for many other operational, regulatory and environmental compliance reasons.

(5 of 11)

Corporate Segment Third Quarter Highlights (continued)

Gallagher’s investment in Chem-Mod generates royalty income from clean energy plants owned by those limited liability companies in which it invests as well as refined coal production plants owned by other unrelated parties. Based on current production estimates provided by licensees, Chem-Mod could generate for Gallagher an average of approximately $4.0 million of net after-tax earnings per quarter.

All estimates set forth above regarding the potential future earnings impact of our clean energy investments are subject to significant risks. Please refer to Gallagher’s filings with the SEC, including Item 1A, “Risk Factors,” of its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and our prospectus supplement filed on April 11, 2014, for a more detailed discussion of these and other factors that could impact the information above.

Acquisition costs — Consists mostly of external professional fees and other due diligence costs related to acquisitions.

Corporate — Consists of overhead allocations mostly related to corporate staff compensation. Gallagher expects to incur a non-cash settlement charge in the fourth quarter of 2014 related to a pension plan de-risking strategy that is more fully discussed in Note 3 on page 15 of the supplemental quarterly data that is available at www.ajg.com.

Income Taxes

Gallagher allocates the provision for income taxes to its Brokerage and Risk Management segments using the local country statutory rates. Gallagher historically has reported, and anticipates reporting for the foreseeable future, an effective tax rate of approximately 35% to 37% in both its Brokerage and Risk Management segments. Gallagher’s consolidated effective tax rate for the quarter ended September 30, 2014 and 2013 was (6.7)% and 12.7%, respectively. Gallagher’s tax rate for the quarter ended September 30, 2014 was lower than the statutory rate and was lower than 2013 due to the amount of IRC Section 45 tax credits earned in 2014 compared to 2013.

Webcast Conference Call

Gallagher will host a webcast conference call on Wednesday, October 29, 2014 at 9:00 a.m. ET/8:00 a.m. CT. To listen to this call, please go to www.ajg.com. The call will be available for replay at such website for not less than 90 days.

About Arthur J. Gallagher & Co.

Arthur J. Gallagher & Co., an international insurance brokerage and risk management services firm, is headquartered in Itasca, Illinois, has operations in 30 countries and offers client-service capabilities in more than 140 countries around the world through a network of correspondent brokers and consultants.

Cautionary Information

This press release contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. When used in this press release, the words “anticipates,” “believes,” “contemplates,” “see,” “should,” “could,” “will,” “estimates,” “expects,” “intends,” “plans” and variations thereof and similar expressions, are intended to identify forward-looking statements. Examples of forward-looking statements include, but are not limited to, statements regarding (i) the amount of, and potential uses for, investment returns generated by Gallagher’s clean energy investments; (ii) our corporate income tax rate; (iii) anticipated future results or performance of any segment or the Company as a whole; (iv) the premium rate environment; (v) the future margin impact of recent acquisitions; (vi) future debt to earnings ratios of the company; and (vii) the economic environment.

Gallagher’s actual results may differ materially from those contemplated by the forward-looking statements. Readers are therefore cautioned against relying on any of the forward-looking statements, which are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the following:

• Risks and uncertainties related to Gallagher’s clean energy investments including uncertainties related to political and regulatory risks, including potential actions by Congress or challenges by the IRS eliminating or reducing the availability of tax credits under IRC Section 45 retroactively and/or going forward; the ability to maintain and find co-investors; the potential for divergent business objectives by co-investors and other stakeholders; plant operational risks, including supply-chain risks; utilities’ future use of, or demand for, coal; the market price of coal; the costs of moving a clean coal plant; intellectual property risks; and environmental risks — all could impact (i) and (ii) above; and

• Changes in worldwide and national economic conditions, changes in premium rates and in insurance markets generally and changes in the insurance brokerage industry’s competitive landscape — all could impact (iii) — (vii) above.

Please refer to Gallagher’s filings with the SEC, including Item 1A, “Risk Factors,” of its Annual Report on Form 10-K for the fiscal year ended December 31, 2013 and its prospectus supplement filed on April 11, 2014, for a more detailed discussion of these and other factors that could impact its forward-looking statements. Any forward-looking statement made by Gallagher in this press release speaks only as of the date on which it is made. Except as required by applicable law, Gallagher does not undertake to update the information included herein or the corresponding earnings release posted on Gallagher’s website.

