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Arthur J. Gallagher Announces Stonehenge Insurance Buyout

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Arthur J. Gallagher & Co. (AJG - Free Report) has acquired Stonehenge Insurance Solutions, Inc. The terms of the transaction have not been revealed

Arthur J. Gallagher expects the acquisition to expand cross-selling opportunities between its retail and wholesale brokerage operations. Addition of Stonehenge Insurance Solutions to the company's portfolio should also boost its retail capabilities in Professional Employer Organizations (PEOs) and staffing-centric insurance.

Palm Beach Gardens, FL-based Stonehenge Insurance Solutions provides commercial insurance products and consulting services to PEOs across the country. The company specializes in workers’ compensation; professional, employment practices, general and cyber liability; commercial, hired and non-owned auto; workplace violence, umbrella coverages, among others.

Arthur J. Gallagher made 12 acquisitions in the second quarter of 2019 and the recent one marks the first for the third quarter. Given a solid capital position, we expect more such strategic buyouts, which will extend the company’s presence in retail and wholesale insurance brokerage services and risk management services. In the third quarter of 2018, this Zacks Rank #4 (Sell) insurance broker had closed nine buyouts with estimated annualized revenues of $61.7 million..

The company remains focused on its long-term growth strategies of delivering organic revenue growth and pursuing strategic mergers and acquisition. It is also focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.

Shares of Arthur J. Gallagher have gained 22.6% year to date, underperforming the industry’s rise of 34.1%. The company’s policy to ramp up its growth and capital position should continue to drive shares higher.

There have been a number of acquisitions in the insurance space of late given the significant capital available. Recently, Sun Life Financial Inc. (SLF - Free Report) acquired a majority stake in BentallGreenOak to widen its global real estate investment footprint. Earlier, Brown & Brown of Kentucky, Inc., a subsidiary of Brown & Brown, Inc. (BRO - Free Report) , acquired United Development Systems, Inc. The Hartford Financial Services Group, Inc. (HIG - Free Report) acquired The Navigators Group, Inc.

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

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