Arthur J. Gallagher & Co. AJG · USD

Segment InformationWe have three reportable segments: brokerage, risk management and corporate.The brokerage segment is primarily comprised of our retail and wholesale insurance and reinsurance brokerage operations. The brokerage segment (which comprises our retail property/casualty, wholesale, reinsurance, benefits and captive operations) generates revenues through commissions paid by underwriting enterprises and through fees charged to our clients. Our brokers, agents and administrators act as intermediaries between underwriting enterprises and our clients and we do not assume net underwriting risks.The risk management segment provides contract claim settlement and administration services for commercial, nonprofit, captive and public sector entities, and various organizations that choose to self-insure some or all of their property/casualty coverages and for underwriting enterprises that choose to outsource some or all of their property/casualty claims departments. These operations also provide claims management, loss control consulting and insurance property appraisal services. Revenues are principally generated on a negotiated per-claim or per-service fee basis. Our risk management segment also provides risk management consulting services that are recognized as the services are delivered.Revenues in the corporate segment consist of other income related to the run-off of legacy investments. In addition, the corporate segment reports the financial information related to our debt, external acquisition-related expenses, other corporate costs, the impact of foreign currency remeasurement and clean energy investments.Allocations of investment income and certain expenses are based on reasonable assumptions and estimates primarily using revenue, headcount and other information. We allocate the provision for income taxes to the brokerage and risk management segments using the local country statutory rates. Reported operating results by segment would change if different methods were applied.Our Chief Operating Decision Maker (which we refer to as CODM) who is our Chairman and Chief Executive Officer, analyzes and evaluates the operating performance of the three reportable segments presented below. We have disclosed for each reportable segment the significant expense categories that are reviewed by the CODM and there are no additional significant expenses within the expense categories presented in the tables below.

Commitments, Contingencies and Off-Balance Sheet ArrangementsIn connection with our investing and operating activities, we have entered into certain contractual obligations and commitments. See Note 7 to these consolidated financial statements for additional discussion of these obligations and commitments. Our future minimum cash payments, including interest, associated with our contractual obligations pursuant to the Senior Notes, Note purchase agreements, Credit Agreement, Premium Financing Debt Facility, operating leases and purchase commitments at December 31, 2025 were as follows (in millions): Payments Due by PeriodContractual Obligations20262027202820292030ThereafterTotalSenior Notes$— $750 $— $750 $— $8,050 $9,550 Note purchase agreements640 478 200 350 466 1,189 3,323 Credit Agreement— — — — — — — Premium Financing Debt Facility226 — — — — — 226 Interest on debt612 593 539 528 473 6,117 8,862 Total debt obligations1,478 1,821 739 1,628 939 15,356 21,961 Operating lease obligations173 148 111 84 73 184 773 Less sublease arrangements(3)(2)(2)(2)— — (9)Outstanding purchase obligations278 227 101 50 26 42 724 Total contractual obligations$1,926 $2,194 $949 $1,760 $1,038 $15,582 $23,449 The amounts presented in the table above may not necessarily reflect our actual future cash funding requirements, because the actual timing of the future payments made may vary from the stated contractual obligation.Senior Notes, Note Purchase Agreements, Credit Agreement and Premium Financing Debt Facility - See Note 7 to these consolidated financial statements for a summary the amounts outstanding under the Senior Notes, Note purchase agreements, the Credit Agreement and Premium Financing Debt Facility.Operating Lease Obligations - Our corporate segment’s executive offices and certain subsidiary and branch facilities of our brokerage and risk management segments are located in a building we own at 2850 Golf Road, Rolling Meadows, Illinois, where we have approximately 360,000 square feet of space and can accommodate approximately 2,000 employees. Relating to the development of our corporate headquarters, we expect to receive property tax related credits under a tax-increment financing note from Rolling Meadows and an Illinois state Economic Development for a Growing Economy (which we refer to as EDGE) tax credit.