(6 of 11)

Information Regarding Non-GAAP Measures

In addition to reporting financial results in accordance with GAAP, this press release provides information regarding EBITDAC, EBITDAC margin, adjusted EBITDAC, adjusted EBITDAC margin, diluted net earnings per share (as adjusted) for the Brokerage and Risk Management segments, adjusted revenues, adjusted compensation and operating expenses, adjusted compensation expense ratio, adjusted operating expense ratio and organic revenue measures for each operating segment. These measures are not in accordance with, or an alternative to, the GAAP information provided in this press release. Gallagher’s management believes that these presentations provide useful information to management, analysts and investors regarding financial and business trends relating to Gallagher’s results of operations and financial condition. Gallagher’s industry peers may provide similar supplemental non-GAAP information related to organic revenues and EBITDAC, although they may not use the same or comparable terminology and may not make identical adjustments. The non-GAAP information provided by Gallagher should be used in addition to, but not as a substitute for, the GAAP information provided. Certain reclassifications have been made to the prior year amounts reported in this press release in order to conform them to the current year presentation.

Adjusted presentation — Gallagher believes that the adjusted presentations of the current and prior year information, presented in this earnings release, provides stockholders and other interested persons with useful information regarding certain financial metrics of Gallagher that may assist such persons in analyzing Gallagher’s operating results as they develop a future earnings outlook for Gallagher. The after-tax amounts related to the adjustments were computed using the normalized effective tax rate for each respective period.

• Adjusted revenues and expenses — Gallagher defines these measures as revenues, compensation expense and operating expense, respectively, each adjusted to exclude net gains realized from sales of books of business, acquisition integration costs, claim portfolio transfer and South Australia ramp up fees/costs, workforce related charges, lease termination related charges, acquisition related adjustments and the impact of foreign currency translation, as applicable. Integration costs include costs related to transactions not expected to occur on an ongoing basis in the future once we fully assimilate the applicable acquisition. These costs are typically associated with redundant workforce, extra lease space, duplicate services and external costs incurred to assimilate the acquisition with our IT related systems.

• Adjusted ratios — Adjusted compensation expense ratio and adjusted operating expense ratio are defined as adjusted compensation expense and adjusted operating expense, respectively, each divided by adjusted revenues.

Earnings Measures — Gallagher believes that each of EBITDAC, EBITDAC margin, adjusted EBITDAC, adjusted EBITDAC margin and diluted net earnings per share (as adjusted) for the Brokerage and Risk Management segments, as defined below, provides a meaningful representation of its operating performance. Gallagher considers EBITDAC and EBITDAC margin as a way to measure financial performance on an ongoing basis. Adjusted EBITDAC, adjusted EBITDAC margin and diluted net earnings per share (as adjusted) for the Brokerage and Risk Management segments are presented to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability.

• EBITDAC — Gallagher defines this measure as net earnings before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables.

• EBITDAC margin — Gallagher defines this measure as EBITDAC divided by total revenues.

• Adjusted EBITDAC — Gallagher defines this measure as EBITDAC adjusted to exclude net gains realized from sales of books of business, acquisition integration costs, workforce related charges, lease termination related charges, claim portfolio transfer and South Australia ramp up fees/costs, acquisition related adjustments and the period-over-period impact of foreign currency translation, as applicable.

• Adjusted EBITDAC margin — Gallagher defines this measure as adjusted EBITDAC divided by total adjusted revenues (defined above).

• Diluted net earnings per share (as adjusted) for the Brokerage and Risk Management segments — Gallagher defines this measure as net earnings adjusted to exclude the after-tax impact of net gains realized from sales of books of business, acquisition integration costs, claim portfolio transfer and South Australia ramp up fees/costs, the impact of foreign currency translation, workforce related charges, lease termination related charges, acquisition related adjustments and effective income tax rate impact divided by diluted weighted average shares outstanding. The effective income tax rate impact represents the difference in income tax expense for tax amounts derived using the actual effective tax rate compared to tax amounts derived using a normalized effective tax rate.

