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

May 17, 2016

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 5.07. Submission of Matters to a Vote of Security Holders.

Arthur J. Gallagher & Co. (“Gallagher”) held its Annual Meeting of Stockholders on May 17, 2016 (the “Annual Meeting”). At the Annual Meeting, three items were submitted to Gallagher’s stockholders. The items are described in more detail in Gallagher’s definitive proxy statement filed with the Securities and Exchange Commission on March 31, 2016. At the Annual Meeting, Gallagher’s stockholders (i) elected all ten Director nominees, whose names appear below, to serve as Directors of Gallagher until Gallagher’s 2017 Annual Meeting of Stockholders, (ii) approved ratification of the appointment of Ernst & Young LLP as Gallagher’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2016, and (iii) approved, on an advisory basis, the compensation of Gallagher’s named executive officers. The final voting results are set forth below:

Item 1: Election of ten Directors, each to serve for a one-year term until Gallagher’s 2017 Annual Meeting of Stockholders:

Directors	For		Against		Abstain		*Broker Non-Votes
Sherry S. Barrat		143,403,317		2,725,299		93,687		18,396,075
William L. Bax		144,245,188		1,939,656		37,459		18,396,075
D. John Coldman		144,338,853		1,799,228		84,222		18,396,075
Frank E. English, Jr.		144,331,541		1,805,946		84,816		18,396,075
J. Patrick Gallagher, Jr.		141,807,794		3,406,543		1,007,966		18,396,075
Elbert O. Hand		140,167,825		5,965,746		88,732		18,396,075
David S. Johnson		130,927,580		15,208,813		85,910		18,396,075
Kay W. McCurdy		141,093,224		5,042,528		86,551		18,396,075
Ralph J. Nicoletti		145,667,020		487,977		67,306		18,396,075
Norman L. Rosenthal		145,025,329		1,111,789		85,185		18,396,075
	For		Against		Abstain		*Broker Non-Votes
Item 2: Ratification of the Appointment of Ernst & Young LLP as Gallagher’s Independent Registered Public Accounting Firm for the fiscal year ending December 31, 2016		160,650,815		3,869,716		97,847		—
Item 3: Advisory Vote on the Compensation of Gallagher’s Named Executive Officers		129,803,996		15,978,030		440,277		18,396,075

* Broker non-votes represent shares held by broker nominees for beneficial owners that were not voted with respect to a non-routine proposal because the broker nominee did not receive voting instructions from the beneficial owner and lacked discretionary authority to vote the shares. If a broker does not receive voting instructions from the beneficial owner, a broker may vote on routine matters, such as the ratification of the Independent Registered Public Accounting Firm, but may not vote on non-routine matters. Broker non-votes are counted for the purpose of determining the presence of a quorum but are not counted for the purpose of determining the number of shares entitled to vote on non-routine matters such as the election of Directors and the advisory vote on the compensation of Gallagher’s named executive officers.

Item 7.01. Regulation FD Disclosure.

The slides containing information presented at the Annual Meeting are furnished as Exhibit 99.1 to this report. This exhibit may also be accessed at Gallagher’s website (www.ajg.com) under the heading Investor Relations.

Item 9.01. Financial Statements and Exhibits.

99.1 Slides presented at the Annual Meeting.

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: May 17, 2016	/s/ WALTER D. BAY
	Walter D. Bay Vice President, General Counsel and Secretary

EX-99.1

2016 Annual Stockholders Meeting

Tuesday, May 17, 2016

Exhibit 99.1

2

Stockholders’

Meeting

–

May

17,

2016

•

2016 Annual Meeting

•

Chairman’s Remarks

2015 Review

Closing Comments

•

Questions & Answers

3

Stockholders’

Meeting

–

May

17,

2016

Please turn off all cell phones.

All audio and video recording

is prohibited.

