Arthur J. Gallagher (AJG) Adds WLA Insurance to Portfolio
Arthur J. Gallagher & Co. AJG recently acquired WLA Insurance, LLC, dba Altman Insurance Services. The buyout will help AJG consolidate its presence in the South Central region.
Louisville, KY-based, WLA Insurance provides employee benefits brokerage and consulting services. It serves large and small group businesses in Kentucky, Indiana, Ohio and Tennessee. The addition of WLA Insurance will thus boost the acquirer’s employee benefits capabilities in the South Central region.
Arthur J. Gallagher has an impressive inorganic story with buyouts in the Brokerage and Risk Management segments. This insurance broker acquired 25 entities in the first half of 2023 that contributed about $418 million to estimated annualized revenues and 13 more quarter to date.
AJG has a solid merger and acquisition pipeline with about 55 term sheets either agreed upon or being prepared, representing more than $700 million of annualized revenues. Revenue growth rates generally range from 5% to 20% for 2023 acquisitions.
A solid capital position supports the insurer in its growth initiatives and it thus 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 billion in 2024 without using any equity.
This Zacks Rank #3 (Hold) insurance broker’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 22.1% year to date, outperforming the industry’s 12% increase. 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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Stocks to Consider
Some better-ranked stocks from the same space are Aon AON, Ryan Specialty Holdings Inc RYAN and Chubb Limited CB, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
AON outpaced earnings estimates in two of the last four quarters and missed the mark twice, the average surprise being 0.52%. The Zacks Consensus Estimate for AON’s 2023 earnings and revenues suggests a rise of 6.5% and 6.2%, respectively, from the prior-year reported figures. The consensus mark for AON’s 2024 earnings implies an increase of 13.4% on 5.5% higher revenues.
Ryan Specialty’s earnings surpassed estimates in three of the trailing four quarters and missed the mark once, the average surprise being 2.97%. The Zacks Consensus Estimate for RYAN’s 2023 and 2024 earnings suggests 20.9% year-over-year growth each. The consensus mark for RYAN’s 2023 and 2024 earnings has moved 3.7% and 2.4% north, respectively, in the past 60 days.
Chubb has a solid record of beating earnings estimates in three of the last four quarters and missing in one, the average being 3.36%. The Zacks Consensus Estimate for CB’s 2023 and 2024 earnings per share is pegged at $18.18 and $19.86, indicating year-over-year increases of 19.3% and 9.2%, respectively.
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