Another Acquisition for AJG
With another acquisition by Arthur J. Gallagher & Co. (AJG), the insurance broker’s tally for the fourth quarter reached eight.
Arthur J. Gallagher & Co. acquired Houston-based Barmore Insurance Agency Inc., for an undisclosed amount in a bid to fortify its presence in Texas.
Founded in 1952, Barmore Insurance Agency operates as an insurance broker and offers retail and wholesale commercial property and casualty, risk management and employee benefits products and services to its middle-market clients across the south-central United States. Barmore Insurance Agency specializes in engineering, construction, public entity, non-profits and industrial coverage.
The acquisition is expected to enrich Arthur J. Gallagher’s wide range of insurance products and services besides strengthening its client base in Texas.
Post the acquisition, employees of Barmore Insurance Agency will continue to work in their current location, led by Mike Henthorn, the south-central region head of retail property and casualty brokerage operations of Arthur J. Gallagher & Co.
Arthur J. Gallagher’s inorganic growth profile is fueled by its continuous acquisition activities. Quarter–to date tally already touched third quarter count and compares favorably with second quarter’s count. Annualized revenues from eight acquisitions in the third quarter were $135.5 million, comparing favorably with $35.9 million in annualized revenues from five acquisitions in the second quarter.
Arthur J. Gallagher & Co.’s strong financial position continues to support its robust acquisition strategy.
No momentum in the earnings estimate was observed over the past week for Arthur J. Gallagher & Co. The Zacks Consensus Estimate for 2013 and 2014 is currently pegged at $2.14 and $2.52, respectively. With optimism over the current acquisitions and solid execution, we expect estimates to be revised upwards in the coming weeks, thus exerting an upward pressure on the Zacks Rank. Arthur J. Gallagher & Co. presently carries a Zacks Rank #3 (Hold).
Others adopting the inorganic growth route in the insurance space are Brown & Brown Inc.’s (BRO) subsidiary, Brown & Brown of Kentucky Inc., which acquired certain assets of O'Neil Financial Services, Agency Services Consolidated and Preserve Extended Protection Plan.
Mercer, the consulting wing of Marsh & McLennan Companies Inc. (MMC), announced its intention to purchase the pension wind-up operations of PricewaterhouseCoopers (PwC) in Canada in August.
A better-ranked insurance broker, AON plc (AON) with a Zacks Rank #2 (Buy), is worth considering.
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