Arthur J. Gallagher Expands Globally With Boston Marks Buyout

Arthur J. Gallagher & Co. (NYSE:AJG) recently acquired insurance brokers of Boston Marks Group in its effort to expand outside the United States. The terms of the transaction remain undisclosed.

The acquisitions include Marks Insurance NZ in New Zealand, BMG Aviation in Australia and the book of business of Boston Marks Insurance Brokers in the United Kingdom. Established in 1985, Boston Marks Group provides brokerage insurance for the aviation sector. The company offers retail property/casualty brokerage services to a broad range of government, commercial and private aviation and aerospace clients. It has operations in Auckland and Papakura in New Zealand, Gold Coast, Queensland and Perth, Western Australia in Australia and London, England.

Addition of these insurance brokers to Arthur J. Gallagher’s portfolio will help ramp up its capabilities in the aviation sector, particularly in Australia and New Zealand.

Arthur J. Gallagher derives about one-third of its revenues from international operations. Given the number and size of the non-U.S. acquisitions, the Zacks Rank #3 (Hold) insurance broker expects international contribution to total revenues to increase.

Given the insurance industry’s all-time high capital level, insurers are aggressively pursuing mergers and acquisitions to ramp up growth, expand footprint, enhance capabilities and diversify operations. Arthur J. Gallagher’s inorganic pipeline remains strong with about $500 million of revenues.

Shares of Arthur J. Gallagher have rallied 18.6% year to date, outperforming the industry’s increase of 11.8%. Its expansion policy to ramp up growth and a strong capital position should help retain the momentum.

Insurers on an Integration Spree

There have been a significant number of acquisitions in the space of late, given the insurance industry’s all-time high capital. Last month, Brown & Brown, Inc. (NYSE:BRO) acquired Hays Companies to ramp up its employee benefits business while Marsh & McLennan Companies, Inc.'s (NYSE:MMC) unit Mercer acquired investment consulting, alternatives consulting and wealth management operations of Pavilion Financial Corporation to provide wider and deeper global research and specialist resources to its consultants and clients

A Stock That Warrants a Look

A better-ranked stock from the same space is eHealth, Inc. (NASDAQ:EHTH) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

eHealth provides private online health insurance exchange services to individuals, families, and small businesses in the United States and China. The company delivered positive earnings surprise of 50.00% in the last reported quarter.

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