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Arthur J. Gallagher Boosts Portfolio With a Couple of Buyouts

Zacks

Arthur J. Gallagher & Co. AJG recently made two acquisitions that of Complete Benefit Alliance, LLC and First Agency, Inc. The terms of the deals have been kept under wraps.

Complete Benefit Alliance was founded in 1997 and is a full-service benefits enrollment and communications firm. The company caters to the needs of large and mid-sized public and private sector employer groups from offices in Alabama and Arizona. Its acquisition will help strengthen Arthur J. Gallagher’s voluntary benefits enrollment business.

First Agency was established in 1959. It specializes in offering blanket student and athletic accident insurance coverage to colleges and K-12 schools. This apart, the company also offers claims administration and policy issuance for several insurers and sells specialty coverages directly to individual students. The addition of First Agency will boost Arthur J. Gallagher’s student accident and special risk expertise. This apart the acquisition will also strengthen the company’s presence in the greater Midwest.

Arthur J. Gallagher has successfully evolved from a small retail presence in Australia, Canada and New Zealand to one of the top five brokers, globally. Its impressive growth story is backed by both organic sales and acquisition and mergers.

Given the insurance industry’s sturdy capital level, insurers are aggressively pursuing mergers and acquisitions to ramp up growth, expand footprint, enhance capabilities and diversify operations. The company has made three acquisitions and agreed for one more in the first quarter itself. In the first quarter of 2018, the company closed six acquisitions with annualized revenues of about $26.7 million. Arthur J. Gallagher’s inorganic pipeline remains strong with about $500 million of revenues.

Shares of this Zacks Rank #4 (Sell) have rallied 15.4% in a year, outperforming the industry’s increase of 4.5%. The company’s expansion policy to ramp up growth and a strong capital position should continue to drive shares higher.



Insurers Take the Inorganic Route

There has been a significant number of acquisitions in the space of late. Recently, Horace Mann Educators Corporation HMN closed the buyout of retirement plan provider Benefit Consultants Group and the subsidiary broker dealer and registered investment adviser BCG Securities to improve its retirement plan offerings for educators.

Last month, Brown & Brown, Kentucky, Inc., a unit of Brown & Brown, Inc. BRO, acquired Dealer Associates, Inc. to expand its Dealer Services team and consolidate in the Southwest region of the United States. Marsh & McLennan Companies, Inc.’s MMC Marsh & McLennan Agency LLC acquired Otis-Magie Insurance Agency Inc.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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