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Arthur J. Gallagher Braces Portfolio With Milne Alexander

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Arthur J. Gallagher & Co. AJG recently acquired Milne Alexander. However, terms of the transaction remain undisclosed. The buyout will help the acquirer consolidate its capabilities to better serve its customers.

Founded in 1973, Milne Alexander focuses on providing coverages to transport, manufacturing and aquaculture industries plus personal accident coverage for the coal mining sector. The company operates from its offices located in Sydney, New South Wales and Port Lincoln, South Australia. Addition of Milne Alexander to Arthur J. Gallagher’s portfolio will thus enhance its coverage range to better meet the aforementioned industries’ demands.
The company boasts an impressive growth profile, driven by its organic sales as well as merger and acquisition activity. This Zacks Rank #3 (Hold) stock has a steady compelling inorganic story, supporting its geographic and portfolio expansions for a while now. In its last endeavor, Arthur J. Gallagher acquired Pronto Holdco LLC to better address demands from the fast growing Hispanic market.

Buyouts not only widen the company’s geographical footprint but also enrich its portfolio of services. The company has evolved over time as one of the top five global brokers. The recent consolidation marks the first for the third quarter of 2018.  Last reported quarter, the company closed 12 buyouts.  Its inorganic pipeline remains strong with about $400 million of revenues.

Mergers and acquisitions are stealing the show of late. This space emerges as one of the key trends to watch out for in 2018. The last couple of years set the ball rolling for insurers to take an aggressive and positive stance toward the deal-making environment in 2018, mainly attributable to an evolving industry and the M&A landscape.

Shares of Arthur J. Gallagher have gained 6.9% year to date, outperforming the industry’s 6.2% increase. The company’s expansion strategy to ramp up its growth profile and a strong capital position should drive the shares higher.

Insurers Following Suit

Considering the insurance industry’s all-time high available capital resource, there is a conspicuous craze for acquisitions in the space of late. Recently, Brown & Brown, Inc. BRO announced that it will buy Health Special Risk to add capabilities to its special risk and accident & health portfolio. Kemper Corporation (KMPR - Free Report) has purchased Infinity Property and Casualty Corporation for $1.6 billion envisioning a market leading position in nonstandard auto insurance domain. Last month, Assurant, Inc. AIZ bought The Warranty Group to fortify its footprint as an ace provider in the vehicle protection business.

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

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