Arthur J. Gallagher Expands Canadian Operations With Buyout

Arthur J. Gallagher & Co. AJG has recently purchased Palmer Atlantic Insurance Ltd. to boost its retail property/casualty brokerage operations as well as solidify its presence in Atlantic Canada.  However, financial details of the transaction remain undisclosed.

Details of the Transaction

Established in 1976, Palmer Atlantic offers retail property/casualty brokerage services. The company operates as a specialist in the transportation and logistics sector and is also a leading trucking insurance specialist in Atlantic Canada. Over a significant period of time, Palmer Atlantic has built a name for itself, offering commercial insurance and risk management solutions. The company caters to a diverse group of industries and clients in the Atlantic region. After the completion of the buyout, the company will continue to operate from its current office location.

The latest acquisition will likely fortify the already robust inorganic growth portfolio of the acquirer. The team at Palmer Atlantic displays solid strength in transportation and logistics plus boasts a stellar client service delivery as well as sturdy market relationships. These in turn, are anticipated to be highly value accretive to Arthur J. Gallagher’s expanding operations in Canada. With this buyout, the insurance broker will be able to reinforce its footprint and enhance its retail property/casualty brokerage operations in Canada.

Arthur J. Gallagher’s prudent acquisitions bear testimony to its inorganic growth strategy. The insurance broker remains optimistic about its capability to attract 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 mainly fueled by organic sales as well as judicious buyouts and mergers. The company has put the steam behind its acquisition activity in the retail employee benefits brokerage and wholesale brokerage areas. Its merger and acquisition pipeline remain strong with about $300 million of revenues.

Zacks Rank and Share Price Movement

Arthur J. Gallagher holds a Zacks Rank #2 (Buy). Shares of the company have rallied 26.2% in a year’s time, outperforming the industry’s rise of 19.8%. We expect top-line growth, prudent acquisitions and a robust capital position to drive the shares higher in the near term.  Notably, the company’s long-term earnings growth is pegged at 11.10%, better than the industry’s increase of 10.80%.

 

Other Acquisitions in the Insurance Space

Recently, Brown & Brown, Inc.’s BRO unit, Brown & Brown Insurance Agency of Virginia, purchased all the assets of Kerxton Insurance Agency, Inc. and Fitness Underwriters, Inc. (together known as Kerxton Insurance). Also, Karfunkel-Zyskind Family will buy 45% of AmTrust Financial Services, Inc.’s AFSI stake with the deal valued at $2.7 billion.

Another milestone decision was announced by AXA on Mar 5, 2018 to acquire 100% of XL Group Ltd XL for $15.3 billion and creating the leading global property and casualty (P&C) Commercial lines insurer based on gross written premiums.

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