In its effort to expand outside the United States, Arthur J. Gallagher & Co. AJG has acquired a minority stake in Edelweiss Insurance Brokers Limited. The transaction is subject to regulatory approval.
Headquartered in Mumbai, India, Edelweiss Insurance is a wholly-owned subsidiary of Edelweiss Group, a leading diversified financial services conglomerate in India. The company has branch offices in other key cities in India such as Delhi, Kolkata and Bangalore. Edelweiss Insurance offers general insurance solutions to individuals and institutions across India.
The acquisition should complement Arthur J. Gallagher's core brokerage offerings as well help consolidate the company’s commercial insurance business in India. The company noted that India's growing commercial and specialty market is supported by robust demand for specialist coverages like renewable energy, infrastructure and cyber liability. Thus, making buyouts in India is a strategic fit for the company.
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. Its recent acquisitions have helped it expand in New Zealand, Australia and United Kingdom.
Arthur J. Gallagher is one of the top five global brokers. In the first quarter of 2019, the company completed 11 brokerage acquisitions, which should add about $70 million of annualized revenues. The recent acquisition is the sixth in the second quarter. Given its solid capital position, the company is well poised to pursue more strategic buyouts.
Shares of Arthur J. Gallagher have gained 8.6% quarter to date, outperforming the industry’s growth of 5.6%. The company’s policy to ramp up its growth profile and a strong 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 received all regulatory approvals necessary for the closing of its acquisition of The Navigators Group, Inc. NAVG.
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