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Arthur J. Gallagher (AJG) Boosts PEO Presence With Buyout

Arthur J. Gallagher & Co.'s (AJG) buyout of Risk Transfer Insurance is likely to help the acquirer strengthen its presence in the growing PEO industry.

This story originally appeared on Zacks

Arthur J. Gallagher & Co. AJG has acquired Risk Transfer Insurance Agency, LLC. The terms of the transaction have not been disclosed.

Orlando, FL-based Risk Transfer Insurance, founded in 2000, is a full-service commercial property/casualty agency and program administrator. This company provides tailor-made insurance solutions and risk management services to professional employer organizations (PEOs) and temporary staffing firms. Thus, the addition will help the acquirer strengthen its presence in the growing PEO industry.

Arthur J. Gallagher boasts an impressive inorganic story. The recent buyout is its first acquisition in 2022. The company has a strong merger and acquisition pipeline. Arthur J. Gallagher has made 19 buyouts, representing $190 million in estimated annual revenues in the first three quarters of 2021 and another 18 in the fourth quarter.

Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations and a compelling product and service portfolio. A solid capital position supports AJG in its growth initiatives and it thus remains focused on continuing its tuck-in mergers and acquisitions.

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. AJG is focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.  

Shares of Arthur J. Gallagher have gained 40.2% in a year, outperforming the industry’s 29% 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 like Brown and Brown Inc. BRO, Stewart Information Services Corporation STC and HCI Group Inc. HCI are pursuing strategic mergers and acquisitions.

Brown & Brown’s subsidiary Brown & Brown Lone Star Insurance Services has purchased HARCO to boost its presence in Texas. Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues.

Stewart Information has acquired Devon Title Agency to expand in Michigan. Stewart Information has a sizable merger and acquisition pipeline. It boasts a strong balance sheet with $585 million over regulatory requirements and $74 million on an existing line of credit facility supporting growth initiatives. Stewart Information remains focused on improving operational efficiencies by adding scale, investing in priority markets and strengthening core business with real estate technology and services.

HCI Group has agreed to acquire United Insurance Holdings’ personal lines insurance business in the states of Georgia, North Carolina, and South Carolina to expand into new geographies. Well-performing Homeowners Choice and TypTap coupled with conservative reserving practice should continue to support HCI’s growth story.

Shares of Brown and Brown, Stewart Information and HCI Group have gained 49.2%, 62.8% and 56.6%, respectively, in a year’s time.  

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


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Arthur J. Gallagher & Co. (AJG): Free Stock Analysis Report


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HCI Group, Inc. (HCI): Free Stock Analysis Report


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