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Arthur J. Gallagher (AJG) Expands in Southwest With Buyout

Arthur J. Gallagher & Co. AJG recently acquired Erin P. Collins & Associates, Inc. The terms of the transaction have not been revealed.

Kingman, AZ-based Erin P. Collins & Associates (ECA) was founded in 1994.  The company is an employee benefits and workplace wellbeing consultant with expertise in multiple employer programs, also known as public entity pools. It caters to clients across Arizona.

The addition of ECA will help Arthur J. Gallagher boost its benefits capabilities across the Southwest apart from providing cross-selling opportunities. ECA's business is closely aligned with the acquirer’s health and welfare strategy.

This marks the third buyout in the ongoing quarter. In the first half of 2020, the company completed 12 mergers, representing about $138.1 million of annualized revenues. The company’s merger and acquisition pipeline is quite strong with about $300 million of revenues, associated with about 40 term sheets either agreed upon or being prepared.

Based on the activity experienced in July, the company believes to return to normal levels of merger activity later this year. A sturdy liquidity position supports Arthur J. Gallagher in its strategic initiatives. The company targets about $1.5 billion to $1.6 billion of mergers and acquisitions with free cash and debt.

This Zacks Rank #3 (Hold) insurance broker remains focused on its long-term growth strategies of delivering organic revenue growth and pursuing strategic mergers and acquisition. It is also focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.

Shares of Arthur J. Gallagher have gained 9.5% year to date against the industry’s decrease of 0.6%. Efforts to ramp up its growth profile and capital position should continue to drive share price higher.


 

There have been a host of acquisitions in the insurance space of late, given the significant capital available. Recently, Brown & Brown of Tennessee, a subsidiary of Brown & Brown BRO acquired Frank E. Neal & Co. Agency.

Stocks to Consider

Some better-ranked insurance broker are eHealth EHTH  and RLI Corp RLI.

eHealth delivered earnings surprise of 138.89% in the last-reported quarter. The stock sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

RLI delivered earnings surprise of 71.11% in the last-reported quarter. The stock carries Zacks Rank #2 (Buy).

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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