4

2016 Board of Directors

•

Sherry S. Barrat

•

William L. Bax

•

D. John Coldman

•

Frank E. English, Jr.

•

Elbert O. Hand

•

David S. Johnson

•

Kay W. McCurdy

•

Ralph J. Nicoletti

•

Norman L. Rosenthal, Ph.D.

5

Stockholders’

Meeting

–

May

17,

2016

•

2016 Annual Meeting

Stockholders’

Meeting

–

May

17,

2016

•

2016 Annual Meeting

•

Chairman’s Remarks

2015 Review

6

7

Information Regarding Forward-Looking Statements

This presentation contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995.

When used in this presentation, 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 in this presentation include, but are not limited to, statements regarding: (i) improvements in

our new business production; (ii) “tuck-in” M&A activity; (iii) global brand recognition; (iv) completion of large UK M&A integration

efforts; (v) the leveraging of internal resources across divisions and borders; (vi) our status as the premier provider of claims

management services; (vii) our global presence in the claims space; (viii) our ability to stay in front of improvements in technology; (ix)

commercial P&C pricing; (x) drivers and expected levels of our organic growth; (xi) future M&A opportunities, including bolt-on

acquisitions to our international “platforms”; (xiii) increasing productivity and quality; (xiv) our management team; (xv) our use of

leverage;

(xvi)

our

balance

sheet;

and

(xvii)

our

total

shareholder

return.

Important

factors

that

could

cause

actual

results

to

differ

materially from those in the forward-looking statements include: declines in premiums or other adverse trends in the insurance

industry; an economic downturn; competitive pressures in our businesses; failure to successfully or cost-effectively integrate recently

acquired businesses; risks to our acquisition strategy, including continuing consolidation in our industry and increased interest in

acquiring

insurance

brokers

by

private

equity

firms;

our

failure

to

attract

and

retain

key

executives

and

other

personnel;

risks

arising

from our international operations, including political and economic uncertainty and regulatory and legal compliance risk; concentration

of large amounts of revenue with certain clients in our risk management segment; failure to apply technology effectively in our

businesses; business continuity and cybersecurity risks; damage to our reputation; and failure to comply with regulatory requirements,

including the FCPA, other anti-corruption laws, and data privacy laws.

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, 2015 for a more detailed discussion of these and other factors that could impact its forward-looking statements.

8

Information Regarding Non-GAAP Measures

This presentation includes references to Adjusted EBITDAC, Adjusted EBITDAC margin, Adjusted Revenues, Adjusted Operating Expense Ratio and Organic Growth, which are measures not

in accordance with, or an alternative to, the GAAP information provided herein.

Earnings Measures-Gallagher believes that each of Adjusted EBITDAC and Adjusted EBITDAC margin, as defined below, provides a meaningful representation of its operating performance

and improves the comparability of Gallagher’s results between periods by eliminating the impact of certain items that have a high degree of variability.

Adjusted EBITDACis defined as earnings from continuing operations before interest, income taxes, depreciation, amortization and the change in estimated acquisition earnout payables

(EBITDAC), further adjusted to exclude gains realized from sales of books of business, acquisition integration costs, earnout related compensation charges, workforce related charges, lease

termination related charges, client run-off/bankruptcy impact, South Australia and claim portfolio transfer ramp up fees/costs, acquisition related adjustments and the period-over-period

impact of foreign currency translation, as applicable.

Adjusted EBITDAC marginis defined as Adjusted EBITDAC divided by Adjusted Revenues (defined below).

The most directly comparable GAAP measure for these non-GAAP earnings measures is net earnings. For the Brokerage Segment, the Risk Management Segment, and the two segments

on a combined basis, net earnings was $139 million, $35 million and $174 million, respectively, in 2011, $156 million, $43 million and $199 million, respectively, in 2012, $205 million, $48

million and $253 million, respectively, in 2013, $264 million, $42 million and $306 million, respectively, in 2014 and $268 million, $57 million and $325 million, respectively, in 2015.

