The Signal Interview
J Patrick Gallagher Jr sits comfortably in a brown leather chair in his Rolling Meadows, Illinois headquarters, reminiscing about his early memories of the man who founded the insurance brokerage he has led for three decades. “As a young boy, I could sense the passion he had for this business,” Gallagher recalls of his late grandfather, Arthur J Gallagher, who launched the family business in 1927 with an insurance agency in Chicago.
Gallagher’s journey with the company began in 1972 when he interned alongside three cousins. His father and uncle offered straightforward advice as he climbed the corporate ladder: “Don’t screw it up.” Though Arthur J Gallagher went public over four decades ago and now employs 56,000 people, the company remains a family affair. Gallagher’s brother, sister, daughter, three sons, and two nephews are all listed as employees in the latest proxy filing.
The company’s impressive track record is evident in its stock performance. Since listing in 1984, Gallagher has outperformed the US market tenfold, achieving an $87 billion valuation that places it between Marsh McLennan and Aon in global brokerage rankings. Gallagher attributes much of this growth to strategic acquisitions – over 500 during his tenure, with fewer than 5% deemed unsuccessful.
Critics often argue that roll-up strategies don’t work, but Gallagher insists his company is “building a partnership” rather than simply acquiring businesses. With 30,000 insurance brokerages in the US competing for mid-sized accounts, Gallagher’s pitch focuses on leveraging data analytics and global reach. By integrating acquired brokers into their systems, Gallagher can provide valuable insights to clients. For instance, they can show a local trucking firm with $10 million in coverage that similar clients are purchasing twice as much insurance, potentially increasing their business.
The company’s global presence in over 130 countries is another significant selling point. Gallagher recounts the story of an Iowa-based broker whose business grew five to ten times after being acquired. “We gave him cash and stock. His kids went to college on the cash. He’s the happiest guy on the planet,” Gallagher says, highlighting the benefits of partnering with his company.
Despite recent regulatory scrutiny over its proposed $13.5 billion acquisition of AssuredPartners, Gallagher maintains that the industry remains competitive. With global insurance premiums exceeding $7 trillion, Gallagher’s $125 billion in pressed premiums gives them little market share.
Gallagher describes the insurance industry as “the most important business in the world,” likening insurers to first responders who help businesses recover from adversity. He emphasizes that his company runs on a set of “shared values” established by his uncle Robert during the company’s IPO. The Gallagher Way promotes a culture that is both “competitive and aggressive” and “warm [and] close,” valuing loyalty and collaboration.
At 73, after three decades as CEO, Gallagher shows no signs of stepping down. “Yesterday, I spent an hour and a half with 100 of our young people – how fun is that? Tomorrow I’ll spend time with a client. This is what I love to do. As long as I’m capable, the board is stuck with me,” he says with a smile.