Credit and Other Debt AgreementsThe following is a summary of our corporate and other debt (in millions):December 31,20252024Senior Notes:Semi-annual payments of interest, fixed rate of 4.60%, balloon due December 15, 2027$750 $750 Semi-annual payments of interest, fixed rate of 4.85%, balloon due December 15, 2029750 750 Semi-annual payments of interest, fixed rate of 2.40%, balloon due November 9, 2031400 400 Semi-annual payments of interest, fixed rate of 5.00%, balloon due February 15, 2032500 500 Semi-annual payments of interest, fixed rate of 5.50%, balloon due March 2, 2033350 350 Semi-annual payments of interest, fixed rate of 6.50%, balloon due February 15, 2034400 400 Semi-annual payments of interest, fixed rate of 5.45%, balloon due July 15, 2034500 500 Semi-annual payments of interest, fixed rate of 5.15%, balloon due February 15, 20351,500 1,500 Semi-annual payments of interest, fixed rate of 3.50%, balloon due May 20, 2051850 850 Semi-annual payments of interest, fixed rate of 3.05%, balloon due March 9, 2052350 350 Semi-annual payments of interest, fixed rate of 5.75%, balloon due March 2, 2053600 600 Semi-annual payments of interest, fixed rate of 6.75%, balloon due February 15, 2054600 600 Semi-annual payments of interest, fixed rate of 5.75%, balloon due July 15, 2054500 500 Semi-annual payments of interest, fixed rate of 5.55%, balloon due February 15, 20551,500 1,500 Total Senior Notes9,550 9,550 Note Purchase Agreements:Semi-annual payments of interest, fixed rate of 4.31%, balloon due June 24, 2025— 200 Semi-annual payments of interest, fixed rate of 4.85%, balloon due February 13, 2026140 140 Semi-annual payments of interest, fixed rate of 4.73%, balloon due February 27, 2026175 175 Semi-annual payments of interest, fixed rate of 4.40%, balloon due June 2, 2026175 175 Semi-annual payments of interest, fixed rate of 4.36%, balloon due June 24, 2026150 150 Semi-annual payments of interest, fixed rate of 3.75%, balloon due January 30, 202730 30 Semi-annual payments of interest, fixed rate of 4.09%, balloon due June 27, 2027125 125 Semi-annual payments of interest, fixed rate of 4.09%, balloon due August 2, 2027125 125 Semi-annual payments of interest, fixed rate of 4.14%, balloon due August 4, 202798 98 Semi-annual payments of interest, fixed rate of 3.46%, balloon due December 1, 2027100 100 Semi-annual payments of interest, fixed rate of 4.55%, balloon due June 2, 202875 75 Semi-annual payments of interest, fixed rate of 4.

Income TaxesWe and our principal domestic subsidiaries are included in a consolidated U.S. federal income tax return. Our international subsidiaries file various income tax returns in their jurisdictions. Significant components of earnings before income taxes and the provision for income taxes are as follows (in millions):Year Ended December 31,202520242023Earnings before income taxes:United States$1,211 $972 $605 Foreign, principally Australia, Canada, New Zealand and the U.K.660 903 580 Total earnings before income taxes$1,871 $1,875 $1,185 Provision for income taxes:Federal:Current$39 $38 $(22)Deferred94 112 113 133 150 91 State and local:Current42 53 (15)Deferred(8)(1)43 34 52 28 Foreign:Current224 194 213 Deferred(23)8 (113)201 202 100 Provision for income taxes$368 $404 $219 In December 2023, the FASB issued ASU No. 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”), which requires a company to disclose specified additional information in its income tax rate reconciliation and provide additional information for reconciling items that meet a quantitative threshold. ASU 2023-09 also requires the company to disaggregate its income taxes paid disclosure by federal, state and foreign taxes, with further disaggregation required for significant individual jurisdictions We have adopted ASU 2023-09 using a prospective transition method. A reconciliation of the provision for income taxes with the U.S. federal statutory income tax rate is as follows (in millions, except percentages):Year Ended December 31,2025Amount% of PretaxEarningsU.S. federal statutory income tax$393 21.0 %Domestic federal:Tax credits(19)(1.0)Non taxable / nondeductible itemsExcess tax benefits on share-based payments(77)(4.1)Nondeductible executive compensation (IRC 162(m))24 1.3 Other 5 0.3 Cross-border tax lawsIncome (loss) from branches / disregarded entities (1)(57)(3.1)Other16 0.9 Changes in valuation allowance (2)41 2.2 Other (2)(51)(2.7)Domestic state and local income taxes, net of federal benefits *25 1.3 Foreign tax effects:U.K.:Nontaxable / nondeductible itemsEarnout liability adjustments22 1.2 Other37 2.0 Other foreign jurisdiction (3)1 0.1 Changes in unrecognized tax benefits8 0.4 Provision for income taxes$368 19.7 %(1)Includes foreign tax credit benefits of $33 million.(2)In 2025, we completed the sale of the Pronto Group that resulted in a $40 million U.S. federal capital loss.

