Arthur J. Gallagher (AJG) Adds Koberich to its Portfolio
Arthur J. Gallagher & Co. AJG recently acquired Köberich Financial Lines. The acquisition will consolidate the acquirer’s presence in Europe. The terms of the transaction have not been revealed yet.
Cologne, Germany-based Köberich was founded in 2009. It specializes in insurance and other financial lines products, including cyber, warranties & indemnities, professional indemnity and crime insurance. Köberich's customer base includes energy, engineering, construction, manufacturing and mining companies.
The addition of Köberich will provide AJG with an opportunity to enter into the German specialty financial lines market and enhance its presence in European countries.
Arthur J. Gallagher has an impressive inorganic story with buyouts in the Brokerage and Risk Management segments. This insurance broker acquired 37 entities in the first nine months of 2023 that contributed about $475.3 million to estimated annualized revenues. The insurer is growing through mergers and acquisitions, most of which are within its Brokerage segment. The recent acquisition marks the first buyout in the first quarter of 2024.
AJG has a solid merger and acquisition pipeline with about 45 term sheets either agreed upon or being prepared, representing more than $450 million of annualized revenues. Revenue growth rates generally range from 5% to 20% for 2023 acquisitions.
A solid capital position supports this Zacks Rank #3 (Hold) insurance broker in its growth initiatives. It remains focused on continuing its tuck-in mergers and acquisitions. AJG continues to expect M&A capacity upward of $3 billion through the end of 2023 and another $3.5 billion in 2024 without using any equity.
Arthur J. Gallagher’s long-term growth strategies should help it deliver organic revenue improvement and pursue strategic mergers and acquisitions. AJG is focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.
Shares of Arthur J. Gallagher have gained 18.7% over the past year compared with the industry’s rise of 8.9%. The solid performance of the Brokerage and Risk Management segments, strategic buyouts to capitalize on growing market opportunities and effective capital deployment should continue to drive share price higher.
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Other Acquisitions in Insurance Space
The Travelers Companies TRV recently closed the Corvus Insurance Holdings buyout. With this acquisition, TRV will have access to Corvus’ $200-plus million book of business. This apart, Corvus’ portfolio will enhance the return profile of its attractive cyber portfolio.
Balance sheet strength driven by scale, profitability and cash flow supports it to invest more than $1 billion annually on technology. Travelers is one of the leading writers of auto and homeowners’ insurance plus commercial U.S. property-casualty insurance with solid inorganic growth. The insurer has successfully maintained historically high levels of retention, improved pricing and an increase in new business while achieving a positive renewal premium change.
In December 2023, Brown & Brown, Inc. BRO announced that it has entered into an agreement to purchase Caton-Hosey Insurance. This acquisition is expected to boost Brown & Brown’s presence in the Florida market.
BRO and its subsidiaries continuously make strategic acquisitions to expand on a global scale, add capabilities, boost its operations and improve margins. Also, these strategic buyouts help it increase commissions and fees, which, in turn, drive revenues. Consistent operational results have been aiding Brown & Brown in generating solid cash flows for deployment in growth initiatives.
Marsh & McLennan Companies, Inc.’s MMC business, Oliver Wyman, agreed to buy SeaTec Consulting Inc., which caters to aerospace, defense, aviation and transportation industries, in December 2023. This move is expected to boost Oliver Wyman’s position in the aviation space.
The acquisition underscores MMC's strategic inorganic growth approach, exemplified by various purchases across its operating units. These acquisitions have facilitated entry into new regions, expansion in existing ones, diversification into new businesses and the development of new segments. The prudent acquisitions position the company for sustained long-term growth.
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