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Arthur J. Gallagher (AJG) Expands in Canada, Buys Cain Insurance

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Arthur J. Gallagher & Co. (AJG - Free Report) recently acquired Cain Insurance Services Ltd. The terms of the transaction have not been revealed yet.

Fredericton, New Brunswick-based Cain Insurance Services, founded in 1986, is a property/casualty broker providing commercial and personal insurance. It caters to clients from public sector, manufacturing, agriculture, realty and construction sector.

Cain Insurance Services will be able to leverage Arthur J. Gallagher’s presence across Nova Scotia and New Brunswick. The addition of Cain Insurance Services will thus help the acquirer expand its footprint in Atlantic Canada.

Arthur J. Gallagher boasts an impressive inorganic growth story with prudent buyouts. Last year, the company closed 26 buyouts and has made two acquisitions as of now this year. This Zacks Rank #3 (Hold) insurance broker’s revenues are geographically diversified with strong domestic and international operations. International operations contribute about one-third of revenues. The company expects international contribution to total revenues to increase, given the number and size of the non-U.S. acquisitions. This in turn helps insulate the top line from loss of clients or weakening of macro conditions in any particular country.

A strong capital position enables Arthur J. Gallagher to engage in strategic initiatives that position it for growth. The company targets about $1.5-$1.6 billion of mergers and acquisitions with free cash and debt.

Arthur J. Gallagher remains focused on long-term growth strategies for delivering organic revenue improvement, apart from making strategic mergers and acquisitions. It is also focused on productivity improvements and quality enhancements that should help it deliver sustained operational excellence.

Shares of Arthur J. Gallagher have gained 29% in a year compared with the industry’s 12.4% increase. Efforts to ramp up its growth profile and capital position should continue to drive share price higher.

There have been a host of acquisitions in the insurance space of late, given significant capital availability. Assurant (AIZ - Free Report) acquired EPG Insurance to consolidate its presence in the automotive service contract space. Brown & Brown, Inc.’s (BRO - Free Report) subsidiary Brown & Brown Dealer Services acquired considerably all ADM Marketing Group, Inc. and its affiliate ADM Insurance Services, Ltd. Marsh & McLennan Companies, Inc.’s (MMC - Free Report) unit Marsh & McLennan Agency LLC (MMA) recently acquired independent agency, INSPRO in Nebraska.

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

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