LeasesWe have operating leases primarily related to branch facilities, data centers, sales offices, and agent locations, automobiles and office equipment. Many of our leases include both lease (fixed rent payments) and non-lease components (common-area or other maintenance costs) which are accounted for as a single lease component as we have elected the practical expedient to group lease and non-lease components for all leases. Variable lease payments, such as periodically indexed and/or market adjustments, are presented as lease expense in the period in which they are incurred. Since we did not elect the short-term policy election, we record leases of 12 months or less on the balance sheet.We exclude options to extend or terminate a lease from our recognition as part of our right-of-use assets and lease liabilities until those options are reasonably certain and/or executed. We do not have any material guarantees, options to purchase, or restrictive covenants related to our leases.As our leases do not provide an implicit rate, we use our incremental borrowing rate based on the information available at the lease commencement date in determining the present value of the lease payments. We consider qualitative factors including our derived credit rating, notched adjustments for collateralization, lease term, and, if significant, adjustments to our collateralized rate to borrow in the same currency in which the lease is denominated.The components of lease expense are as follows (in millions):Lease ComponentsStatement of EarningsClassificationYear endedDecember 31, 2025Operating lease expenseOperating expense$167 Variable lease expenseOperating expense32 Sublease incomeInvestment income(2)Total net lease expense$197 Variable lease cost consist primarily of common-area and other maintenance costs for our lease facilities, as well as variable lease payments related to indexed and/or market adjustments. Our sublease income derives primarily from a few office lease arrangements and we have no significant sublease losses.Year endedSupplemental Cash Flow Information Related to Leases (in millions)December 31, 2025Cash paid for amounts included in the measurement of lease liabilities:Operating cash flows from operating leases$155 Right-of-use assets obtained in exchange for new operating lease liabilities$343 We present all noncash transactions related to adjustments to the lease liability or right-of-use asset as noncash transactions.

