Strong 1Q Earnings at Gallagher

Insurance intermediary Arthur J. Gallagher AJG posted a strong earnings result in its first quarter, on first impression. Internal revenue (excluding acquisitions and contingent commissions) was basically flat, as it was for 2008 as a whole, with Gallagher citing a continued weak pricing and economic environment. Cost-saving efforts led to a significant margin increase in continuing operations, however, where earnings nearly than doubled their year-earlier first-quarter result. At the bottom line, Gallagher reported net income of $26 million, compared with a modest loss in the first quarter of 2008. Late last week, the firm announced its regularly scheduled dividend, and the stock continued to post a dividend yield of about 7% as of Tuesday. We will have a fuller review of the earnings after Wednesday's conference call, but they look very good on the surface, in light of market conditions.