In its effort to expand outside the United States, Arthur J. Gallagher & Co. AJG has agreed to acquire a minority stake in Renomia a.s. The acquisition is expected to be completed in the third quarter of 2019.
Founded in 1993, Prague-based Renomia a.s. is the largest independent broker in Central and Eastern European (CEE) offering its services to commercial clients. The company has broking operations in Czech Republic, Slovakia, Romania, Hungary, Serbia, Bulgaria and Croatia in addition to a broad franchise network in the rest of the CEE region.
The acquisition should complement Arthur J. Gallagher's international property/casualty brokerage operations. The company remains committed to expansion in economies that offer immense growth opportunities. The acquisition of Renomia is thus a strategic fit.
In the first quarter of 2019, international operations across Australia, Bermuda, Canada, the Caribbean, New Zealand and the United Kingdom generated 26% of revenues. Given the number and size of its non-U.S. acquisitions, the insurance broker expects international contribution to total revenues to increase. Its recent acquisitions have helped it expand in New Zealand, Australia and United Kingdom.
Shares of Arthur J. Gallagher have gained 16.9% year to date, underperforming the industry’s increase of 29.7%. The company’s policy to ramp up its growth profile and a strong capital position should continue to drive shares higher. Arthur J. Gallagher carries a Zacks Rank #4 (Sell).
There have been a number 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 Erie Indemnity Company ERIE, carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Erie Indemnity operates as a managing attorney-in-fact for subscribers at the Erie Insurance Exchange in the United States. The company delivered positive earnings surprise of 5.11% in the last reported quarter.
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