Arthur J. Gallagher (AJG) Adds Hartley Cylke Pacific to Portfolio
Arthur J. Gallagher & Co. AJG acquired Hartley Cylke Pacific Insurance Services, Inc. The buyout will help AJG consolidate its presence in the transportation market across California and Arizona.
San Diego, CA-based Hartley Cylke Pacific Insurance Services is a retail insurance broker with expertise in transportation coverage. It serves its clients across California and Arizona. The addition of Hartley Cylke Pacific will thus boost the acquirer’s capabilities in the aforesaid operating region.
Arthur J. Gallagher has an impressive inorganic story with buyouts made 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 12 more in the 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 will 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 23.7% year to date, outperforming the industry’s 14.3% growth. 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 the share price higher.
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Given the insurance industry’s adequate capital level, players like Marsh & McLennan Companies, Inc. MMC pursue strategic mergers and acquisitions. Recently, Marsh, its business unit, inked a deal to purchase the entire outstanding share capital of the Australia-based specialist insurance broker Honan Insurance Group Pty Ltd. Management of Marsh believes that the inclusion of Honan’s well-established capabilities, specifically in the field of corporate risk and strata insurance, will enhance its specialist competence. This, in turn, will enable Marsh to better serve its client base across Australia and New Zealand.
Acquisitions form one of the core growth strategies of Marsh & McLennan. Buyouts, similar to the latest one, add strength to its capabilities, expand its services offerings and enable the company to enter new geographies as well as solidify its foothold across existing markets. An upgraded services suite is likely to lure more customers and contribute more to the revenues of MMC in the days ahead.
Stocks to Consider
Some better-ranked stocks from the same space are Erie Indemnity Company ERIE and Ryan Specialty Holdings Inc. RYAN.
Erie Indemnity outpaced earnings estimates in two of the last four quarters and missed the mark twice, the average surprise being 2.05%. The Zacks Consensus Estimate for ERIE’s 2023 earnings and revenues suggests a rise of 32.9% and 16.7%, respectively, from the prior-year reported figures. The consensus mark for ERIE’s 2023 and 2024 earnings has moved 5.4% and 8.6% north, respectively, in the past 60 days. The company sports a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
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 in the past 60 days. It carries a Zacks Rank #2 (Buy) at present.
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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
Erie Indemnity Company (ERIE) : Free Stock Analysis Report
Ryan Specialty Holdings Inc. (RYAN) : Free Stock Analysis Report
