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Arthur J. Gallagher (AJG) Buys Hruska to Expand Portfolio

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Arthur J. Gallagher & Co. (AJG - Free Report) has acquired Hruska Insurancenter, Inc. The terms of the transaction have not been disclosed.

Mokena, IL-based Hruska Insurancenter, founded in 1956, is a retail property and casualty brokerage. It remains focused on serving commercial real estate clients. It renders clients with Personal Insurance (Auto insurance, home insurance, life insurance, renter insurance) Commercial Insurance (umbrella insurance, truck insurance, auto insurance) and Financial Services (Long -term care options, group health).

The addition of Hruska Insurancenter to Arthur J. Gallagher’s portfolio will enhance the acquirer’s presence, widen its markets and expertise in the habitational and commercial real estate market.

Arthur J. Gallagher boasts an impressive inorganic story. The recent buyout marked the sixth acquisition in the second quarter of 2022. The company has a strong merger and acquisition pipeline. In the first quarter of 2022, Arthur J. Gallagher closed five acquisitions with estimated annualized revenues of about $32.2 million.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations and a compelling product and service portfolio. A solid capital position supports AJG in its growth initiatives and it thus remains focused on continuing its tuck-in mergers and acquisitions. Revenue growth rates generally ranged from 5% to 10% for 2022 acquisitions.

This Zacks Rank #1 (Strong Buy) insurance broker remains focused on long-term growth strategies for delivering organic revenue improvement and pursuing strategic mergers and acquisitions. AJG is focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.
 
Given the insurance industry’s adequate capital level, players like Brown and Brown Inc. (BRO - Free Report) and Aon plc (AON - Free Report) are pursuing strategic mergers and acquisitions.

Brown & Brown’s subsidiary Brown & Brown of Massachusetts, LLC has acquired substantially all the assets of Claim Technologies Incorporated. Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues.

Aon purchased the actuarial software platform, Tyche to boost its insurance consulting capabilities. Aon undertakes strategic buyouts every now and then to boost its capabilities and provide advanced solutions to clients. AON spent $14 million on buyouts in 2021 and has sealed many acquisition deals over the past few years. Its acquisitions mainly aim at expanding its health and benefits business, flood insurance solutions, and risk and insurance solutions operations.

Price Performance

Shares of Arthur J. Gallagher have gained 9.5% in a year against the industry’s decrease of 7.6%. Efforts to ramp up the company’s growth profile and capital position should help the stock retain the price momentum.

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Another Stock to Consider

Another top-ranked stock from the insurance space is W.R. Berkley Corporation (WRB - Free Report) , sporting a Zacks Rank #1. You can see the complete list of today’s Zacks #1 Rank stocks here.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 30 days.

Shares of Brown and Brown, Aon and W.R. Berkley have gained 10.3%, 9.3% and 29%, respectively, in the same time frame.