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Alleghany's Subsidiary Acquires Majority Stake in Wilbert

Zacks Equity Research

Alleghany Corporation’s Y unit Alleghany Capital has acquired a majority stake in Wilbert. In addition to serving precast concrete markets, Wilbert caters to the needs of funeral and cemetery industries.

Notably, Alleghany Capital signed a deal to buy a 45% equity stake in Wilbert in the year 2017.

Apart from continually innovating products and services, Wilbert has been actively undertaking strategic initiatives to enhance existing capabilities. Wilbert’s solid business model will enable Alleghany Capital to leverage potential growth opportunities prevailing in noninsurance markets. Similarly, Alleghany Capital is expected to boost the vast distribution network of Wilbert, which has its base of operations mostly in the United States and Canada.

Wilbert, which has a leading position in the funeral services industry, should be a good addition to Alleghany’s portfolio. The inevitability of death continues to drive demand for the industry’s services. Thus, the market players are likely to benefit from high mortality rates and aging baby boomer population.

Alleghany Capital has been undertaking several strategic initiatives that are intended to boost revenues from middle-market businesses. Concurrent with the move of obtaining a majority stake in Wilbert, Alleghany Capital’s unit Jazwares has obtained a majority stake in plush toys manufacturer Kellytoy. Considering numerous growth opportunities prevailing in global plush markets, Jazwares is expected to gain traction from this move.

This February, Alleghany Capital’s unit PCT acquired Supermill LLC, which serves the metal working industry. The buyout is expected to enhance PCT’s portfolio of cutting consumables and expand its foothold across Northeastern United States. All these initiatives underline Alleghany’s efforts to boost noninsurance revenues, which improved 45.4% year over year in 2019.

However, shares of this Zacks Rank #5 (Strong Sell) P&C insurer have lost 14.5% over a year, narrower than the industry’s 16.1% decline. Nevertheless, we believe that the company’s solid fundamentals are likely to drive its shares going forward.

Stocks to Consider

Some better-ranked stocks in the same space are Cincinnati Financial Corporation CINF, First American Financial Corporation FAF and ProAssurance Corporation PRA. While First American Financial currently sports a Zacks Rank #1 (Strong Buy), Cincinnati and ProAssurance carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cincinnati, First American Financial and ProAssurance surpassed earnings estimates in the last reported quarter by 10.8%, 33.3% and 23%, respectively.

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Cincinnati Financial Corporation (CINF) : Free Stock Analysis Report
 
ProAssurance Corporation (PRA) : Free Stock Analysis Report
 
First American Financial Corporation (FAF) : Free Stock Analysis Report
 
Alleghany Corporation (Y) : Free Stock Analysis Report
 
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