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Arthur J. Gallagher (AJG) Unit to Buy Horseshoe Insurance

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Arthur J. Gallagher & Co.’s (AJG - Free Report) subsidiary, Artex Risk Solutions recently agreed to buy Horseshoe Insurance Services Holdings Ltd. The acquisition, following the fulfillment of regulatory approvals, is expected to be completed in the fourth quarter of 2019.

Founded in 2005 and headquartered in Bermuda, Horseshoe Insurance Services provides insurance management, fund administration, advisory and corporate services to the insurance-linked securities (ILS) market. With offices in London, Cayman, Sri Lanka and Charlotte, N.C., the company also offers tailor-made, integrated technology solutions. The addition of Horseshoe Insurance Services to Arthur J. Gallagher’s portfiolio will help the acquirer consolidate its position as the largest provider of solutions to the ILS market.

Peter Mullen, CEO of Artex, noted that Horseshoe could become Artex’s global brand in the ILS market.

Meanwhile, Horseshoe Insurance Services should be able to capitalize on the compelling product and services of its acquirer, aiding it to further develop solutions and products for ILS.

Arthur J. Gallagher has grown meaningfully over the years through a number of strategic acquisitions that ramped up growth, expanded its footprint, enhanced capabilities and diversified operations. The company’s revenues are geographically diversified with strong domestic and international operations. It derives about one-third of its revenues from international operations. Given the insurance industry’s high capital level, companies are aggressively pursuing mergers and acquisitions. Arthur J. Gallagher’s inorganic pipeline remains strong with about $400 million of revenues.  The company targets about $1.5 billion of mergers and acquisitions with free cash and debt.

Shares of this Zacks Rank #3 (Hold) insurance broker have gained 40.9% in the past two years, outperforming the industry’s increase of 24.5%. 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 - Free Report) , Palomar Holdings (PLMR - Free Report) and Brown & Brown (BRO - Free Report) . 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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