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Arthur J. Gallagher Boosts Portfolio With Cunnington Buyout


Arthur J. Gallagher & Co. AJG has closed the buyout of Cunnington & Associates, Inc. The details of the transaction were not made public.

Meridian, ID-based Cunnington & Associates was founded in 2005. The company operates as an insurance company and offers personal, commercial and business insurance products and risk management solutions. It caters to clients across Idaho and the Intermountain West in particular. It also specializes in agriculture, construction, healthcare, manufacturing, real estate, technology and transportation industries in the United States.

We believe Cunnington & Associates is a strategic fit for Arthur J. Gallagher. This is because the buyout will help the acquirer to expand its presence in the Northwest region, particularly the Intermountain region. Also, it is likely to boost cross-selling opportunities at Gallagher’s employee benefits division.

This latest transaction marks Arthur J. Gallagher’s fourth buyout in the second quarter of 2020. A strong capital position supported by sustained solid operational performance should continue to back its inorganic efforts.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations. A number of strategic acquisitions have boosted its capabilities and diversified operations. Its inorganic pipeline remains strong with revenues of about $250 million, associated with 30 term sheets either agreed upon or being prepared.

In 2019, the company closed 49 mergers with more than $468 million of annualized revenues. These buyouts provide the company with incremental capabilities and services to assist clients across Australia, the UK, Europe and the United States. The company remains focused on its long-term growth strategies of delivering organic revenue growth and pursuing strategic mergers and acquisition.

Shares of this Zacks Rank #3 (Hold) insurance broker have gained 13.8% in a year’s time outperforming the industry’s increase of 0.4%. Efforts to ramp up its growth profile and capital position should help shares bounce back.

There have been a host of acquisitions in the insurance space of late, given the significant capital available. Last month, Brown & Brown BRO acquired Loan Protector Insurance Services. Recently, Marsh & McLennan Companies’ MMC unit Oliver Wyman acquired a minority stake in Corridor Platforms.

A Stock to Consider

A better-ranked insurance broker is eHealth EHTH, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

eHealth provides services like private health insurance exchange in the United States and China to families, individuals and small businesses. The company came up with average four-quarter positive surprise of 78.40%.

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