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Arthur J. Gallagher (AJG) Expands in Ireland With Wrightway

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Arthur J. Gallagher & Co.’s (AJG - Free Report) specialist underwriting subsidiary, Pen Underwriting, recently acquired Wrightway Underwriting Limited. The terms of the transaction have not been revealed yet.

Wexford, Ireland-based Wrightway was established in 1999. Wrightway, being a managing general agent, offers motor and liability coverages for the haulage and fleet sector across Ireland through its independent broker clients, as well as other commercial and personal insurance products. It has a long track record in adapting to the significant changes in Irish Insurance.

With this acquisition, Arthur J. Gallagher will leverage the client excellence and expertise of Wrightway to enhance the present specialist capabilities of Pen Underwriting. The deal is also projected to provide AJG with further growth opportunities, as well as expand its operations in Ireland.

Arthur J. Gallagher has an impressive inorganic story with buyouts in the Brokerage and Risk Management segments. This Zacks Rank #3 (Hold) insurance broker acquired 12 entities totaling $69.2 million of estimated annualized revenues in the first quarter of 2024. The company is growing through mergers and acquisitions, most of which are within its Brokerage segment. AJG has a solid merger and acquisition pipeline with about 50 term sheets either agreed upon or being prepared, representing more than $350 million of annualized revenues.

A solid capital position ensuring continuous cash inflow supports AJG in its growth initiatives. It remains focused on continuing its tuck-in mergers and acquisitions. The insurer continues to expect an M&A capacity of $3.5 billion in 2024 and another $4 billion in 2025 without using any equity.

Arthur J. Gallagher’s long-term growth strategies should help it deliver organic revenue improvement and pursue strategic mergers and acquisitions. AJG is focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future. 

Price Performance

Shares of Arthur J. Gallagher have gained 24.3% over the past year compared with the industry’s 11.5% growth. Solid performance of the Brokerage and Risk Management segments, strategic buyouts to capitalize on growing market opportunities and effective capital deployment should continue to drive share price higher.

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Acquisitions by Other Industry Players

Marsh & McLennan Companies, Inc.’s (MMC - Free Report) Marsh McLennan Agency (“MMA”), a division of MMC’s Marsh business, closed the buyout of Mississippi-based Fisher Brown Bottrell Insurance, Inc. in June 2024. The closing of this acquisition is likely to serve as a means for Marsh McLennan Agency to solidify its foothold in Mississippi, Alabama and Florida. MMA will be empowered to devise enhanced risk management strategies for addressing the needs of businesses and individuals in the Southeast region.

The different units operating under the Risk and Insurance Services, and Consulting segments of MMC resort to buyouts that enable them to expand product suite, enter new geographies, expand within the existing locations, foray into new businesses and specialize within current businesses.

Chubb Limited (CB - Free Report) inked a definitive agreement to acquire a Melbourne-based managing general agent, Catalyst Aviation Insurance. The transaction is a testimony to CB’s effort to expand its presence in Australia. The addition of Catalyst Aviation would expand the insurer's capabilities, expertise and presence in an important aviation market, providing its brokers and clients with local market access.

This insurer has always considered acquisitions as an effective strategy for inorganic growth and global expansion. Acquisitions provide the company with a competitive edge in terms of scale, efficiencies and balance sheet size, which would lead to considerable value creation in the future. Through acquisitions, Chubb Limited has expanded its international and domestic footprint and built a superior portfolio of products and services.

Stock to Consider

Another better-ranked stock from the brokerage insurance industry is Brown and Brown, Inc. (BRO - Free Report) , carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Brown and Brown has a solid track record of beating earnings estimates in each of the trailing four quarters, the average being 11.90%. In the past year, shares of BRO have jumped 40.9%.

The Zacks Consensus Estimate for BRO’s 2024 and 2025 earnings implies year-over-year growth of 28.47% and 8.03%, respectively.

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