Douglas Howell: Yes. All right. First, you’re right. I think it might be about 34%, but I think [indiscernible] over a point or 2 on that. I think that when it comes to the tax, I think it’s important on these margins, we always get a step-up in basis on smaller deals, but on many larger mergers that these sellers are not willing to allow a step up in basis. In this case, the sellers were willing to and we paid a little bit more cash upfront on it. But we’re going to get $250 million worth of deductions over the next 15 years. Your present value that back at 5% or 6%, you get something . So it really doesn’t impact them all that much because I don’t know if they’re — they might be able to shield it with NOL carryforwards or something like that, but it benefits us a lot.
So to be able to achieve that. And it’s not all that important in many times for, let’s say, a PE firm that buys a bigger one over at trades because they’ve got the large interest shield coming off of the high levels of debt they run there. But for us to be able to negotiate that benefit and to be able to have a seller that’s willing to allow that benefit to pass out, that makes a big difference. So in this case, this is a true win-win for them. They get more cash, we get more cash, and it brings our multiple down considerably on it. This is not using our clean energy credit. We have $670 million of clean energy credits available. Think about that. We’ll use those over the next few years. It’s almost like we have another free Cadence coming our way because of those tax credits.
So tax does matter. And in this case, we think that a conservative view of that benefit is $150-some million.
Michael Zaremski: Interesting. And I guess this one probably for — this one question is for Pat, and congrats to Thomas and Patrick on our new appointments. Just curious on Pat. Will these new appointments cause any of your existing managers other than yourself to share responsibilities they didn’t previously share?
Patrick Gallagher: There will be some follow-on promotions. Sure. There’s good opportunities for everybody at Gallagher, yes.
Michael Zaremski: And so were these promotions well-telegraphed? Or is this kind of like — were these promotions like about well-telegraphed, like within the firm, like over time or were these kind of…
Patrick Gallagher: I’m going to ask you the Gallagher answer. There’s not a lot secret at Gallagher, right? Yes, I would say that these moves have been telegraphed over about 20 years.
Operator: Our next question comes from the line of Mark Hughes with Truist Securities.
Mark Hughes: On the — could you give any guidance on the corporate segment profit for 2024. Any early thoughts there?
Douglas Howell: We haven’t. And can you give until December? I know you’re trying to figure out your ’24 models. You might want to take what we did this year and just take it by line by line and make a site pick on it to see what you think it — what would happen there. I know it’s really difficult to do, Mark, because of FX remeasurement gains. I know we put some acquisition costs through there that can be lumpy. And there’s a lot of tax, restructure numbers that run through there as we implement tax planning strategy. I know it’s really difficult. But if you could you just give me until December and I can get that to you.
Mark Hughes: Yes. Yes.
Douglas Howell: We get this every year.
Mark Hughes: Any thoughts on medical inflation? Just curious to get, I think, the benefit is being helped by higher health care costs for employees, but the medical inflation impact on, say, workers’ comp or GL.
Patrick Gallagher: It’s interesting you should ask because we were talking about that with the board this week. And yes, we’re seeing a lot of pressure on medical costs. Full insured renewals at our largest carriers are showing 7% to 9% increases right now as we speak. When you start to take retentions and you start to get in the stop-loss market, we’re seeing averages there closer to 17% to 18%. That’s on premium now. That’s not on the underlying costs. But that’s because more of the claims are tagging those carriers. So they’re not only trying to move away in terms of the low end of the cost, but also they’re having to pay that. So if you take a look at all of it, all in, Mark, I’d say that our numbers that we’re seeing are about 8% to 9% and that’s embedded both in work comp as well as health insurance across the United States.
Operator: Our next question comes from the line of David Motemaden with Evercore ISI.
David Motemaden: I was wondering if you could just help me think through just how much of the organic growth over the last several years and even this quarter is driven by just the macro environment versus what you guys have been doing behind the scenes to accelerate share gains? Because it feels like there’s been a lot going on to help you guys gain share and that the share gains are accelerating. So I’m just wondering as kind of a big picture question. as you guys head into next year and you think about that 7% to 9% organic, I guess, how much of that do you think is coming from market share gains as you guys continue to execute versus like rate and exposure improvements?
Patrick Gallagher: Well, let me split the question with Doug in this regard. Let me talk about market gains in terms of share gain and then he can tear the numbers a bit. But we’re seeing and we’re measuring this literally every single day, every month. We know now where we’re producing business. We know, for instance, that 90% of the time, we compete with somebody smaller than we are. We know exactly what’s happening in our verticals. We have 32 verticals that we’re very, very clear on management expectation, knowing what’s going on, building products and what have you. That’s in the property casualty arena. We have another 7 or 8 in benefits. And in those verticals, we know that our growth rate is substantially greater than what is in our just general book of business. So internally, we know that we are taking definite share in those verticals. And I would probably — I’d throw out a number, Mike, maybe you throw a number out on the table of what…
Douglas Howell: In terms of?
Patrick Gallagher: Just in terms of the growth rate in the vertical as opposed to general.
Douglas Howell: 92% of our new business.
Patrick Gallagher: 19% of our new business falls…
Douglas Howell: Into one of our verticals.
Patrick Gallagher: In one of those — 19?
Douglas Howell: 92%.