Revenue and Expense Measures-Gallagher believes that Adjusted Revenues and Adjusted Operating Expense Ratio, each as defined below, provides stockholders and other interested

persons with useful information that will assist such persons in analyzing Gallagher’s operating results as they develop a future outlook for Gallagher. Gallagher believes that Organic

Growth provides a comparable measurement of revenue growth that is associated with the revenue sources that will be continuing in 2016 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 financial statement users to measure, analyze and compare the growth from its Brokerage and Risk Management segments in a meaningful and consistent manner.

Adjusted Revenuesis defined as revenues, adjusted to exclude gains realized from sales of books of business, New Zealand earthquake claims administration fees, South Australia ramp up

fees and the impact of client bankruptcy.

Adjusted Operating Expense Ratiois defined as operating expense, adjusted to eliminate lease termination and abandonment charges, acquisition related adjustments and integration

costs, costs related to New Zealand earthquake claims administration, South Australia and claim portfolio transfer ramp up costs,  and the impact of foreign currency translation, as

applicable, divided by Adjusted Revenues.

Organic Growthis defined as organic change in commission and fee revenues (including supplemental and contingent commissions), and 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 organic growth excludes the period-over-period impact of foreign currency translation. The amounts excluded with

respect to foreign currency translation are calculated by applying 2015 foreign exchange rates to the same periods in 2014.

The most directly comparable GAAP measure for Adjusted Revenues and Organic Growth is reported revenues. For the Brokerage Segment, reported revenues were $533 million, $679

million, $783 million, $863 million, $946 million, $1,007 million, $1,114 million, $1,188 million, $1,276 million, $1,329 million, $1,544 million, $1,812 million, $2,126 million, $2,896 million,

and $3,324 million in 2001, 2002, 2003, 2004, 2005, 2006, 2007, 2008, 2009, 2010, 2011, 2012, 2013, 2014 and 2015, respectively. For the Risk Management Segment, reported revenues

were $682.3 million and $727.1 million in 2014 and 2015, respectively. The most directly comparable GAAP measure for Adjusted Operating Expense Ratio is reported operating expense,

which was $247 million and $638 million in 2008 and 2015, respectively, for the Brokerage Segment and $126 million and $181 million in 2008 and 2015, respectively, for the Risk

Management Segment.

Reconciliations–For other reconciliations, please see the appendix at the back of this presentation and the examples set forth in "Reconciliation of Non-GAAP Measures  and

supplemental quarterly financial data " on Gallagher's Web site at ajg.com/IR.

Who We Are

KEY FACTS

KEY SHAREHOLDER DATA

3.2%

$

0.38

52-Week Range***

$

49.59 Hi

$

35.96 Lo

Outstanding Shares

176.9M

$

4.0+B

Acquired Revenues –

2015

$

230.8M

$

8.3B

2015 Total Adjusted

Revenues**

Dividend Yield ***

2016 Q2 Dividend/Share

at April 27, 2016

Market Cap***

680+

Employees

21,537

•

Founded in 1927

•

Public

since

1984

–

32

years

ago

•

One of the World’s Leading Insurance Brokers *

•

One of the world’s largest P&C third-party administrators *

As of December 31, 2015 unless otherwise indicated.

*   According to Business Insurance.

**Brokerage and Risk Management adjusted revenue for the year ended December 31, 2015

*** as of  May 13, 2016

Sales/Service Offices –

31 Countries

AJG

NYSE

9

10

•

82% of revenue*

•

We sell insurance and consult on insurance programs

•

P&C and benefits

•

Retail and wholesale

•

Primarily middle-market commercial clients and

individuals

•

77%

of

revenue*

is

commissions

–

23%

is

fee-based

•

18% of revenue*

•

We adjust claims and help companies and carriers

reduce their losses

•

Workers compensation, liability, managed care, property

and auto

•

Modest amount of storm/quake claims

•

Primarily Fortune 1000 clients

•

90% of revenue* from non-affiliated brokerage

customers and their clients

BROKERAGE

SEGMENT

Snapshot of Core Operations

*Brokerage and Risk Management adjusted revenue for the year ended December 31, 2015.

