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Arthur J. Gallagher (AJG) Boosts Ireland Presence With Buyout

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Arthur J. Gallagher & Co. AJG has acquired INNOVU Group Holding Company Limited. The terms of the transaction have not been disclosed.

Wexford, Ireland-based INNOVU Group, founded in 2018, is a retail insurance broker. This company provides commercial and personal insurance products and services, as well as financial services to its client across various industries in Ireland. Thus, the addition will help the acquirer strengthen its presence in Ireland, which AJG identified as a growing economic region.

Arthur J. Gallagher boasts an impressive inorganic story. While the Zacks Rank #3 (Hold) insurance broker closed five new tuck-in brokerage mergers, representing about $32 million of estimated annualized revenues in the first quarter of 2022, this marks the eighth acquisition quarter to date.  AJG’s merger and acquisition pipeline is quite strong with about $250 million of revenues, associated with about 40 term sheets either agreed upon or being prepared.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations and a compelling product and service portfolio. A solid capital position supports AJG in its growth initiatives and it thus remains focused on continuing its tuck-in mergers and acquisitions.

AJG remains focused on long-term growth strategies for delivering organic revenue improvement and pursuing strategic mergers and acquisitions. AJG is focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.  

Shares of Arthur J. Gallagher have lost 5.3%% quarter to date, narrower than the industry’s 10.3% decrease. The efforts to ramp up its growth profile and capital position should continue to drive the share price higher.

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Given the insurance industry’s adequate capital level, players like Brown & Brown Inc. BRO, Marsh & McLennan Companies, Inc. MMC have been pursuing strategic mergers and acquisitions.

Brown & Brown’s subsidiary Brown & Brown Dealer Services (“BBDS”) has acquired all the assets of Profits Creation Corp. to consolidate its presence in the Southeast. BRO’s impressive growth is driven by organic and inorganic means across all segments. It intends to make consistent investments in boosting organic growth and margin expansion. Its solid earnings have allowed the company to expand its capabilities, with the buyouts extending the company’s geographic footprint.

Marsh & McLennan’s Marsh McLennan Agency acquired Maine-based Clark Insurance to boost its capabilities and more effectively cater to clients, colleagues and the community. Acquisitions are one of the core growth strategies of Marsh & McLennan, which has helped it to expand product offerings, benefit customers and strengthen its global presence. MMC spent $1.1 billion on buyouts in 2021. On the acquisition front, the insurance broker has been quite active this year as well by expending $24 million on buyouts in the first quarter of 2022.

A Stock to Consider

A better-ranked insurer from the same space is Ryan Specialty Group Holdings, Inc. RYAN, carrying Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for RYAN’s  2022 and 2023 earnings has moved 3.4% and 4.3% north in the past 60 days and indicates a 13% and 19.3% year-over-year increase, respectively. Ryan Specialty delivered a four-quarter average earnings surprise of 19.7%.

Shares of BRO, MMC and RYAN have lost 18.3%, 6.8% and 4.8%, respectively, quarter to date.



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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
 
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