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Arthur J. Gallagher (AJG) Expands Presence in Cayman Islands

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Arthur J. Gallagher & Co. (AJG - Free Report) has acquired Briat Insurance Ltd in its efforts to boost its footprint in Cayman Islands. The terms of the transaction were not disclosed.

Grand Cayman-based Briat Insurance was founded in 2012. This retail insurance broker is a provider of commercial, professional, homeowners and health insurance coverages. Its niche area includes professional lines, larger commercial accounts and high-net-worth homes. It serves businesses and individuals. Thus, the addition will help the acquirer expand its high net-worth practice business as well as footprint in Cayman Islands. Last month, Arthur J. Gallagher acquired Lloyd Bedford Cox in its efforts to boost its high-net-worth practice business.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations. Its international operations contribute about one-third of the revenues. The company expects international contribution to total revenues to increase, given the number and size of the non-U.S. acquisitions. Revenue growth rates have generally been 5-15% for 2021 acquisitions to date.

Arthur J. Gallagher boasts an impressive inorganic story. Its merger and acquisition pipeline is quite strong with about $300 million revenues associated with nearly 40 term sheets either agreed upon or being prepared.

A solid capital position supports Arthur J. Gallagher in its growth initiatives. The company estimates more than $2.5 billion for mergers and acquisitions consisting of $1 billion in cash, about $650 million of net cash generation in the second half of 2021, and $600 million to $700 million of borrowing capacity.

This Zacks Rank #3 (Hold) insurance broker remains focused on long-term growth strategies for delivering organic revenue improvement and pursuing strategic mergers and acquisitions. 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 20.6% year to date compared with the industry’s 18.8% increase. The efforts to ramp up its growth profile and capital position should continue to drive the share price higher.
 

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Given the insurance industry’s adequate capital level, players are pursuing strategic mergers and acquisitions. Brown & Brown, Inc.’s (BRO - Free Report) subsidiary Bridge Specialty Group, LLC has acquired substantially all assets of Gremesco of New Jersey, LLC. Marsh McLennan’s (MMC - Free Report) Marsh McLennan Agency has acquired Vaaler Insurance. Willis Towers Watson plc has inked an initial, non-binding agreement to acquire Leaderim to strengthen its presence in Israel.

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

 


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