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Arthur J. Gallagher (AJG) Boosts RPS Division With Atlas Buyout

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Arthur J. Gallagher & Co. AJG recently acquired Atlas General Holdings, LLC, dba Atlas General Insurance Services (Atlas). The terms of the transaction have not been revealed yet.

San Diego, CA-based Atlas, founded in 2009, is a full-service program administrator that offers a wide range of insurance solutions, with expertise in California workers compensation market. The company develops and underwrites specialty programs with a variety of insurance carrier partners.

Atlas General Insurance Services offers products in the following divisions, Workers Compensation, General Commercial Lines and Specialty Property.

Atlas General Insurance Services combines proven expertise, superior personal service and a relationship-based approach to provide clients with a trusted insurance partner.

We believe Atlas General Insurance Services is a strategic fit for Arthur J. Gallagher. This is because the buyout will provide Risk Placement Services, Inc. (RPS), a division of Arthur J. Gallagher, with market expertise, a complementary book of business and high-rated workers compensation platform.

Inorganic Growth Story

Acquisitions enable Arthur J. Gallagher to expand into desirable geographic locations, extend its presence in retail and wholesale insurance and reinsurance brokerage services markets, and increase the volume of general services currently provided. Its inorganic pipeline remains strong, with revenues of about $350 million associated with 40 term sheets either agreed upon or being prepared.

Arthur J. Gallagher currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Last year, the insurance broker closed 26 buyouts. So far this year, it has made three acquisitions. Revenue growth rates have generally been 2.5-15% for 2020 acquisitions. The buyouts provide the company with incremental capabilities and services to assist clients across Australia, the U.K., Europe and the United States. The company remains focused on its long-term growth strategies of delivering organic revenue growth, and pursuing mergers and acquisitions.

Other Acquisitions in the Same Space

There have been a host of acquisitions in the insurance space of late, given significant capital availability. Assurant AIZ acquired EPG Insurance to consolidate its presence in the automotive service contract space. Brown & Brown, Inc.’s BRO subsidiary Brown & Brown Dealer Services acquired considerably all of ADM Marketing Group, Inc. and its affiliate ADM Insurance Services, Ltd. Marsh & McLennan Companies, Inc.’s MMC unit Marsh & McLennan Agency LLC (MMA) recently acquired independent agency, INSPRO in Nebraska.

Price Performance

Shares of Arthur J. Gallagher have gained 22% in a year against the industry’s increase of 0.1%. Efforts to ramp up the company’s growth profile and capital position should help shares gain further.

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