RISK

MANAGEMENT

SEGMENT

11

Diverse Revenue Base

RISK MANAGEMENT*

BROKERAGE*

*Brokerage and Risk Management adjusted revenue for the year ended December 31, 2015.

59%

24%

17%

WHOLESALE

RETAIL P/C

RETAIL

BENEFITS

64%

36%

DOMESTIC

INTERNATIONAL

69%

27%

4%

PROPERTY

WORKERS

COMPENSATION

LIABILITY

81%

19%

DOMESTIC

INTERNATIONAL

12

Brokerage Segment –

2015

(in $M)

See important disclosures regarding Non-GAAP measures on Page 3.

$2,795

$3,317

$2,500

$3,000

$3,500

2014

2015

ADJUSTED REVENUES

19%

4.3%

3.6%

2.0%

4.0%

6.0%

8.0%

2014

2015

TOTAL ORGANIC GROWTH

$710

$867

$600

$700

$800

$900

$1,000

2014

2015

ADJUSTED EBITDAC

22%

25.4%

26.1%

23.0%

24.0%

25.0%

26.0%

27.0%

2014

2015

ADJUSTED EBITDAC MARGIN

13

(in $M)

Risk Management Segment –

2015

10%

18%

See important disclosures regarding Non-GAAP measures on Page 3.

$660

$728

$625

$650

$675

$700

$725

$750

2014

2015

ADJUSTED REVENUES

$107

$126

$90

$100

$110

$120

$130

$140

2014

2015

ADJUSTED EBITDAC

16.1%

17.3%

12.0%

14.0%

16.0%

18.0%

20.0%

2014

2015

ADJUSTED EBITDAC MARGIN

9.5%

11.3%

5.0%

7.0%

9.0%

11.0%

13.0%

2014

2015

TOTAL ORGANIC GROWTH

14

Brokerage & Risk Management Combined –

2015

(in $M)

See important disclosures regarding Non-GAAP measures on Page 3.

17%

22%

$3,455

$4,045

$2,800

$3,200

$3,600

$4,000

$4,400

2014

2015

ADJUSTED REVENUES

5.5%

5.1%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

2014

2015

TOTAL ORGANIC GROWTH

$816

$993

$600

$700

$800

$900

$1,000

$1,100

$1,200

2014

2015

ADJUSTED EBITDAC

23.6%

24.5%

20.0%

21.0%

22.0%

23.0%

24.0%

25.0%

26.0%

2014

2015

ADJUSTED EBITDAC MARGIN

15

Adjusted Net Earnings from Clean Energy Investments

(in $M)

2009

2010

2011

2012

2013

2014

Excludes non-cash after tax gain of $14.1m from a re-consolidation accounting gain, related to clean-energy investments, recorded in 2014.

2015

-$4.8

$7.5

$3.9

$32.7

$63.7

$90.5

$100.9

-$10.0

$0.0

$10.0

$20.0

$30.0

$40.0

$50.0

$60.0

$70.0

$80.0

$90.0

$100.0

$110.0

$120.0

16

Dividends Per Share

*Indicated –

On January 28, 2016, Gallagher’s Board of Directors declared a $.38 per share first-quarter 2016 dividend.

