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Arthur J. Gallagher Consolidates Portfolio With Buyout

Zacks Equity Research

Arthur J. Gallagher & Co. AJG recently acquired Rogers & Young Insurance Services, LLC. However, terms of the transaction remain undisclosed. The buyout will help the acquirer consolidate its capabilities to better serve its customers. Shares of the company inched up 0.3% in the last trading session.

Founded in 1958, Rogers & Young Insurance Services, LLC is a diversified commercial and personal lines agency, focusing on contractors and construction clients with operations across California. Addition of Rogers & Young Insurance Services to Arthur J. Gallagher’s portfolio will aid the company to boost its abilities to serve clients more efficiently across San Francisco and Oregon. Post transaction, the acquired company will continue to operate from its current location.
The company boasts an impressive growth profile, driven by its organic sales as well as merger and acquisition activity. This Zacks Rank #3 (Hold) stock has a steady compelling inorganic story, supporting its geographic and portfolio expansions for a while now. In its last endeavor, Arthur J. Gallagher purchased United Dealer Services, LLC to drive its prospects in the franchised auto market.

Buyouts not only widen the company’s geographical footprint but also strengthen its portfolio of services. The company has evolved over time as one of the top five global brokers. The recent consolidation marks the 11th transaction for the third quarter of 2018. Last reported quarter, the company closed 12 integrations. Its inorganic pipeline remains strong with about $400 million of revenues.

Mergers and acquisitions are stealing the show of late. This inorganic growth strategy emerges as one of the key trends to eye in 2018. The last couple of years set the stage for insurers to opt for an aggressive and positive approach toward the deal-making environment in 2018, mainly attributable to an evolving industry and the M&A landscape.

Shares of Arthur J. Gallagher have rallied 18.7% year to date, outperforming the industry’s 8.2% increase. The company’s expansion policy to ramp up its growth profile and a strong capital position should drive the shares higher.


Insurers on Integration Spree

Taking the insurance industry’s all-time high available capital resource into account, there has been a noticeable rage for acquisitions in the space of late. Markel Corporation MKL has agreed to buy Nephila Holdings Limited. The acquisition will uphold Markel as the largest fund manager in insurance-linked securities sector. Also, Enstar Group Limited ESGR will take over Maiden Reinsurance North America, Inc. from a subsidiary of Maiden Holdings, Ltd. MHLD.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
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