(7 of 11)

Organic Revenues — For the Brokerage segment, organic change in base commission and fee revenues excludes the first twelve months of net commission and fee revenues generated from acquisitions accounted for as purchases and the net commission and fee revenues related to operations disposed of in each year presented. These commissions and fees are excluded from organic revenues in order to help interested persons analyze the revenue growth associated with the operations that were a part of Gallagher in both the current and prior year. In addition, change in base commission and fee organic growth excludes the impact of supplemental commission and contingent commission revenues and the period-over-period impact of foreign currency translation. The amounts excluded with respect to foreign currency translation are calculated by applying current year foreign exchange rates to the same periods in the prior year. For the Risk Management segment, organic change in fee revenues excludes the first twelve months of fee revenues generated from acquisitions accounted for as purchases and the fee revenues related to operations disposed of in each year presented. In addition, change in organic growth excludes the impact of South Australia ramp-up fees and the period-over-period impact of foreign currency translation to improve the comparability of our results between periods by eliminating the impact of the items that have a high degree of variability or are due to the limited-time nature of these revenue sources.

These revenue items are excluded from organic revenues in order to determine a comparable measurement of revenue growth that is associated with the revenue sources that are expected to continue in the current year and beyond. Gallagher has historically viewed organic revenue growth as an important indicator when assessing and evaluating the performance of its Brokerage and Risk Management segments. Gallagher also believes that using this measure allows readers of our financial statements to measure, analyze and compare the growth from its Brokerage and Risk Management segments in a meaningful and consistent manner.

Reconciliation of Non-GAAP Information Presented to GAAP Measures — This press release includes tabular reconciliations to the most comparable GAAP measures, as follows: for EBITDAC (on page 9), for adjusted revenues, adjusted EBITDAC and adjusted diluted net earnings per share (on pages 1 and 2), for organic revenue measures (on pages 2 and 4, respectively, for the Brokerage and Risk Management segments), for adjusted compensation and operating expenses and adjusted EBITDAC margin (on pages 3 and 4, respectively, for the Brokerage and Risk Management segments). Reported compensation and operating expense ratios can be found in the supplemental quarterly data available at www.ajg.com.

(8 of 11)

Arthur J. Gallagher & Co.

Reported Statement of Earnings and EBITDAC — 3rd Qtr and 9 Months Ended September 30,

(Unaudited — in millions except per share, percentage and workforce data)

Brokerage Segment	3rd Q Ended Sept 30, 2014		3rd Q Ended Sept 30, 2013			9 Mths Ended Sept 30, 2014		9 Mths Ended Sept 30, 2013
Commissions	$	572.5	$	399.1		$	1,523.5	$	1,126.8
Fees		169.6		120.5			416.7		320.5
Supplemental commissions		24.2		17.8			77.5		53.4
Contingent commissions		14.4		6.5			68.4		43.5
Investment income and gains realized on books of business sales		19.1		2.4			24.9		7.4
Revenues		799.8		546.3			2,111.0		1,551.6
Compensation		459.2		318.6			1,239.1		920.3
Operating		145.8		92.3			378.9		268.9
Depreciation		12.5		8.3			32.1		22.1
Amortization		53.6		30.1			133.2		88.2
Change in estimated acquisition earnout payables		4.5		(0.3	)		16.6		1.6
Expenses		675.6		449.0			1,799.9		1,301.1
Earnings before income taxes		124.2		97.3			311.1		250.5
Provision for income taxes		44.9		36.1			110.7		96.2
Net earnings	$	79.3	$	61.2		$	200.4	$	154.3
EBITDAC
Net earnings	$	79.3	$	61.2		$	200.4	$	154.3
Provision for income taxes		44.9		36.1			110.7		96.2
Depreciation		12.5		8.3			32.1		22.1
Amortization		53.6		30.1			133.2		88.2
Change in estimated acquisition earnout payables		4.5		(0.3	)		16.6		1.6
EBITDAC	$	194.8	$	135.4		$	493.0	$	362.4

