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Arthur J. Gallagher Buys California-Based Abram Interstate

Zacks Equity Research

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

Rocklin, CA-based Abram Interstate Insurance is a property/casualty managing general agency that offers a full range of commercial, agri-business and personal insurance products. The company caters to retail agents and their customers largely across California. The acquisition is a strategic fit as it will help Arthur J. Gallagher consolidate its presence in California, enhance product portfolio and capitalize on the growth opportunities there.

Arthur J. Gallagher is one of the top five global brokers, having a presence in the United States, Australia, Bermuda, Canada, the Caribbean, New Zealand and the United Kingdom. Since 2002 through 2018, the company closed 507 buyouts that helped it expand its global presence as well as grow its revenues and profits.

Also, Arthur J. Gallagher closed 11 brokerage acquisitions in the first quarter of 2019 that should add about $71.2 million of annualized revenues. So far this quarter, the Zacks Rank #3 (Hold) insurance broker has already made 11 acquisitions. In the second quarter of 2018, the company had acquired 12 companies with $145.2 million of annualized revenues. Given its solid capital position, the company is well poised to pursue more strategic buyouts.

The company 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 11.6% quarter to date, outperforming the industry’s rise of 10%. The company’s policy 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. 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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Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
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