Arthur J. Gallagher, (AJG), Aids Health Insurance Market with JCB
Arthur J. Gallagher & Co. John C. Breckenridge Insurance Solutions, Inc. has been acquired by AJG. The terms of the transaction are still unknown.
JCB was founded in Sacramento, CA, in 2016. This brokerage and plan management company specializes in intercollegiate sports and student health insurance for higher education institutions.
The addition of this entity will enhance the acquirer’s student health insurance market expertise and product offerings as well as consolidate its presence on the West Coast.
The Inorganic Growth Story
Arthur J. Gallagher boasts a fascinating inorganic tale. This Zacks #3 (Hold), insurance broker purchased 13 entities in the fourth-quarter of 2022, and closed 19 new tuck in brokerage mergers. The estimated annualized revenue of $107 million was contributed by the broker to the Zacks Rank 3 (Hold) in 2022.
The latest acquisition is the third in the first quarter for 2023. AJG’s merger and acquisition pipeline is quite strong with about $400 million of annualized revenues and associated with about 50 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. AJG’s capital position is a support to its growth initiatives. It therefore remains focused on its tuck in mergers and acquisitions. The insurer expects M&A capacity at more than $4 billion through the end of 2023.
AJG is still focused on long-term growth strategies to improve organic revenue and pursue strategic mergers and acquisitions. AJG will continue to focus on productivity and quality improvements, which should enable it to post strong numbers in the long-term.
Price Performance
Shares of Arthur J. Gallagher have gained 20.5% in the past year, outperforming the industry’s increase of 6.1%. The insurer’s efforts to ramp up its growth profile and capital position should continue to drive the share price.
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Another Acquisition in the SAME Space
Given the insurance industry’s adequate capital level, another player like Marsh & McLennan Companies, Inc. MMC has been pursuing strategic mergers and acquisitions.
Marsh & McLennan’s business Marsh recently acquired HMS Insurance Associates, Inc. through its subsidiary Marsh McLennan Agency or MMA in January 2023. MMA is expected to gain vastly from HMS Insurance’s robust experience in property and casualty insurance, group captive, employee benefits and surety operations. The move is likely to boost Marsh McLennan Agency’s footprint in Hunt Valley region.
The company’s core growth strategy includes acquisitions. MMC made numerous purchases within its different operating units, which have enabled it to enter geographical regions, expand within the existing ones, foray into new businesses, develop segments and specialize within its existing businesses. Marsh & McLennan’s shares have gained 6.1% in the past year.
Stocks to Be Considered
Here are some stocks that have been ranked higher in the property- and casualty insurance sector. Aon plc AON and Hannover Ruck SE HVRRY each carry Zacks rank #2 (Buy), at the moment. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Aon’s earnings surpassed estimates in three of the last four quarters and missed in one, the average being 2.83%. AON’s growth in the last year has been 11.4%.
The Zacks Consensus Estimate for AON’s 2023 earnings implies a year-over-year rise of 10.2%.
The Zacks Consensus Estimate for Hannover Ruck’s 2023 earnings has moved 3% north in the past 60 days. HVRRY gained 0.9% in the past year.
The Zacks Consensus Estimate for Hannover Ruck’s 2023 earnings implies a year-over-year rise of 35.7%.
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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
Aon plc (AON) : Free Stock Analysis Report
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Hannover Ruck SE (HVRRY) : Free Stock Analysis Report