Risk Management Segment	3rd Q Ended Sept 30, 2014		3rd Q Ended Sept 30, 2013			9 Mths Ended Sept 30, 2014		9 Mths Ended Sept 30, 2013
Fees	$	168.1	$	149.5		$	495.6	$	458.1
Investment income		0.2		0.2			0.8		1.4
Revenues		168.3		149.7			496.4		459.5
Compensation		100.4		90.6			300.7		273.5
Operating		41.8		35.5			118.7		110.4
Depreciation		5.2		5.1			15.1		14.2
Amortization		0.7		0.7			2.1		1.9
Change in estimated acquisition earnout payables		—		(0.1	)		—		(0.1	)
Expenses		148.1		131.8			436.6		399.9
Earnings before income taxes		20.2		17.9			59.8		59.6
Provision for income taxes		7.4		6.8			21.7		22.1
Net earnings	$	12.8	$	11.1		$	38.1	$	37.5
EBITDAC
Net earnings	$	12.8	$	11.1		$	38.1	$	37.5
Provision for income taxes		7.4		6.8			21.7		22.1
Depreciation		5.2		5.1			15.1		14.2
Amortization		0.7		0.7			2.1		1.9
Change in estimated acquisition earnout payables		—		(0.1	)		—		(0.1	)
EBITDAC	$	26.1	$	23.6		$	77.0	$	75.6

Corporate Segment	3rd Q Ended Sept 30, 2014			3rd Q Ended Sept 30, 2013			9 Mths Ended Sept 30, 2014			9 Mths Ended Sept 30, 2013
Revenues from consolidated clean coal facilities	$	304.8		$	129.7		$	709.3		$	245.2
Royalty income from clean coal licenses		16.7			6.3			44.1			23.2
Loss from unconsolidated clean coal facilities		(0.3	)		(1.1	)		(3.0	)		(4.3	)
Other net revenues		(2.5	)		4.9			23.3			14.2
Revenues		318.7			139.8			773.7			278.3
Cost of revenues from consolidated clean coal facilities		326.2			146.9			767.7			281.6
Compensation		5.0			3.3			21.1			18.1
Operating		17.4			5.3			48.6			25.4
Interest		25.9			13.1			63.3			36.2
Depreciation		0.9			0.9			2.8			1.9
Expenses		375.4			169.5			903.5			363.2
Loss before income taxes		(56.7	)		(29.7	)		(129.8	)		(84.9	)
Benefit for income taxes		(58.2	)		(32.0	)		(143.2	)		(101.7	)
Net earnings	$	1.5		$	2.3		$	13.4		$	16.8
EBITDAC
Net earnings	$	1.5		$	2.3		$	13.4		$	16.8
Benefit for income taxes		(58.2	)		(32.0	)		(143.2	)		(101.7	)
Interest		25.9			13.1			63.3			36.2
Depreciation		0.9			0.9			2.8			1.9
EBITDAC	$	(29.9	)	$	(15.7	)	$	(63.7	)	$	(46.8	)

See “Information Regarding Non-GAAP Measures” on page 7 of 11.

(9 of 11)

Arthur J. Gallagher & Co.

Reported Statement of Earnings and EBITDAC — 3rd Qtr and 9 Months Ended September 30,

(Unaudited — in millions except share and per share data)

