Arthur J. Gallagher Buys 65% Stake in Columbian Reinsurer - Analyst Blog
Arthur J. Gallagher & Co. AJG announced that it has bought a 65% equity stake in Columbian insurance company, ARM Re Ltda Corredores de Reaseguros (“ARM”). The transaction amount remained undisclosed. Though this acquisition is the first in the ongoing quarter, the company’s year-to-date tally of acquisition has reached 21.
Founded in 2006, Bogota, Colombia based ARM Re is a reinsurance broker specializing in energy, construction and mobile equipment risks. Also, the company does facultative insurance business across various domains that include transportation, terrorism, third-party liability, property and contractors' machinery and equipment. Fernando Tellez and Carlos Rodriguez Angulo along with their associates will continue to operate from their current location Bogota. But they will work under direct instructions from the head of Arthur J. Gallagher's international brokerage operations in London.
The acquisition fits well with Arthur J. Gallagher’s aim of expanding its sales and service capabilities globally by merging with specialist international brokers and developing key strategic partnerships. The acquirer will benefit from ARM Re’s reputed and innovative program design, and its flexible and integrated client solution services.
The insurance broker has maintained consistentency in its inorganic growth. The second quarter of 2015 witnessed the addition of 9 entities to its portfolio. The company’s solid liquidity position cushions its growth initiatives and will encourage more takeovers going forward.
Arthur J. Gallagher’s compelling inorganic growth and strategic focus on global expansion will likely prompt a revision in earnings estimates and hence, lead to a rank upgrade. Currently, the insurance broker carries a Zacks Rank #3 (Hold).
Of late, some other insurance brokers have been growing through acquisitions. Recently, Brown & Brown Inc. BRO acquired certain assets of RF Ougheltree & Associates, LLC in order to leverage its professional and executive liability insurance services. Also, Willis Group Holdings plc WSH inked a deal to buy PMI Health Group in an attempt to bolster its health care advisory business in the U.K. Earlier this month, a subsidiary of Marsh & McLennan Companies, Inc.’s MMC – Marsh & McLennan Agency LLC – acquired a leading independent insurance brokerage firm, Vézina.
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