Arthur J. Gallagher Acquires Affiliated Benefit Consultants

Arthur J. Gallagher & Co. (NYSE:AJG) has acquired Affiliated Benefit Consultants, Inc., which offers brokerage and consulting solutions to employers who are looking to take charge of their benefit programs. The details of the transaction have been kept under wraps.

Oakbrook, IL-based Affiliated Benefit Consultants was established in 1986. The company caters to clients throughout the United States, providing them with a full suite of benefits consulting services.

Affiliated Benefit Consultants is a strategic fit for Arthur J. Gallagher. This growth-oriented benefit consultant will boost brokerage and consulting services of the acquirer.

The recent buyout is the sixth for Arthur J. Gallagher in the first quarter of 2020. A strong capital position along with solid operational performance should continue to back Arthur J. Gallagher in its inorganic efforts.

Given the insurance industry’s high capital level, companies are aggressively pursuing mergers and acquisitions. Arthur J. Gallagher’s inorganic pipeline remains strong with revenues of about $250 million, associated with 50 term sheets either agreed upon or being prepared. In 2019, the company completed 49 mergers with more than $468 million of annualized revenues. These acquisitions provide it with incremental capabilities and services that benefit clients in Australia, the UK, Europe and the United States.

Recently, there have been a number of acquisitions in the insurance brokerage industry, given the significant capital available. Brown & Brown’s (NYSE:BRO) subsidiary, Hull & Company, LLC acquired the assets of All Risk General Agency, Inc., Select General Agency, LLC, TARGA Investment Corporation, TARGA Premium Finance Company, Inc., and Texas All Risk General Agency, Inc., collectively known as Texas All Risk.

Shares of this Zacks Rank #3 (Hold) insurance broker have gained 36.7% in the past year, outperforming the industry’s increase of 31.9%. The company’s policy of ramping up growth and capital position should continue to drive share price higher.

Stocks to Consider

Some better-ranked stocks from the same space are Cincinnati Financial Corporation (NASDAQ:CINF) and Aon plc (NYSE:AON) . While Cincinnati Financial sports a Zacks Rank #1 (Strong Buy), Aon carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Cincinnati Financial provides property casualty insurance products in the United States. The company beat earnings estimates in the trailing four quarters, the average being 17.86%.

Aon offers advisory and solutions based on risk, retirement, and health to clients and provides commercial risk solutions, including retail brokerage, cyber, and global risk consulting solutions, as well as acts as a captive insurance provider. The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 0.62%.

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