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Arthur J. Gallagher (AJG) Expands Into Nevada With Buyout
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Arthur J. Gallagher & Co. (AJG - Free Report) recently acquired Richied & Associates, Inc. The terms of the transaction have been kept under wraps.
Reno, NV-based Richied & Associates, founded in 1999, specializes in providing businesses and individuals with the industry’s leading products and services. It is a retail property and casualty insurance agency. It caters to small- to mid-market commercial clients, across Reno and Carson City.
This recent transaction is a strategic fit for Arthur J. Gallagher as it will reinforce the acquirer’s retail property and casualty capabilities in the state of Nevada. This transaction is expected to offer AJG solid cross-selling opportunities.
Inorganic Growth Story
Arthur J. Gallagher boasts an impressive inorganic story. The recent buyout marks the 15th acquisition by the company quarter to date, compared with 10 buyouts in the fourth quarter of 2020 (with estimated annualized revenues of $100.2 million). It made five brokerage mergers during the third quarter, with estimated annualized revenues of $16 million. Arthur J. Gallagher’s merger and acquisition pipeline is quite strong with about $400 million revenues associated with nearly 50 term sheets either agreed upon or being prepared.
Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations and a compelling product and service portfolio. Revenue growth rates have generally been 5-15% for 2021 acquisitions to date.
A solid capital position supports Arthur J. Gallagher in its growth initiatives. This Zacks Rank #3 (Hold) insurance broker 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.
Arthur J. Gallagher remains focused on long-term growth strategies for delivering organic revenue improvement and pursuing strategic mergers and acquisitions. Its focus on productivity improvements and quality enhancements should help AJG post sturdy numbers in the future.
Other Acquisitions in the Same Space
Given the insurance industry’s adequate capital level, players like Athene Holdings , Brown & Brown, Inc. (BRO - Free Report) , and Marsh & McLennan Companies (MMC - Free Report) are pursuing strategic mergers and acquisitions.
Athene and Apollo Global have agreed to buy a majority interest in Aqua Finance to boost Apollo’s $80 billion annual run-rate of asset origination across commercial and consumer lending platforms. Athene boasts impressive inorganic growth, driven by several buyouts and block reinsurance transactions with several companies. ATH expects its inorganic growth channel to continue to be an important driver in the future.
Brown & Brown’s subsidiary Brown & Brown Dealer Services recently acquired substantially all of the assets of Rainmaker Advisory, LLC to enhance its capabilities for the dealer customers and establish its footprint in the West Coast. Brown & Brown intends to make consistent investments in boosting organic growth and margin expansion. BRO’s solid earnings have allowed it to expand its capabilities, with the buyouts extending its geographic footprint.
Marsh & McLennan’s unit Marsh McLennan Agency acquired InSource Insurance Group to leverage InSource’s know-how in the oil and gas industry and enhance capabilities. Marsh & McLennan has made numerous purchases within its different operating units that enabled it to enter new geographies, expand within the existing locations, foray into new businesses, develop new segments and specialize within its current businesses.
Price Performance
Shares of Arthur J. Gallagher have gained 31.8% in a year, outperforming the industry’s increase of 24.9%. Efforts to ramp up the company’s growth profile and capital position should help the stock retain the price momentum.
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Shares of Athene, Brown & Brown and Marsh & McLennan have gained 85.3%, 45.7% and 44.3%, respectively, in the same time frame.
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Arthur J. Gallagher (AJG) Expands Into Nevada With Buyout
Arthur J. Gallagher & Co. (AJG - Free Report) recently acquired Richied & Associates, Inc. The terms of the transaction have been kept under wraps.
Reno, NV-based Richied & Associates, founded in 1999, specializes in providing businesses and individuals with the industry’s leading products and services. It is a retail property and casualty insurance agency. It caters to small- to mid-market commercial clients, across Reno and Carson City.
This recent transaction is a strategic fit for Arthur J. Gallagher as it will reinforce the acquirer’s retail property and casualty capabilities in the state of Nevada. This transaction is expected to offer AJG solid cross-selling opportunities.
Inorganic Growth Story
Arthur J. Gallagher boasts an impressive inorganic story. The recent buyout marks the 15th acquisition by the company quarter to date, compared with 10 buyouts in the fourth quarter of 2020 (with estimated annualized revenues of $100.2 million). It made five brokerage mergers during the third quarter, with estimated annualized revenues of $16 million. Arthur J. Gallagher’s merger and acquisition pipeline is quite strong with about $400 million revenues associated with nearly 50 term sheets either agreed upon or being prepared.
Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations and a compelling product and service portfolio. Revenue growth rates have generally been 5-15% for 2021 acquisitions to date.
A solid capital position supports Arthur J. Gallagher in its growth initiatives. This Zacks Rank #3 (Hold) insurance broker 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.
You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Arthur J. Gallagher remains focused on long-term growth strategies for delivering organic revenue improvement and pursuing strategic mergers and acquisitions. Its focus on productivity improvements and quality enhancements should help AJG post sturdy numbers in the future.
Other Acquisitions in the Same Space
Given the insurance industry’s adequate capital level, players like Athene Holdings , Brown & Brown, Inc. (BRO - Free Report) , and Marsh & McLennan Companies (MMC - Free Report) are pursuing strategic mergers and acquisitions.
Athene and Apollo Global have agreed to buy a majority interest in Aqua Finance to boost Apollo’s $80 billion annual run-rate of asset origination across commercial and consumer lending platforms. Athene boasts impressive inorganic growth, driven by several buyouts and block reinsurance transactions with several companies. ATH expects its inorganic growth channel to continue to be an important driver in the future.
Brown & Brown’s subsidiary Brown & Brown Dealer Services recently acquired substantially all of the assets of Rainmaker Advisory, LLC to enhance its capabilities for the dealer customers and establish its footprint in the West Coast. Brown & Brown intends to make consistent investments in boosting organic growth and margin expansion. BRO’s solid earnings have allowed it to expand its capabilities, with the buyouts extending its geographic footprint.
Marsh & McLennan’s unit Marsh McLennan Agency acquired InSource Insurance Group to leverage InSource’s know-how in the oil and gas industry and enhance capabilities. Marsh & McLennan has made numerous purchases within its different operating units that enabled it to enter new geographies, expand within the existing locations, foray into new businesses, develop new segments and specialize within its current businesses.
Price Performance
Shares of Arthur J. Gallagher have gained 31.8% in a year, outperforming the industry’s increase of 24.9%. Efforts to ramp up the company’s growth profile and capital position should help the stock retain the price momentum.
Shares of Athene, Brown & Brown and Marsh & McLennan have gained 85.3%, 45.7% and 44.3%, respectively, in the same time frame.