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Arthur J. Gallagher Announces Buyout of Protectors Group

Zacks Equity Research

In its continuous efforts to expand internationally, Arthur J. Gallagher & Co. AJG has acquired The Protectors Insurance Brokers Pty Ltd and Regent Insurance Brokers Pty Ltd., together known as The Protectors Group (TPG). The terms of the transaction have not been revealed.

Liverpool, New South Wales based The Protectors Group is a retail broker offering construction, hospitality and transport coverage. The company provides its services to commercial and corporate clients in Greater Western Sydney. The acquisition is a strategic fit as it will help Arthur J. Gallagher consolidate its presence in Western Sydney and capitalize on the growth opportunities there.

Arthur J. Gallagher is one of the top five global brokers. In the first quarter of 2019, the company’s international operations accounted for 26% of the revenues, primarily from Australia, Bermuda, Canada, the Caribbean, New Zealand and the United Kingdom.

Arthur J. Gallagher derives about one-third of its revenues from international operations. Given the number and size of its non-U.S. acquisitions, the Zacks Rank #3 (Hold) insurance broker expects international contribution to total revenues to increase.

Also, Arthur J. Gallagher closed 11 brokerage acquisitions that should add about $71.2 million of annualized revenues. Given its solid capital position, the company is well poised to pursue more strategic buyouts.

Shares of Arthur J. Gallagher have gained 8% quarter to date, outperforming the industry’s rise of 4.6%. The company’s policy to ramp up its growth profile and capital position should continue to drive share price higher.

There has been a host of acquisitions in the insurance space of late given the significant capital available. Brown & Brown of Kentucky, Inc., a subsidiary of Brown & Brown, Inc. BRO, acquired United Development Systems, Inc. The Hartford Financial Services Group, Inc. HIG acquired The Navigators Group, Inc.

A Stock to Consider

A better-ranked insurer is eHealth, Inc. EHTH, sporting a Zacks Rank #1 (Strong Buy).  You can see the complete list of today’s Zacks #1 Rank stocks here.

eHealth provides private health insurance exchange services to individuals, families, and small businesses in the United States and China. The company delivered positive earnings surprise of 512.20% in the last reported quarter.   

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