Arthur J. Gallagher Arm Acquires to Curb Environmental Risk

Gallagher Basset Services, Inc., a unit of Arthur J. Gallagher & Co. AJG, recently acquired WCD Group, LLC. This buyout is likely to allow the acquirer to help lower its clients’ environmental risks in their respective businesses. However, financial details of the transaction were kept under wraps.

Details of the Transaction

Established in 2002, Pennington, NJ-based WCD Group controls and reduces the potential risk in environmental, construction and real estate industries. The company caters to clients including owners, lenders, developers, contractors as well as insurance carriers. The acquired company will continue to operate from its current location.

The current business environment poses a lot of challenges at numerous industries and environmental risks are integral to those trials. With a separate division —Gallagher Environmental — the insurance broker has been successfully able to identify and quantify environmental risks, providing a wide range of solutions that has helped its clients mitigate such risks while boosting their capabilities to conduct businesses efficiently. The buyout will not only strengthen the acquirer but also extend its ability to offer assistance in managing the aforementioned environmental exposures.

The latest consolidation is expected to solidify Arthur J. Gallagher’s strong inorganic growth profile as well as add capabilities to its insurance brokerage service portfolio.

Arthur J. Gallagher’s discerning M&A activity bears testimony to its compelling inorganic growth strategy. The company remains optimistic about its ability to draw acquisition partners in its typical small tuck-in size at fair prices.

Over the past few years, Arthur J. Gallagher’s impressive growth has been primarily backed by organic sales as well as prudent buyouts and mergers. The company has been closely monitoring its consolidation pipeline in the retail employee benefits brokerage and wholesale brokerage areas, which remains strong with about $400 million of revenues. Further, driven by the number and size of non-U.S. buyouts, international contribution to the company’s top line is likely to improve.

Zacks Rank and Share Price Movement

Arthur J. Gallagher carries a Zacks Rank #3 (Hold). Shares of the company have rallied 19.6% in a year’s time, outperforming the industry’s rise of 10.4%. We expect top-line growth, smart acquisitions and a sturdy capital position to push the shares up in the near term.

 

Other Acquisitions in the Insurance Space

We have noticed insurers walking the inorganic line to brace portfolio for a while now. The insurance industry has been grabbing eyeballs of late with hordes of acquisitions on the back of its all-time high available capital resource.

Recently, Brown & Brown, Inc. BRO announced that it will buy Health Special Risk to add an impetus to its special risk and accident & health portfolio. Kemper Corporation KMPR has purchased Infinity Property and Casualty Corporation for $1.6 billion, envisioning a market leading position in nonstandard auto insurance domain.

Last month, Assurant, Inc. AIZ bought The Warranty Group to fortify its footprint as an ace provider in the vehicle protection business.

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

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