Sec Form 4 Filing - GALLAGHER ROBERT E @ GALLAGHER ARTHUR J & CO - 2006-03-14

FORM 4 Check this box if no longer subject to Section 16. Form 4 or Form 5 obligations may continue. See Instruction 1(b).

UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 STATEMENT OF CHANGES IN BENEFICIAL OWNERSHIP Filed pursuant to Section 16(a) of the Securities Exchange Act of 1934, Section 17(a) of the Public Utility Holding Company Act of 1935 or Section 30(h) of the Investment Company Act of 1940

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1. Name and Address of Reporting Person GALLAGHER ROBERT E 2. Issuer Name and Ticker or Trading Symbol GALLAGHER ARTHUR J & CO [ AJG] 5. Relationship of Reporting Person(s) to Issuer (Check all applicable) X __ Director _____ 10% Owner X __ Officer (give title below) _____ Other (specify below) Chairman (Last) (First) (Middle) ARTHUR J. GALLAGHER & CO., TWO PIERCE PLACE 3. Date of Earliest Transaction (MM/DD/YY) 03/14/2006 (Street) ITASCA, IL60143 4. If Amendment, Date Original Filed (MM/DD/YY) 6. Individual or Joint/Group Filing (Check Applicable Line) __ X __ Form filed by One Reporting Person _____ Form filed by More than One Reporting Person (City) (State) (Zip)

Table I - Non-Derivative Securities Acquired, Disposed of, or Beneficially Owned 1.Title of Security (Instr. 3) 2. Transaction Date (MM/DD/YY) 2A. Deemed Execution Date, if any (MM/DD/YY) 3. Transaction Code (Instr. 8) 4. Securities Acquired (A) or Disposed of (D) (Instr. 3, 4 and 5) 5. Amount of Securities Beneficially Owned Following Reported Transaction(s) (Instr. 3 and 4) 6. Ownership Form: Direct (D) or Indirect (I) (Instr. 4) 7. Nature of Indirect Beneficial Ownership (Instr. 4) Code V Amount (A) or (D) Price Common Stock (restricted) 03/14/2006 A 8,618 A 16,951 D Common Stock 524,469 D Common Stock 200,000 I by Corporation ( 2 ) Common Stock 300,000 I by Trust ( 3 ) Common Stock 300,000 I by Trust 2 ( 4 ) Common Stock 276,048 I by Trust 3 ( 5 ) Common Stock 400,000 I by Trust 4 ( 6 ) Common Stock 500,000 I by Trust 5 ( 7 ) Common Stock 100,000 I by Trust 6 ( 8 )

Table II - Derivative Securities Acquired, Disposed of, or Beneficially Owned ( e.g. , puts, calls, warrants, options, convertible securities) 1. Title of Derivative Security (Instr. 3) 2. Conversion or Exercise Price of Derivative Security 3. Transaction Date (MM/DD/YY) 3A. Deemed Execution Date, if any (MM/DD/YY) 4. Transaction Code (Instr. 8) 5. Number of Derivative Securities Acquired (A) or Disposed of (D) (Instr. 3, 4, and 5) 6. Date Exercisable and Expiration Date (MM/DD/YY) 7. Title and Amount of Underlying Securities (Instr. 3 and 4) 8. Price of Derivative Security (Instr. 5) 9. Number of Derivative Securities Beneficially Owned Following Reported Transaction(s) (Instr. 4) 10. Ownership Form of Derivative Security: Direct (D) or Indirect (I) (Instr. 4) 11. Nature of Indirect Beneficial Ownership (Instr. 4) Code V (A) (D) Date Exercisable Expiration Date Title Amount or Number of Shares Non-Qualified Stock Option (right to buy) $ 27.1 ( 9 ) 05/16/2015 Common Stock 18,450 18,450 D

Reporting Owners Reporting Owner Name / Address Relationships Director 10% Owner Officer Other GALLAGHER ROBERT E ARTHUR J. GALLAGHER & CO. TWO PIERCE PLACE ITASCA, IL60143 X Chairman Signatures By: John C. Rosengren For: Robert E. Gallagher 03/16/2006 Signature of Reporting Person Date

Explanation of Responses:

( 1 )Restricted stock award vesting in equal parts over two-year period. ( 2 )100,000 of these shares were previously reported as directly beneficially owned by the reporting person, and 100,000 of these shares were previously reported as indirectly beneficially owned by the reporting person. All 200,000 shares were contributed by the reporting person on October 31, 2005 to Flagship III, LLC, a limited liability company, of which the voting LLC membership interests are owned by the reporting person and his spouse, and the non-voting LLC membership interests are owned by two grantor annuity trusts (one established by the reporting person and for which he is the trustee, and one established by the reporting person's spouse and for which she is the trustee). ( 3 )Held in irrevocable trust by three trustees for the benefit of spouse. ( 4 )Held in trust for benefit of grandchildren. ( 5 )Held in trust for benefit of daughter. ( 6 )Held in irrevocable charitable trust. ( 7 )Securities are held of record by Flagship Limited Partnership, an Illinois limited partnership ("Flagship"). The reporting person is the general partner of Flagship and, as such, may be deemed to be beneficial owner of such shares. The reporting person disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. ( 8 )Securities held of record by Flagship II, LLC, an Illinois limited liability company. Voting membership interests are owned by the reporting person and non-voting membership interests are owned by the reporting person (1%) and a family trust (99%). The reporting person disclaims beneficial ownership of these securities except to the extent of his pecuniary interest therein. ( 9 )The stock option becomes exercisable 10% each year, commencing January 1 after the date of grant.

Reminder: Report on a separate line for each class of securities beneficially owned directly or indirectly.

* If the form is filed by more than one reporting person, see Instruction 4(b)(v).

** Intentional misstatements or omissions of facts constitute Federal Criminal Violations. See 18 U.S.C. 1001 and 15 U.S.C. 78ff(a).

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