Arthur J. Gallagher Adds Zuber Insurance To Its Portfolio

Arthur J. Gallagher & Co. (NYSE:AJG) recently acquired Zuber Insurance Agency to enhance its employee benefits consulting and brokerage operations in the South Central U.S. The financial details of the transaction, however, were not revealed.

Texas-based Zuber Insurance was established in 1934 and operates as a full-service insurance agency. The acquired company offers a wide range of commercial and personal property/casualty insurance, employee benefits and life insurance to clients across Texas. We believe that the buyout will further strengthen the already robust inorganic growth portfolio of the acquirer. Post takeover, Zuber Insurance will continue to operate from its current location.

We expect Zuber Insurance’s in-depth expertise, family history and focus on personalized client service to be highly value accretive to the acquirer’s client portfolio. Moreover, the latest transaction will enable Arthur J. Gallagher to solidify its foothold in the South Central region with better employee benefits consultation and insurance brokerage services.

This Zacks Rank #3 (Hold) insurance broker is known for improving its growth profile through strategic acquisitions. We note that the company closed 12 acquisitions with annualized revenues of over $62.5 million in the first quarter of 2017. Though most of these buyouts are within the brokerage segment, Arthur J. Gallagher has increased purchases in the retail employee benefits brokerage as well as wholesale brokerage sectors too. It also intends to pursue smaller tuck-in mergers in 2017. We note that Arthur J. Gallagher’s merger and acquisition pipeline remains strong with revenues of about $350 million.

Notably, Arthur J. Gallagher shares gained 18.94% in the last one year, outperforming the Zacks categorized Insurance Broker industry’s increase of about 16.00%. We believe that strategic acquisitions, which improve the insurance broker’s inorganic portfolio and accelerate growth, will continue to drive the stock higher in the near term.

Stocks to Consider

Some better-ranked stocks from the insurance industry include Infinity Property and Casualty Corporation (NASDAQ:IPCC) , ProAssurance Corporation (NYSE:PRA) and American Financial Group, Inc. (NYSE:AFG) . Each of these stocks holds a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Infinity Property and Casualty provides personal automobile insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 37.45%.

ProAssurance Corporation offers P&C insurance, and reinsurance products in the United States. The company delivered positive surprises in all of the last four quarters with an average beat of 16.59%.

American Financial offers property and casualty insurance products in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 11.47%.

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