Yahoo Finance Arthur J. Gallagher (AJG) Closes Buck Buyout, Boosts Portfolio
Arthur J. Gallagher & Co. AJG closed the acquisition of partnership interest in BCHR Holdings, L.P., dba Buck and its subsidiaries for $660 million. The transaction was announced in December 2022. The buyout will help AJG consolidate its portfolio of professional services.
BCHR Holdings, L.P. is a leading provider of retirement, HR and employee benefits consulting and administration services catering to customers across the United States, Canada and the United Kingdom. While the insurance broker estimates expense synergies of approximately $20 million, integration expense is expected to be about $125 million.
The acquisition should enhance AJG’s retirement, benefits & HR consulting, administration, and technology portfolio while adding bSuite, a leading, proprietary software platform for benefits administration and employee engagement. The acquirer also expects potential cross-selling opportunities across current benefits and property and casualty clients. The transaction is thus estimated to be about 2% accretive to adjusted earnings per share over the trailing 12-month period ended Sep 30, 2022, assuming expense synergies.
Arthur J. Gallagher has an impressive inorganic story with buyouts made in Brokerage and Risk Management segments. This 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.
A solid capital position supports AJG in its growth initiatives and it thus remains focused on continuing its tuck-in mergers and acquisitions. The company expects an M&A capacity of more than $3 billion through the end of 2023.
This Zacks Rank #3 (Hold) insurance broker is inclined toward 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 2.5% year to date, outperforming the industry’s 1.5% 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 & Brown, Inc. BRO pursue strategic mergers and acquisitions. Recently, this insurance broker acquired Highcourt Partners Limited and its subsidiaries eUnderwriters and CLIS. The buyout will help it expand its presence in Canada.
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. Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments. Consistent operational results have been aiding Brown & Brown in generating solid cash flows for deployment in strategic initiatives
Stocks to Consider
Some better-ranked insurers from the insurance industry are Marsh & McLennan Companies, Inc. MMC and eHealth, Inc. EHTH, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Marsh & McLennan’s earnings surpassed estimates in each of the last four quarters, the average beat being 4.08%.
The Zacks Consensus Estimate for MMC’s 2023 and 2024 earnings per share indicates a year-over-year increase of 9.3% and 9.1%, respectively. In the year-to-date period, MMC has gained 1.9%.
The Zacks Consensus Estimate for eHealth’s 2023 earnings per share indicates a year-over-year increase of 63%. In the year-to-date period, EHTH has gained 91.7%.
EHTH’s earnings surpassed estimates in three of the last four quarters and missed in one, the average beat being 38.51%.
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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
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eHealth, Inc. (EHTH) : Free Stock Analysis Report