1984

2016

$1.52*

$0.00

$0.20

$0.40

$0.60

$0.80

$1.00

$1.20

$1.40

$1.60

17

2015 Business Highlights

Brokerage & Risk

Management growth:

•

17% adjusted revenue growth

•

22% adjusted EBITDAC growth

•

92 bps margin improvement

•

5.1% total organic growth

M&A growth:

$230.8m in acquired revenues

•

WGA -

New England Platform

•

+43 additional -

avg

$3.6m in

revenue

•

Returning to tuck-in

opportunities

Clean energy growth:

•

$100.9m of adjusted net earnings

•

12% increase in adjusted net

earnings over 2014

•

Additional 2 facilities to long-term

production contracts

All while accomplishing:

Global M&A integration

•

Completed Australia/New

Zealand & Canada

•

Combining 4 U.K. brokers

expected to finish in 2016

•

Top 5 broker in the U.K.

U.S. retail–one agency system

See important disclosures regarding Non-GAAP measures on Page 3 and Page 10.

18

•

Improving new business production

•

Continuing tuck-in M&A

•

Increasing global brand recognition

•

Completing large U.K. M&A integration

•

Leveraging internal resources across

divisions

•

To be premier provider of claims management

services with superior outcomes

•

Increasing global presence in claims space

•

U.S. clients with global operations

•

Expanding via M&A/new partners

•

Staying in front of improving technology

•

Increasing brand recognition globally

•

Leveraging resources across borders

BROKERAGE

SEGMENT

Where We’re Going  

RISK

MANAGEMENT

SEGMENT

19

Source for calendar year combined ratio data: AM Best.  Using 9 month 2014 data as of 01/29/15.  2012 and prior excludes certain

large mortgage insurance and personal lines companies.

Indicators

for

U.S.

P/C

Carriers

–

Shallow

Rate

Environment

INVESTMENT YIELDS

STATUTORY SURPLUS

($Billions)

months 2014 as of 0/29/15.  Prior to 2004, sources are A.M. Best and ISO via the Insurance Information Institute. 

PREMIUM/STATUTORY SURPLUS

COMBINED RATIOS

118.3

93.8

97.0

90

95

100

105

110

115

120

0.6x

0.8x

1.0x

1.2x

1.4x

1.6x

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

$100

$200

$300

$400

$500

$600

$700

$800

Source for data : Total US P/C Industry from Best’s Statement File P/C US for 2001 – 2013. and Quarterly Statement File for 9 months 2014

(annualized). Prior to 2001, sources are A.M. Best and ISO via the Insurance Information Institute. 

Source for data : Total US P/C Industry from Best’s Statement File P/C US for 2001 – 2013. and Quarterly Statement File for 9 months

2014 (annualized) as of 01/29/2015.  Prior to 2001, sources are A.M. Best and ISO via the Insurance Information Institute. 

Source for data : Total US P/C Industry from Best’s Statement File P/C US for 2004 – 2013 and Quarterly Statement File for 9

CPI

136

Rates

96

Commercial P&C Pricing Shows Shallow Cycle

Commercial Rate Index reflects the cost of P&C premiums relative to the year 2000. Constructed using Counsel of

Insurance Agents and Brokers (CIAB) data.  CPI index uses data from the Bureau of Labor Statistics.

80

90

100

110

120

130

140

150

160

20

Shows Shallow Pricing Cycle

21

-2.9%

-0.1%

0.9%

2.7%

4.4%

4.3%

3.9%

5.0%

5.2%

4.3%

3.4%

2.1%

1.5%

-0.5%

0.1%

-0.7%

-2.3%

-3.3%

-3.1%

-2.8%

-4.0%

-3.0%

-2.0%

-1.0%

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

CIAB -

Change in Average Commercial Rates

Gallagher Sales Culture  Performs Through Any Pricing Cycle

Hard Market

Shallow Market

CIAB is the 4 quarter average.  Gallagher’s Brokerage Segment Organic Growth excluding Contingent Commissions.

See important disclosures regarding Non-GAAP measures on Page 3.

