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Arthur J. Gallagher Expands Outside US, to Buy Anthony Hodges

Zacks Equity Research

Arthur J. Gallagher & Co. AJG recently acquired Anthony Hodges Consulting Limited (AHC). However, the transaction particulars were not revealed.

Founded in 1996, Wakefield, England-based Anthony Hodges Consulting is an award-winning pension, change and reward benefit communications consultancy. The company serves clients across the United Kingdom, United States and Australia from its headquarters in Wakefield and offices in Minneapolis and Melbourne.

The addition of Anthony Hodges Consulting to Arthur J. Gallagher’s portfolio will improve its position as an international financial wellbeing communication partner.

Additionally, the buyout will provide Arthur J. Gallagher with distinguished market expertise and growth opportunities. It will aid Arthur J. Gallagher in helping its clients in financial communication with their employees.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations. It 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, United Kingdom and Asia.

Given the insurance industry’s high capital level, companies are aggressively pursuing mergers and acquisitions to ramp up growth, expand footprint, enhance capabilities and diversify operations. The recent acquisitions take the total number of buyouts by the company in the ongoing quarter to 14. Arthur J. Gallagher’s inorganic pipeline remains strong with about $400 million of revenues.  A strong capital position along with solid operational performance should continue to back its inorganic efforts.

Shares of this insurance broker have gained 40.1% in the past two years, outperforming the industry’s increase of 24%. The company’s policy of ramping up growth and capital position should continue to drive share price higher.

Stocks to Consider

Some better-ranked insurance stocks include Hallmark Financial Services HALL, Palomar Holdings PLMR and Brown & Brown BRO. While Hallmark Financial Services and Palomar Holdings sport a Zacks Rank #1 (Strong Buy), Brown & Brown carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Hallmark Financial provides its services to individuals and businesses in the United States through its subsidiaries. It markets, distributes and services property and casualty products. Its average four-quarter positive surprise is 97.50%.

Palomar Holdings provides personal and commercial specialty property insurance products. The company delivered average four-quarter positive surprise of 25.00%.

Brown & Brown markets and sells insurance products and services in the United States, England, Canada, Bermuda, and the Cayman Islands. It came up with average four-quarter positive surprise of 9.06%.

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