Arthur J Gallagher & Co.
) has been on an uptrend reflecting investors' enthusiasm about
its impressive inorganic growth story. Shares gained almost 28%
year-to-date. The insurance broker announced yet another
Arthur J. Gallagher & Co. acquired New York-based fine arts
broker team of Jeffrey Haber and Michael Fischman. With
this acquisition, the tally reaches four for the month and six
for the current quarter. This also compares favorably with five
acquisitions (with annualized revenues totaling $35.9 million)
closed in the preceding quarter. The company's strong
financial position continues to support the acquisitions.
The acquisition complements the acquirer's product portfolio as
the broker team of Haber and Fischman provides retail insurance
products and risk management services in the U.S. with
specialization in insurance coverage for art galleries and
dealers, museums, and high net worth collectors. Moreover, it
will also enhance the acquirer's operations in the Northeast
Arthur J. Gallagher & Co. undertakes acquisitions to augment
its product and service offerings as well as expand its
international exposure. Transactions earlier in September include
adding Belmont International based in Kent, England; Eau Claire,
Wis.-based R. W. Scobie, Inc.; and London-based Giles Group of
Companies (Giles) to its portfolio.
While adding Belmont, provider of retail insurance and
employee benefit products and services, will leverage Arthur J
Gallagher & Co.'s foothold in southeastern U.K. and also
enhance its product portfolio, acquisition of Scobie will augment
the company's wholesale network. The Giles acquisition will
expand the company's footprint in England and Scotland and help
it to make a foray into Northern Ireland, Wales, Isle of Man and
the Channel Islands. It will also inflate Arthur J. Gallagher
& Co.'s client base in the middle-market and enhance its
underwriting footprint via current underwriting business and
increased retail distribution opportunities through broker
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With respect to earnings performance, Arthur J Gallagher &
Co. delivered straight quarters of positive surprise with an
average beat of almost 14%. We expect the trend to continue as
our proven model shows that Arthur J. Gallagher & Co. has the
right combination of positive
and Zacks Rank. Expected Surprise Prediction or ESP, which
represents the difference between the Most Accurate Estimate and
the Zacks Consensus Estimate, is +5.80%. Arthur J. Gallagher
& Co. presently carries a Zacks Rank #3 (Hold).
Arthur J Gallagher & Co. has been witnessing rising earnings
estimates, reflecting analysts' confidence on the solid execution
of the company. Over the last 30 days, the Zacks Consensus
Estimate for 2013 moved north by 0.5% to $2.21 as 4 of 12
estimates were raised. For 2014 also, 4 of 12 estimates moved up
pushing the Zacks Consensus Estimate by 1.6% to $2.59.
Among other insurance brokers, in August, Mercer, consulting wing
Marsh & McLennan
) announced its intention to purchase the pension wind-up
operations of PricewaterhouseCoopers (PwC) in Canada, in a bid to
expand its operations in the country.
Brown & Brown Inc.
) closed its merger with Beecher Carlson Holdings, Inc. in July.
In the insurance space, property and casualty insurer
AmTrust Financial Services, Inc
) also boasts of a strong history of acquisitions. Recently,
AmTrust Financial inked a deal to buy the Insco Dico Group (Insco
Dico) for about $85 million, in an effort to strengthen its
foothold in the domestic surety insurance market.