Total Company	3rd Q Ended Sept 30, 2014			3rd Q Ended Sept 30, 2013			9 Mths Ended Sept 30, 2014			9 Mths Ended Sept 30, 2013
Commissions	$	572.5		$	399.1		$	1,523.5		$	1,126.8
Fees		337.7			270.0			912.3			778.6
Supplemental commissions		24.2			17.8			77.5			53.4
Contingent commissions		14.4			6.5			68.4			43.5
Investment income and gains realized on books of business sales		19.3			2.6			25.7			8.8
Revenues from clean coal activities		321.2			134.9			750.4			264.1
Other net revenues — Corporate		(2.5	)		4.9			23.3			14.2
Revenues		1,286.8			835.8			3,381.1			2,289.4
Compensation		564.6			412.5			1,560.9			1,211.9
Operating		205.0			133.1			546.2			404.7
Cost of revenues from clean coal activities		326.2			146.9			767.7			281.6
Interest		25.9			13.1			63.3			36.2
Depreciation		18.6			14.3			50.0			38.2
Amortization		54.3			30.8			135.3			90.1
Change in estimated acquisition earnout payables		4.5			(0.4	)		16.6			1.5
Expenses		1,199.1			750.3			3,140.0			2,064.2
Earnings before income taxes		87.7			85.5			241.1			225.2
Provision (benefit) for income taxes		(5.9	)		10.9			(10.8	)		16.6
Net earnings	$	93.6		$	74.6		$	251.9		$	208.6
Diluted net earnings per share	$	0.58		$	0.57		$	1.67		$	1.61
Dividends declared per share	$	0.36		$	0.35		$	1.08		$	1.05
EBITDAC
Net earnings	$	93.6		$	74.6		$	251.9		$	208.6
Provision (benefit) for income taxes		(5.9	)		10.9			(10.8	)		16.6
Interest		25.9			13.1			63.3			36.2
Depreciation		18.6			14.3			50.0			38.2
Amortization		54.3			30.8			135.3			90.1
Change in estimated acquisition earnout payables		4.5			(0.4	)		16.6			1.5
EBITDAC	$	191.0		$	143.3		$	506.3		$	391.2

Arthur J. Gallagher & Co.

Consolidated Balance Sheet

(Unaudited — in millions except per share data)

	Sept 30, 2014			Dec 31, 2013
Cash and cash equivalents	$	290.5		$	298.1
Restricted cash		1,342.1			1,027.4
Premiums and fees receivable		1,669.0			1,288.8
Other current assets		670.8			261.3
Total current assets		3,972.4			2,875.6
Fixed assets — net		196.6			160.4
Deferred income taxes		352.7			279.8
Other noncurrent assets		399.0			320.7
Goodwill — net		3,296.2			2,145.2
Amortizable intangible assets — net		1,771.1			1,078.8
Total assets	$	9,988.0		$	6,860.5
Premiums payable to insurance and reinsurance companies	$	2,755.4		$	2,154.7
Accrued compensation and other accrued liabilities		560.9			370.6
Unearned fees		98.7			84.5
Other current liabilities		58.6			44.5
Premium financing debt		149.2			—
Corporate related borrowings — current		147.0			630.5
Total current liabilities		3,769.8			3,284.8
Corporate related borrowings — noncurrent		2,125.0			825.0
Other noncurrent liabilities		837.2			665.2
Total liabilities		6,732.0			4,775.0
Stockholders’ equity:
Common stock — issued and outstanding		161.4			133.6
Capital in excess of par value		2,494.6			1,358.1
Retained earnings		683.7			596.4
Accumulated other comprehensive loss		(83.7	)		(2.6	)
Total stockholders’ equity		3,256.0			2,085.5
Total liabilities and stockholders’ equity	$	9,988.0		$	6,860.5

See “Information Regarding Non-GAAP Measures” on page 7 of 11.

(10 of 11)

Arthur J. Gallagher & Co.

Other Information and Notes

(Unaudited — data is rounded where indicated)

OTHER INFORMATION	3rd Q Ended Sept 30, 2014		3rd Q Ended Sept 30, 2013		9 Mths Ended Sept 30, 2014		9 Mths Ended Sept 30, 2013
Basic weighted average shares outstanding (000s)		160,231		129,816		149,571		127,747
Diluted weighted average shares outstanding (000s)		161,503		131,322		151,006		129,278
Common shares issued for acquisitions & earnouts (excluding secondary offering) (000s)		1,941		3,400		4,083		3,438
Number of acquisitions closed		19		8		45		17
Annualized revenues acquired (in millions)	$	178.7	$	135.5	$	693.6	$	176.4
Number of common shares outstanding at end of period (000s)						161,374		131,538
Workforce at end of period (includes acquisitions):
Brokerage						14,750		9,890
Risk Management						4,848		4,672
Total Company						19,980		14,903

Contact: Marsha Akin

Director — Investor Relations

630-285-3501 or marsha_akin@ajg.com

(11 of 11)