Can Arthur J. Gallagher's Inorganic Growth Boost the Stock?
Arthur J. Gallagher & Co. (AJG) has been on an acquisition spree in 2014 with the year-to-date takeover tally becoming 37. The insurance broker has been consistently improving its inorganic growth and expanding its market presence globally.
For the first six months of the year, Arthur J. Gallagher’s made 26 acquisitions (which generated annualized revenue of $514.9 million). The remaining purchases were made in the present quarter. Going forward, the number of buyouts is expected to rise supported by its solid liquidity position.
Arthur J. Gallagher’s overall growth looks impressive. While the buyouts widen the company’s geographical footprint, these also support the enhanced portfolio of services, and consolidate its position in retail and wholesale insurance brokerage services, risk management industries and employee benefits business.
Notably, Arthur J. Gallagher’s latest acquisitions in retail insurance business include Caribbean-based Minvielle & Chastanet Insurance Brokers, CT-based Cowles & Connell and NY-based Hagedorn & Company. The takeover of Westfarmers Ltd. for $938 million marks its biggest deal till date, leading to strengthening of its presence in Australia.
In order to enhance its employee benefits business, Arthur J. Gallagher has made buyouts like Baker Tilly's Employee Benefits Solutions Business, U.S.-based Foundation Strategies Inc., UT-based Insurance Point, LLC, CO-based Denman Consulting Services and St. Louis-based Benfield Group.
Other insurance brokers have also been resorting to acquisitions to boost inorganic growth. For instance, Aon plc (AON)’s Aon Risk Solutions took over a Lima-Peru-based risk and insurance solutions provider, Grana y Asociados last month. Marsh & McLennan Companies Inc.’s (MMC) leading insurance brokerage wing, Marsh Inc. announced the purchase of Montreal-based commercial insurance brokerage, Kocisko Insurance Brokers Inc. earlier this month. Earlier this month, Willis Group Holdings plc (WSH) also declared that its North American reinsurance business, Willis Re Inc. had entered into an agreement to acquire the assets of SurePoint Reinsurance Advisors, LLC.
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