22

14.0%

16.0%

10.0%

2.0%

2.0%

5.0%

2.0%

-0.8%

-2.4%

-1.7%

3.1%

4.4%

5.6%

3.8%

AJG

Organic

3.8%

19.8%

19.8%

8.1%

-4.1%

-8.0%

-5.2%

-12.1%

-11.0%

-5.4%

-5.6%

0.2%

4.4%

3.8%

0.1%

CIAB

-2.9%

-15.0%

-10.0%

-5.0%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Gallagher Organic

CIAB -

Change in Avg. Commercial Rates

Soft Market

Shallow Rate Cycle Is Better for:

CLIENTS

CARRIERS

& BROKERS

23

How We’re Getting There-Consistent Growth Strategy

Consistent Growth Strategy –

Organic

26

Driving Brokerage Organic Growth

27

Niche

Expertise

Teams

–

Brokerage

Aviation & Aerospace

Automotive

Agribusiness

Real Estate

Manufacturing

Global Risks

Construction

Personal

Marine

Life Solutions

Life Sciences

Hospitality

Higher Education

Healthcare

Environmental

Entertainment

Energy

Private Equity

Professional Groups

Public Entity

Religious/Nonprofit

Restaurant

Scholastic

Technology/Telecom

Trade Credit/

Political Risk

Transportation

Driving Risk Management Organic Growth

28

29

Risk Mgmt

Growth Focuses on Four Market Segments

ALTERNATIVE

MARKET

PARTICIPANTS

LARGE

COMMERCIAL

ENTITIES

PUBLIC SECTOR

ENTITIES

INSURANCE

CARRIERS

Consistent Growth Strategy –

M&A

Annualized Revenues Acquired (in $M’s)

2015 –Acquisition Revenue Growth 

31

0

100

200

300

400

500

600

700

800

900

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

Domestic Property & Casualty  

Foreign Property & Casualty

Employee Benefits

Risk Management

M&A Opportunities Continue

Vast

Pipeline

Domestic and

international markets

highly fragmented

18,000+ agents/

brokers just in the

U.S.

Baby boomers

looking for exit

strategy

Need Gallagher’s

expertise

Acquisition

Units

Retail P&C

Wholesale

Benefits

International

MGA

MGU

Captive

Limited

Consolidators

Core

Competency

Culture

Proven history

Ability to integrate

32

33

Platforms

In

Place

for

Bolt-on

M&A

Client Capabilities in 150 Countries

34

International Correspondent Broker Network

Productivity

and

Quality

Initiatives

Utilizing

Offshore

Centers of

Excellence

Controlling

Headcount

Focus Continues:

Optimizing Productivity & Quality

Building

Productivity

Tools –

DMS

and Workflow

Optimizing

Real Estate

Footprint

Investing in

Business

Intelligence

Leveraging

Sales Force

Management

Tools

CONTINUE TO

IMPROVE

PRODUCTIVITY

AND QUALITY

Utilizing

Offshore

Centers of

Excellence

Controlling

Headcount

Utilizing

Sourcing to

Manage

Expenses

Standardizing

Processes and

Systems

36

Benefits Continue:

From Offshore Centers of Excellence

Increase

Speed to Market

Foster

Innovation

Reduce Costs

Focus on Core

Improve

Quality

37

38

Client-Facing Efforts

BUILDING CLIENT SERVICE OPERATIONS

•

Process and deliver consistent client service

•

Technology and tools improve operating efficiencies

•

Staffed by dedicated service professionals that:

Generate client applications and proposals

Handle client requests

Manage renewal cycles

•

Improves turn-around time on client requests

•

Supports production teams

•

Can still customize for niche practice areas

•

Easily integrated for new acquisition partners to utilize

39

Behind the Scenes Efforts

OFFSHORE CENTERS OF EXCELLENCE UPDATE

•

We now have more than 2,400 associates in four locations

•

Utilized for processes such as:

