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Arthur J. Gallagher (AJG) Boosts Portfolio With CRES Buyout

Zacks Equity Research

Arthur J. Gallagher & Co. AJG recently acquired CRES Insurance Services, LLC. The terms of the transaction have not been revealed.

Las Vegas, NV-based CRES Insurance was founded in 1996.  The company designs, markets and services comprehensive errors & omissions insurance and risk management services. It caters to real estate firms and professionals across the United States, the Southwest in particular. Thus, its addition will help the acquirer fortify its capabilities in that market.

Arthur J. Gallagher boasts impressive growth, partly driven by strategic mergers and acquisitions that expand its presence as well as enhance its product portfolio and capabilities. Year to date, the company has made 10 buyouts. The company’s merger and acquisition pipeline is quite strong with about $200 million of revenues, associated with about 30 term sheets either agreed upon or being prepared. Management believes that 2020 should be another strong year for tuck-in merger and acquisition strategy as it continues to attract entrepreneurial partners.  The company targets about $1.5 billion to $1.6 billion of mergers and acquisitions with free cash and debt.

This Zacks Rank #3 (Hold) insurance broker remains focused on its long-term growth strategies of delivering organic revenue growth and pursuing strategic mergers and acquisition. It is also focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.

Shares of Arthur J. Gallagher have gained 6.3% year to date against the industry’s decrease of 3.6%. Efforts to ramp up its growth profile and capital position should continue to drive share price higher.

There have been a host of acquisitions in the insurance space of late, given the significant capital available. Last month, Brown & Brown BRO acquired Loan Protector Insurance Services. Recently, Marsh & McLennan Companies, Inc.’s MMC unit Oliver Wyman acquired a minority stake in Corridor Platforms.

Stock to Consider    

A better-ranked insurance broker is eHealth EHTH. eHealth 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 78.40%. The company sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

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Marsh McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
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