Arthur J. Gallagher & Co. (AJG - Free Report) recently declared that it has purchased Nicoud Insurance Services to enhance its employee benefits consulting and brokerage operations in the Central U.S. The financial details of the transaction were not revealed.
Springfield, IL-based Nicoud Insurance was established in 1985 and operates as a property/casualty (P&C) broker and employee benefit consultant. The acquired company offers a wide range of coverages and services to commercial and personal clients throughout the Central U.S. Nicoud Insurance specializes in financial institutions, senior care/healthcare as well as automotive service providers. We believe that the buyout will further boost the already robust inorganic growth portfolio of the acquirer. Post takeover, Nicoud Insurance will continue to operate from its current location.
We expect Nicoud Insurance’s in-depth expertise, outstanding market relationships and focus on financial institutions to be highly value accretive to the acquirer’s client portfolio. Moreover, the latest transaction will enable Arthur J. Gallagher to strengthen its foothold in the Midwest and Great Lakes regions with better employee benefits consultation and insurance brokerage services.
This Zacks Rank #3 (Hold) insurance broker is known for improving its growth profile through acquisitions. We note that the company closed 37 acquisitions with annualized revenues of over $137.9 million in 2016. Though most of these buyouts are within the brokerage segment, Arthur J. Gallagher has increased purchases in the retail employee benefits brokerage as well as wholesale brokerage sectors too. It also intends to pursue smaller tuck-in mergers in 2017. In addition, Arthur J. Gallagher’s merger and acquisition pipeline remains strong with revenues of about $200 million.
Notably, Arthur J. Gallagher shares gained 29.00% in the last one year, outperforming the Zacks categorized Insurance Broker industry’s increase of about 25.06%. We believe that strategic acquisitions, which improve the insurance broker’s inorganic portfolio and accelerate growth, will continue to drive the stock higher in the near term.
Stocks to Consider
Some better-ranked stocks from the insurance industry include American Financial Group, Inc. (AFG - Free Report) , Argo Group International Holdings, Ltd. (AGII - Free Report) and The Progressive Corporation (PGR - Free Report) . Each of these stocks sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
American Financial offers P&C insurance products in the U.S. The company delivered positive surprises in three of the last four quarters with an average beat of 6.45%.
Argo Group International Holdings underwrites specialty insurance and reinsurance products in the P&C market worldwide. The company delivered positive surprises in all of the last four quarters with an average beat of 36.54%.
The Progressive Corporation offers personal and commercial P&C insurance, and other specialty P&C insurance and related services, primarily in the U.S. The company delivered positive surprises in two of the last four quarters with an average beat of 1.32%.
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