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Arthur J. Gallagher to Acquire Michigan-Based LSG Insurance

Zacks Equity Research

Arthur J. Gallagher & Co. AJG recently agreed to buy LSG Insurance Partners. The acquisition, following the fulfilment of closing conditions, is expected to be completed in the fourth quarter of 2019.

Bloomfield Hills, MI-based LSG Insurance Partners was founded in 1968. It provides a wide range of employee benefits, commercial property/casualty, private client and merger and acquisition services. The company caters to clients throughout the Midwest and across the United States. LSG boasts a leading, independent insurance, risk management and consulting services agency in Michigan with solid focus on cross-selling.

The addition of LSG Partners to Arthur J. Gallagher’s portfolio will strengthen its presence in Michigan and expand its U.S. brokerage and consulting operations.

As far as LSG Insurance Partners is concerned the acquisition will help its clients leverage Arthur J. Gallagher’s expertise and access compelling products and services.

A strong capital position along with solid operational performance should continue to back Arthur J. Gallagher in its inorganic efforts.

Arthur J. Gallagher, a global insurance brokerage firm, has a sound growth track supported by solid organic sales and inorganic growth. So far, the company has completed 542 mergers and acquisitions. Furthermore, the company’s merger and acquisition pipeline is quite strong with about $400 million in revenues. It targets merger and acquisitions worth about $1.5 billion with free cash and debt.

Arthur J. Gallagher has gained 1.4% quarter to date against the industry’s decline of 2.1%. The company’s policy of ramping up growth and capital should continue to drive share price higher.  The company currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Stocks to Consider

Some better-ranked insurance stocks include eHealth EHTH, Palomar Holdings PLMR and Brown & Brown BRO. While eHealth and Palomar Holdings sport a Zacks Rank #1, Brown & Brown carries a Zacks Rank #2 (Buy).

eHealth operates through two segments, and 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 167.16%.

Palomar Holdings provides personal and commercial specialty property insurance products. The company delivered average four-quarter positive surprise of 25.00%.

Brown & Brown markets and sells insurance products and services in the United States, England, Canada, Bermuda, and the Cayman Islands. It came up with average four-quarter positive surprise of 9.06%.

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