Yahoo Finance Arthur J. Gallagher (AJG) Boosts Portfolio With Bay Risk
Arthur J. Gallagher & Co.’s AJG reinsurance division Gallagher Re has acquired the business and assets of Bay Risk Services Limited (Bay Risk). The terms of the transaction have not been revealed yet.
London-based, independent Lloyd's broker, Bay Risk, was formed in 2016. It is a member of the Optio Group. Bay Risk delivers independent insurance and reinsurance placement services into the Lloyd's and International Markets. It specializes in structuring and placing contracts of delegated underwriting authority. The company caters to the needs of niche program managers, managing general agents and Lloyd's coverholders.
The addition of this entity to the acquirer’s portfolio is a strategic fit to the expanding global programs practice of Gallagher Re.
Inorganic Growth Story
Arthur J. Gallagher boasts an impressive inorganic story. This Zacks Rank #2 (Buy) insurance broker acquired 36 entities in 2022 that contributed about $107 million to estimated annualized revenues of $244 million. AJG has a strong merger and acquisition pipeline with about $300 million of revenues, associated with about 45 term sheets either agreed upon or being prepared. The recent deal marks the seventh acquisition in the first quarter of 2023.
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. The insurer expects an M&A capacity of more than $3 billion through the end of 2023.
AJG 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, which should help it post sturdy numbers in the future.
Price Performance
Shares of Arthur J. Gallagher have gained 21.2% in the past year, outperforming the industry’s increase of 6.7%. The insurer’s efforts to ramp up its growth profile and capital position should continue to drive the share price.
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Another Acquisition in the Same Space
Given the insurance industry’s adequate capital level, another player like Marsh & McLennan Companies, Inc. MMC has been pursuing strategic mergers and acquisitions.
Marsh & McLennan’s business Mercer recently acquired a Human Resources technology advisory firm, Leapgen. The acquisition is expected to enrich Mercer’s solutions for Workforce and HR Transformation, improve technology decision-making and enable providing better employee experience outcomes.
Acquisitions are part of the core growth strategies of the company. MMC made numerous purchases within its different operating units, which have enabled it to enter geographical regions, expand within the existing ones, foray into new businesses, develop segments and specialize within its existing businesses. Marsh & McLennan’s shares have gained 6.5% in the past year.
Stocks to Consider
Some better-ranked stocks from the insurance industry are Everest Re Group, Ltd. RE and Kinsale Capital Group, Inc. KNSL, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for Everest Re’s 2023 and 2024 earnings per share is pegged at $44.68 and $51.29, indicating year-over-year increase of 64.9% and 15.7%, respectively. In the past year, RE has gained 39.1%.
RE beat estimates in each of the last four quarters, the average being 43.2%.
Kinsale Capital has a solid track record of beating earnings estimates in each of the last four quarters, the average being 13.83%. In the past year, KNSL has gained 47.6%.
The Zacks Consensus Estimate for Kinsale Capital’s 2023 and 2024 earnings per share is pegged at $9.86 and $11.85, indicating year-over-year increase of 26.4% and 20.2%, respectively.
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Everest Re Group, Ltd. (RE) : Free Stock Analysis Report
Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
Kinsale Capital Group, Inc. (KNSL) : Free Stock Analysis Report
