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Arthur J. Gallagher Expands With Merit Insurance Buyout

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Arthur J. Gallagher & Co. (AJG - Free Report) has acquired Merit Insurance, Inc. to ramp up its portfolio and consolidate presence in Fairfield County. The terms of the transaction have not been revealed.

Established in 1950, Connecticut-based Merit Insurance is a property/casualty and employee benefits consultant and catering to clients across Northeast. It focuses on contractors, public entities, real estate developers, nonprofits and high net-worth clients. The acquisitions will thus compliment Arthur J. Gallagher’s portfolio.

Arthur J. Gallagher is one of the top five global brokers. The company has been aggressively expanding outside the United States. Its recent acquisitions have helped it expand in New Zealand, Australia and United Kingdom.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations. Year to date, the Zacks Rank #3 (Hold) insurance broker has already made eight acquisitions and inked agreements  to make two more.

Organic growth coupled with strategic acquisitions are driving better results at both Risk Management and Brokerage segments. The top line more than doubled in the last six years.

Given its solid capital position, the company is well poised to pursue more strategic buyouts. The company targets about $1.5 billion to $1.7 billion of mergers and acquisitions with free cash and debt.

Shares of Arthur J. Gallagher have rallied 10.9% in a year, outperforming the industry’s growth of 9.4%. The company’s policy to ramp up its growth profile and a strong capital position should continue to drive shares higher.



Acquisition Spree in Insurance Space

Given the insurance industry’s sturdy available capital, there has been a significant number of acquisitions in the space. This month, Brown & Brown Insurance Services of California, Inc., a subsidiary of Brown & Brown, Inc. (BRO - Free Report) , purchased substantially all the assets of Austin & Austin Insurance Services. Marsh & McLennan Companies, Inc.’s (MMC - Free Report) Marsh & McLennan Agency LLC bought Employee Benefits Group, Inc. Last month, Cincinnati Financial Corporation (CINF - Free Report) acquired MSP Underwriting Limited, an experienced property and aviation underwriter.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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