Business CombinationsDuring 2025, we acquired substantially all of the ownership interests or net assets, as applicable, of the following firms in exchange for our common stock and/or cash. These acquisitions have been accounted for using the acquisition method for recording business combinations (in millions, except share data):Name and Effective Date of AcquisitionCommonSharesIssuedCommonShareValueCashPaidAccruedLiabilityEscrowDepositedRecordedEarnoutPayableTotalRecordedPurchasePriceMaximumPotentialEarnoutPayable(000s)W K Webster & Co Ltd February 1, 2025 (WKW)—$— $139 $2 $— $14 $155 $29 Case Group February 26, 2025 (CSG)—— 58 3 6 14 81 84 Woodruff Sawyer & Co April 10, 2025 (WSC)—— 1,195 12 67 — 1,274 — Dolphin TopCo, Inc., the holding company of AssuredPartners, Inc., August 18, 2025 (APG)—— 13,515 — 300 — 13,815 — Tompkins Insurance Agencies, Inc. October 31, 2025 (TIA)—— 225 8 — — 233 — First Actuarial, LLP November 27, 2025 (FAC)—— 101 4 46 7 158 26 Twenty-seven other acquisitions completed in 20256416 502 19 22 73 632 150 64$16 $15,735 $48 $441 $108 $16,348 $289 On August 18, 2025, we acquired all of the issued and outstanding stock of Dolphin TopCo, Inc., the holding company of AssuredPartners for gross consideration of $13.8 billion. AssuredPartners is a leading U.S. insurance broker with client capabilities across commercial property/casualty, specialty, employee benefits and personal lines with operations in the U.K. and Ireland. We raised $8.5 billion of cash raised in our December 11, 2024 follow-on common stock offering and $5.0 billion of cash in our December 19, 2024 senior notes issuance (which we refer to, together with the follow-on common stock offering, the "AssuredPartners Financing"), to fund the transaction. On January 7, 2025, we received an additional $1.3 billion of cash due to the exercise by the underwriters of the overallotment provision related to the follow-on common stock offering. AssuredPartners had over 10,900 employees serving through offices located across the U.S., U.K. and Ireland. On April 10, 2025, we acquired all of the issued and outstanding stock of Woodruff Sawyer for consideration of $1.2 billion. We funded the transaction using cash on hand. Woodruff Sawyer provides a full suite of commercial property/casualty products, employee benefits solutions and risk management services with a focus on middle and large market clients.

Item 1C. Cybersecurity.We have implemented a cybersecurity program to assess, identify, and manage risks from cybersecurity threats that could adversely and materially affect the confidentiality, integrity, and availability of our information and information systems. We maintain administrative, technical, and physical safeguards designed to protect the security and privacy of confidential, personal and proprietary information. Our cybersecurity program is aligned with notable control frameworks such as the NIST CSF (National Institute of Standards and Technology Cybersecurity Framework) and ISO (International Organization for Standardization) 27001.Our Chief Information Security Officer (which we refer to as our CISO), working together with our Chief Information Officer (which we refer to as our CIO), oversees a team of employees dedicated to cybersecurity. Our cybersecurity team includes Business Information Security Officers (which we refer to as BISOs) in each region to lead the cybersecurity program, and to communicate ongoing updates from the cybersecurity team regarding the prevention, detection, mitigation, and remediation of cybersecurity incidents. Our CISO regularly reports to the CIO and is an active member of our management-level enterprise risk management committee, which has broad oversight of the company’s enterprise risks, including cybersecurity risks. In addition, our CIO and CISO both attend regular meetings of the executive officer team, including our Chief Executive Officer, Chief Financial Officer, General Counsel and other senior executive officers, dedicated to compliance and risk, and report on cybersecurity matters as appropriate. Our Board of Directors has delegated primary responsibility for the oversight of cybersecurity matters to its Risk and Compliance Committee; however, the full board reviews significant cybersecurity matters as appropriate. Our CIO and CISO report on cybersecurity and information security at each quarterly meeting of the Risk and Compliance Committee.Our cybersecurity program leverages people, processes, and technology to identify and respond to cybersecurity threats. We have a global incident response capability supported by our Security Operations Center (which we refer to as SOC) team, a managed security service provider (MSSP), ReliaQuest, and our global Cybersecurity Incident Response Team (which we refer to as CSIRT), which provides threat detection and incident response.

Fixed AssetsMajor classes of fixed assets consist of the following (in millions):December 31,20252024Office equipment$53 $34 Furniture and fixtures215 152 Leasehold improvements326 260 Computer equipment439 362 Land and buildings - corporate headquarters174 172 Software942 721 Other42 41 Work in process80 64 2,271 1,806 Accumulated depreciation(1,482)(1,156)Net fixed assets$789 $650 The amounts in work in process in the table above primarily are for capitalized expenditures incurred related to IT development projects in 2025 and 2024.