Policy checking

Policy issuance

Certificates of insurance

Renewal support

Claims support

Accounting support

•

Substantially improved quality and reduced

both operating and E&O costs

•

Easy for new acquisition partners to utilize

40

Quality Metrics on Target

EFFICIENCY IMPROVEMENTS

DRIVE QUALITY AND SERVICE

Reduced policy delivery from 30 to 10 days

Achieved 99% quality rate

Reduced certificate of insurance delivery

expense by 20+%

Improved quality rate to 99.5% and reduced

delivery time from 2 hours to 1 hour

Standardized policy issuance for top 30 carriers

and reduced issuance time from 12 to 3 days

Improved carrier and retailer satisfaction

Single agency management system and

standardized processes across the network

Real-time, up-to-date, quality client data in single

repository for

24/7 producer access

Offloaded

routine work such as ordering

reports, filing forms and paying bills  from

experienced Claims Adjusters to COE staff

Allows

Claims Adjusters to focus on timely and

cost effective resolution of open claims

Centralized billing to clients –

previously done in

90 locations –

thereby reducing costs

Improved

accuracy, speed and cash flows

Consolidated 5 regional accounting centers to 1

divisional accounting center in Itasca

Standardizes

and automates data processes,

improves report timing, reduces errors, and

generates savings on resources

Reduced Adjusted Operating Expense Ratio

BROKERAGE

RISK MANAGEMENT

See important disclosures regarding Non-GAAP measures on Page 3.

41

20.8%

17.3%

16.0%

17.0%

18.0%

19.0%

20.0%

21.0%

22.0%

2008

2015

27.0%

24.4%

23.0%

24.0%

25.0%

26.0%

27.0%

28.0%

2008

2015

Brokerage & Risk Mgmt

Adjusted EBITDAC Margin

See important disclosures regarding Non-GAAP measures on Page 3.

42

20.4%

21.2%

22.1%

23.6%

24.5%

18.0%

19.0%

20.0%

21.0%

22.0%

23.0%

24.0%

25.0%

2011

2012

2013

2014

2015

Ranked “Highest in Customer Satisfaction among

Brokers for Large Commercial Insurance”

According

to

the

2015

Large

Commercial

Insurance

Study

SM

conducted by J.D. Power and in partnership with RIMS,

Arthur J. Gallagher & Co. ranked highest in customer

satisfaction among brokers in the large commercial

insurance space. The study focused on 8 factors of

customer satisfaction, and Arthur J. Gallagher & Co. scored

highest in 6 of the 8 factors.

1

1

Arthur J. Gallagher & Co. received the highest numerical score among brokers for large commercial insurance in the J.D. Power 2015 Large Commercial Insurance Study. Based on 1,285 responses

measuring 5 brokers and experiences and perceptions of large commercial insurance insureds, surveyed in April-August 2015. Your experiences may vary. Visit jdpower.com.

Gallagher

scored

highest

in

the

following

factors

1

:

•

Quality of advice/guidance provided

•

Reasonableness of fees

•

Ease of the renewal process

•

Variety of program offerings

•

Effectiveness of program review

•

Claims process

1

43

44

Relentless

Focus on

Quality and

Customer

Service

Best

Companies

for

Leaders

–

2015

CHIEF EXECUTIVE MAGAZINE

America’s

Best

Employers

–

2015

FORBES MAGAZINE

Voted

Best

UK

Broker

for

Service

–

2015

STRATEGIC RISK’S UK FTSE SURVEY

Best

TPA

in

Casualty

Claims

Handling

–

2015

ADVISEN

CLAIMS SATISFACTION SURVEY

UK

Employee

Benefits

Consultancy

of

the

Year

–

2015

WORKPLACE SAVINGS AND BENEFITS MAGAZINE

Corporate

Champion

for

Board

Gender

Balance

–

2015

WOMEN’S FORUM OF NEW YORK

Leadership

500

Excellence

Award

–

2015

HR.COM

Best

Mid-Sized

Broker

–

2014

REACTIONS

MAGAZINE

AJG

Intl/OIM

–

MGA

of

the

Year

–

2014

INSURANCE POST

Group

Risk

Adviser

of

the

Year

–

2014

AJG BENEFITS TEAM CORPORATE ADVISER

Maintaining Culture

45

Maintain

Unique Culture

46

One of the World’s Most Ethical Companies

as Recognized by Ethisphere

four years in a row

•

Industry-leading commitment to

ethics and dedication to integrity

•

Chosen for:

