Arthur J. Gallagher (AJG) Expands With Strategic Acquisitions
Arthur J. Gallagher & Co. AJG recently made two significant acquisitions, further strengthening its position in the industry. The company announced the acquisition of The Andersen Group, a retail insurance agency based in Chantilly, VA, and Fender Marine AS, a Norwegian managing general agent specializing in marine coverages.
Enhancing Regional Capabilities With The Andersen Group
The Andersen Group, located in the greater Washington, D.C. area, caters to non-profit trade associations, government contractors and engineering services companies. By acquiring this retail insurance agency, AJG aims to leverage The Andersen Group's market expertise to enhance its capabilities and expand its offerings in the region.
Entering the Marine Insurance Market With Fender Marine AS
AJG's UK-based subsidiary, Pen Underwriting, has acquired Fender Marine AS, a Norwegian MGA specializing in marine hull and protection & indemnity coverages. Fender Marine AS has a strong reputation for growth and expertise in providing insurance solutions for smaller fleets, specialist working vessels, yachts, pleasure craft, cargo and subsea equipment. This acquisition aligns well with Pen Underwriting's existing capabilities and presents an opportunity for international expansion.
Strategic Acquisitions Fueling Growth
AJG seeks opportunities that align with its business objectives and allow it to enter new markets, strengthen its service offerings and increase its global footprint. Historically, AJG has successfully utilized strategic acquisitions to enhance its competitive position and drive growth. As the company continues to pursue strategic acquisitions, it strengthens its position as a leading global insurance brokerage and risk management firm.
Arthur J. Gallagher has an impressive inorganic story with several buyouts in Brokerage and Risk Management segments. This insurance broker acquired 10 entities in the first quarter of 2023 that contributed about $69 million to estimated annualized revenues and 11 buyouts in the second quarter. AJG has a strong merger and acquisition pipeline with about $350 million of revenues, associated with about 45 term sheets either agreed upon or being prepared.
AJG’s revenues are geographically diversified with strong domestic and international operations, with the latter contributing about one-third of revenues. The company expects an increase in international contribution to total revenues, given the number and size of non-U.S. acquisitions.
A solid capital position supports this insurance broker in its growth initiatives and it thus remains focused on continuing its tuck-in mergers and acquisitions. The company expects an M&A capacity of more than $3 billion through the end of 2023.
This Zacks Rank #3 (Hold) insurance broker is inclined toward long-term growth strategies for delivering organic revenue improvement and pursuing strategic mergers and acquisitions. It is focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Share Price Performance
Shares of Arthur J. Gallagher have gained 15.5% year to date, outperforming the industry’s 9.3% increase. Its efforts to ramp up its growth profile and capital position should continue to drive the share price higher.
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Acquisitions in the Insurance Space
Brown & Brown, Inc.’s BRO subsidiary acquired assets of Brownlee Agency, Inc. The addition of Brownlee Agency will boost Brown & Brown’s presence in Georgia.
Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help the company increase commissions and fees, which, in turn, drive revenues. Its impressive growth is driven by organic and inorganic means across all segments. Consistent operational results have been aiding Brown & Brown in generating solid cash flows for deployment in strategic initiatives.
American Financial Group, Inc. AFG has acquired Crop Risk Services ("CRS"), a primary crop insurance general agent based in Decatur, IL, for a cash consideration of $240 million from American International Group. The inclusion of CRS into the fold will reinforce Great American's position as the fifth largest provider of multi-peril crop insurance in the United States.
American Financial Group has a track record of reaping the rewards of strategic acquisitions. It is actively involved in startups, small-to-medium-sized acquisitions and product launches. It is prudently investing in businesses.
Marsh & McLennan Companies’ MMC subsidiary Marsh McLennan Agency acquired Integrity HR, Inc., marking the launch of a new national HR consulting capability.
Acquisitions are part of the core growth strategies of the company. MMC made numerous purchases within its different operating units, which have enabled it to enter geographical regions, expand within the existing ones, foray into new businesses, develop segments and specialize within its existing businesses.
Disclaimer: This article has been written with the assistance of Generative AI. However, the author has reviewed, revised, supplemented, and rewritten parts of this content to ensure its originality and the precision of the incorporated information.
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