Douglas Howell
Corporate Vice President and Chief Financial Officer at Arthur J. Gallagher & Co.
All right, thanks. Pat, and hello everyone. Today I'll walk-through third quarter organic in margins by segment, make some comments about how we see the fourth-quarter shaping up and provide some early thoughts on full year '24. Then I'll provide some comments on our typical modeling helpers using the CFO commentary document that we posted on our website, and I'll conclude my prepared remarks with a few comments on cash, M&A and capital management.
Okay, let's flip to page 3 of the earnings release. All-in brokerage organic of 9.3% which as a reminder, does not include interest income like some of our peers report. Organic including interest income would be about 12%. A few soundbites, first-in total, we came in a little bit better than we foreshadowed at our September IR Day due to a really strong results from reinsurance in London, specialty. Second, base commission and fee organic was strong at 9.6%. Third supplementals and contingents together up 5% at our IR Day we flagged some softness, mostly related to the amount we fires. Since then we have also seen a very slight uptick in expected insurance carrier. Loss ratios that also had a modest unfavorable impact to organic regardless. 9.3% and total without interest income, 12% with both are fantastic results for the quarter.
One special mentioned. That discuss the global renewal premium increases. We were seeing around 10% this quarter. And on the surface, it might appear this increase a bit lower maybe about a point from what we said in September and also from the second quarter. It's important to note, when we look at our data by line in customer and then adjust for mix, the renewal premium increases for the third quarter are very similar to second quarter. So please don't interpret that there has been any meaningful shift in the market. We're just not seeing that.
Looking ahead to Q4, organic, over the last year, we have reminded, that we have an accounting headwind to overcome. Recall in Q4 '22, we booked a change in estimate related to our 606 deferred revenue accounting. That will now create a more difficult compare. Called out about a point organic headwind. Again, no new news here, but just a reminder as you update your models. Controlling for this, we see fourth quarter underlying organic growth approaching 9%, but the headline might look more like 8%.
If we post that, that would mean full-year brokerage organic in the upper eights pushing towards 9%. Again these percentages do not include the interest income. What a great year that would be. Flip now to page 5 of the earnings release to the Brokerage segment adjusted EBITDAC table, we posted adjusted EBITDAC margin of 32.4% for the quarter, that's up 55 basis-points over third quarter '22 FX-adjusted margin that's great work by the team to-end up a bit better than our September IR Day expectations.
Looking like. Looking at margins like a bridge from Q3 '22 organic gave us 80 points of expansion, incremental interest income gave us 90 basis points. Poland M&A, M&A mostly Buck, which naturally runs at lower margins impacted it by about 65 basis-points. We also made incremental technology investments call that about $7 million in had some continued inflation on T&E, call that about $3 million, which in total used about 50 basis-points.
Follow that bridge and the mass gets you close to that 55 basis-points of FX-adjusted margin expansion in the third quarter. As for our adjusted EBITDAC margin outlook for the fourth quarter, we expect about 40 to 50 basis-points of expansion. And remember that's off of fourth quarter 22 margins recomputed at current FX levels. However, unlike the past few quarters where FX created some noise, we're fortunate that. Now, there's not much impact to consider so much easier to model if we deliver on that for year '23, which show margins expanding 30 basis-points to 40 basis-points or 80 basis-points to 90 basis-points levelizing for the rolling impact of Buck. That would be a terrific year.
Looking ahead to next year, we are just beginning our budgeting process and but our early, very early thinking is that organic we're seeing organic in that 7-9% range. As for margins, we would anticipate seeing to margin expansion, starting at 4% organic growth. And perhaps if we hit 7% call it around 50 basis-points of expansion. And also one other modeling heads-up. Please don't forget first quarter 24 margins will have a slightly tougher year-over-year compare since Buck will still be rolling into our results.
Okay, let's move on to the Risk Management segment and the organic and EBITDAC table on page 5 and 6. A really strong finish to the third quarter 17.9% organic growth and margins at 20.4%. As Pat mentioned, we continue to benefit from higher claim counts, related to the new business wins from the second-half of '22. Looking-forward, we see organic in the fourth quarter around 13% and margins just above 20%. Organic does reflect the lapping of last year's newer large business wins and margins remain terrific. So if we deliver on that full-year organic would be above 15% and margins, pushing 20%, that would be another record year for Gallagher Bassett.
Looking ahead to full-year '24, our early thinking is pointing towards 9% to 11% organic and margins around 20%. Okay, let's turn to page 7 of the earnings release and the Corporate segment shortcut table. In total, adjusted third quarter came in $0.03 better than the midpoint of the range we provided during our September IR Day.
Two reasons, first, lower borrowings on our line-of-credit as Sumit M&A opportunities were pushed into October and November and second lesser FX remeasurement headwinds. Let's move down to the CFO commentary document to page 3. A couple of things versus our September IR Day estimates. You'll see third quarter, amortization expense is better by $7 million, but remember this is non-cash and doesn't impact adjusted EBITDAC nor adjusted EPS. This was simply due to balance sheet true-ups. When we get our third-party M&A valuations. Then you also see depreciation is a touch higher by $2 million, but that was offset by change in acquisition earn-outs, which is lower by $2 million. So no net impact there.
Looking at had, we've updated our fourth quarter numbers and footnotes, so just do a double-check of your models and we will also update this page again during our December IR Day and give you a first look at 2024 numbers.
Flip over to page 4 of the CFO commentary document to the Corporate segment outlook for the fourth quarter. Only real movement in that Q4 interest and banking expenses up a bit reflecting more anticipated borrowing. Moving to page 5. This is the page that shows our tax credit carry-forwards. As of September 30 we have about $670 million available. A nice future cash-flow sweetener that helps fund future M&A.
When you turn to page 6, you'll see the rollover revenue table for third quarter. The rollover revenues for the third quarter were $153 million, that's a little better than our IR Day expectations mostly due notably to one merger that really hit it out of the park during the second-half of September. It really shows you the potential upside mergers can see after joining Gallagher.
Looking-forward, we have included estimated revenues for M&A closed and announced through yesterday. That's important to note these numbers already include expected revenues from Eastern and cadence. We've assumed mid - we've assumed a mid fourth quarter closing date. So please don't double-count. And also, as we always say please don't forget, you need to make a peck for future M&A also. In terms of funding M&A, first available cash on hand at September 30 was around $550 million. Second, our fourth quarter is historically a very strong cash flow quarter. Third, we currently have nothing outstanding on our line-of-credit. So we can use that or do a bond offering. And finally, if we close a lot of the tuck-in M&A pipeline that Pat discussed before year end, we may use a small amount of stock, but call it a couple of $100 million. As we consider these alternatives. We're always being very mindful of maintaining our solid investment-grade rating also. As for 2024, we are currently estimating about $3.5 billion of capacity to fund future M&A using only free-cash and incremental borrowings.
Okay, those are my comments, another fantastic quarter by the team. It's looking like another fantastic year, congratulations to Patrick and Tom on their - on their new roles. We have terrific momentum taking us into 2024, back to you. Pat.
