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Arthur J. Gallagher Boosts Professional Liability Coverages

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Arthur J. Gallagher & Co. (AJG - Free Report) recently acquired JP Tech Insurance Services, Inc to ramp up professional liability coverages. The terms of the transaction remain undisclosed.

Los Angeles, CA-based JP Tech Insurance Services provides insurance and risk management coverages and services to life science, technology, financial institution, REIT and hedge fund client across the globe. Addition of the firm to Arthur J. Gallagher’s portfolio will help the latter leverage its expertise to serve clients more efficiently.

Buyouts not only expand geographical footprint but also strengthen portfolio of services. Arthur J. Gallagher has evolved over time as one of the top five global brokers. Through the first nine months of 2018, the Zacks Rank #3 (Hold) insurance broker closed 27 buyouts with estimated annualized revenues of $233.6 million.   Its inorganic pipeline remains strong with about $500 million of revenues. It boasts an impressive growth profile, driven by organic sales as well as merger and acquisition (M&A) activities.

M&As have been stealing the show of late. This inorganic growth strategy has been one of the key trends of 2018. The last couple of years set the stage for insurers to opt for an aggressive and positive approach toward the deal-making environment in 2018, mainly attributable to an evolving industry and the M&A landscape.

Shares of Arthur J. Gallagher have rallied 21.9% year to date, outperforming the industry’s growth of 14%. The company’s expansion policy to ramp up its growth profile and a strong capital position should continue driving the share price higher.



Insurers on Integration Spree

Taking the insurance industry’s all-time high available capital into account, there has been a significant number for acquisitions in the space of late. Brown & Brown, Inc. (BRO - Free Report) acquired Hays Companies ramp up its employee benefits business.

Stocks to Consider

A couple of better-ranked stocks from the insurance industry are MGIC Investment Corporation (MTG - Free Report) and eHealth, Inc. (EHTH - Free Report) , both carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

MGIC Investment provides private mortgage insurance and ancillary services to lenders and government-sponsored entities in the United States. The company delivered a four-quarter average positive surprise of 34.32%.

eHealth provides private online health insurance exchange services to individuals, families and small businesses in the United States and China. The company delivered a four-quarter average positive surprise of 29.03%.

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