Promoting ethical business

standards and practices

Exceeding legal compliance standards

Innovating to benefit the public

Demonstrating that corporate

citizenship is tied to company success

•

Only 145 organizations named

worldwide

47

Why Invest?

You Believe Our Company Has:

•

Right management

•

Unique culture

•

Proven growth strategy

•

Continuing M&A opportunities

•

Increasing productivity

•

Higher quality

•

Good use of leverage

•

Strong balance sheet

•

Excellent return to shareholders

GALLAGHER IS WELL

POSITIONED FOR

FUTURE GROWTH

48

Why Invest? We Are Just Getting Started                 

Source

for

data:

Bloomberg.

Total

returns

from

1/1/2000

–

12/31/2015

include

reinvestment

of

dividends.

352%

AJG

S&P

500

86%

49

For Additional Information:

Marsha Akin

Director –

Investor Relations

Marsha_Akin@ajg.com

630-285-3501

Questions & Answers

51

Appendix: EBITDAC and Organic Growth Reconciliations

15COR23863C

Brokerage Segment

Risk Management Segment

Corporate Segment

Total Company

Reconciliation of EBITDAC to Net Earnings

2015

2014

2015

2014

2015

2014

2015

2013

Net earnings

268.1

$         

263.8

$         

57.2

$           

42.1

$           

63.8

$           

21.6

$           

389.1

$         

327.5

$         

Provision (benefit) for income taxes

145.3

151.0

35.1

25.3

(276.0)

(212.3)

(95.6)

(36.0)

Interest

-

-

24.3

-

103.0

89.0

127.3

89.0

Depreciation

54.4

44.4

3.0

21.2

15.2

3.8

72.6

69.4

Amortization

237.3

186.3

(0.5)

3.2

-

-

236.8

189.5

Change in estimated acquisition earnout payables

41.1

17.6

-

(0.1)

-

-

41.1

17.5

EBITDAC

746.2

$         

663.1

$         

119.1

$         

91.7

$           

(94.0)

$          

(97.9)

$          

771.3

$         

656.9

$         

Combined Brokerage & Risk

Brokerage Segment

Risk Management Segment

Management Segments

Organic Revenues

2015

2014

2015

2014

2015

2014

Total Commissions and Fees

Commissions as reported

2,338.7

$      

2,083.0

$      

-

$              

-

$              

2,338.7

$      

2,083.0

$      

Fees as reported

705.8

577.0

710.9

662.6

1,416.7

1,239.6

Supplemental commissions as reported

125.5

104.0

-

-

125.5

104.0

Contingent commissions as reported

93.7

84.7

-

-

93.7

84.7

International performance bonus fees

-

-

15.6

18.7

15.6

18.7

Less commissions and fees from acquisitions

(411.3)

-

(3.9)

-

(415.2)

-

Less commissions and fees from disposed of operations

-

(9.1)

-

-

-

(9.1)

Less fees from client run-off

-

-

(17.5)

(25.8)

(17.5)

(25.8)

Levelized foreign currency translation

-

(87.0)

-

(21.8)

-

(108.8)

Total organic commissions and fees

2,852.4

$      

2,752.6

$      

705.1

$         

633.7

$         

3,557.5

$      

3,386.3

$      

Total organic change in commissions and fees

3.6%

11.3%

5.1%

(Unaudited - in millions except percentage data)

Information Regarding Non-GAAP Measures - Year Ended December 31, 2015 and 2014

Arthur J. Gallagher & Co.