Arthur J. Gallagher & Co

Arthur J Gallagher has been enhancing productivity and quality through standardized workflows and data integration for over two decades. The CEO emphasizes that AI digitization and automation are the next steps in this evolution, making professionals faster and better informed without replacing essential human judgment and relationships. This positions the company well to leverage AI as a commercial driver, expanding its total addressable market and reinforcing its competitive moat in the industry.

We believe in Arthur J. Gallagher & Co's organic growth, retention, and expected margin expansion, supported by favorable fundamentals, particularly in its insurance brokerage division. The company is well-positioned to benefit from the ongoing trends in the insurance market, which we see as a durable business model that can withstand market fluctuations. This aligns with our long-term investment philosophy of focusing on high-quality companies with competitive advantages.

AJ Gallagher (AJG) provides insurance brokerage services to commercial customers primarily in the middle market. Although some have suggested AI could impact this business, we believe that the relationship orientation combined with the desire for accountability from customers make this a business that should be more resilient in the future. This positions AJ Gallagher favorably as a durable business amidst evolving market conditions.

AJ Gallagher (AJG) provides insurance brokerage services to commercial customers primarily in the middle market. Although some have suggested AI could impact this business, we believe that the relationship orientation combined with the desire for accountability from customers make this a business that should be more resilient in the future.

Arthur J. Gallagher is a leading global insurance brokerage and risk management firm. We view it as a high-quality business with visible organic growth, supported by its diverse wholesale, reinsurance and claims operations. The company also has a strong acquisition record, and we expect its AssuredPartners acquisition to deliver meaningful synergies as integration moves forward. We added to the position on recent weakness as organic growth shows signs of stabilization and margin expansion opportunities emerge, including from integration and AI-related initiatives.

We initiated a position in Arthur J. Gallagher (AJG), a best-in-class insurance broker consolidating the mid-market space. The company recently completed its largest acquisition to date, which is expected to drive earnings growth of more than 20% next year. This positions Arthur J. Gallagher well for significant growth in the coming years, reflecting our confidence in its business model and market strategy.

We added Arthur J. Gallagher & Co. (AJG), the world’s largest insurance broker focused on middle-market clients. Shares came under modest pressure during the quarter due to a delay in closing its $13.4 billion acquisition of AssuredPartners. The deal ultimately closed in August 2025, with management now projecting stronger synergies than initially anticipated. Looking ahead, we believe AJG’s scale, specialized expertise, and highly scalable platform position it well for continued organic growth and margin expansion. The resilience of the global insurance market further supports its long-term outlook, reinforcing our confidence in AJG as a core holding.

Arthur J. Gallagher's share price fell along with its insurance peers due to a weaker pricing environment following years of strong pricing. The company provides customized, cost-effective insurance and risk management programs, but it suffered from general industry soft pricing, which negatively impacted its performance in a risk-on environment. The insurance industry is relatively more defensive and was negatively impacted by investors switching into more cyclical companies, which further affected Gallagher's performance.

Arthur J Gallagher has significantly outperformed the sector, showcasing its resilience and strength in the current market environment. The firm is well-positioned within the insurance industry, benefiting from strong stock selection and a favorable allocation effect. This performance is indicative of its robust business model and competitive advantages, which we believe will continue to drive growth and returns for investors.

Arthur J Gallagher has demonstrated strong performance, rising by 21.9% in USD during the quarter. The company is characterized as a high-quality business with substantial recurring revenue streams, which provides a strong degree of defensiveness during periods of economic stress. This resilience is particularly valuable in the current macroeconomic environment, where uncertainty has led to increased trading volumes and heightened hedging activity. The Fund's emphasis on high-quality companies like Arthur J Gallagher reinforces its strategy of investing in firms that can weather macro headwinds effectively.