Arthur J. Gallagher Boosts Brokerage Services With New Deal

Arthur J. Gallagher & Co. (NYSE:AJG) has acquired KRW Insurance Agency, Inc. to enhance its brokerage services in the Midwestern region of the United States. The financial details of the deal were not disclosed.

Crystal Lake, IL-based KRW Insurance Agency was founded in 1940. The company offers commercial property/casualty, risk management, employee benefits and personal lines insurance and consulting services. The retail insurance broker caters to clients across the U.S. and is an expert in insuring the construction and manufacturing industries. Thus, we expect this buyout to enrich the acquirer’s portfolio by expanding capabilities. Post acquisition, KRW Insurance Agency will continue to operate from its current location.

KRW Insurance Agency’s remains focused on strengthening its industry expertise along with solidifying its market relationships and exemplary client service. These, Arthur J. Gallagher believes, will prove to be invaluable to its client portfolio. Moreover, the acquired company’s sales-based environment and solid industry specializations will boost the acquirer’s brokerage services in the Midwestern U.S.

Notably, this is the 14th takeover by the company this year. Recently, Arthur J. Gallagher purchased Ashmore & Associates Insurance Agency, Inc. to strengthen its brokerage services in the South Central region of the U.S. In the first quarter of 2016, Arthur J. Gallagher completed eight buyouts with annualized revenues of over $30 million.

Interestingly, the KRW Insurance Agency deal marks the third takeover by Arthur J. Gallagher in the Midwest region this year. In April, the company acquired Waite Park, MN-based Charles Allen Agency, Inc.

Arthur J. Gallagher, which currently holds a Zacks Rank #3 (Hold), is known for improving its growth profile through prudent acquisitions. Most of the buyouts by this brokerage service provider are within the brokerage segment. This apart, Arthur J. Gallagher has increased purchases in the retail employee benefits brokerage and wholesale brokerage sectors.

Following the inorganic route to ramp up one’s growth profile seems a well-accepted strategy among insurers as acquisitions and consolidations rage this space. Last month, Brown & Brown Inc. (NYSE:BRO) announced that it has entered into a purchase agreement to acquire all operating assets of Morstan General Agency.

Investors may consider insurance stocks like Marsh & McLennan Companies, Inc. (NYSE:MMC) and Hannover Rück SE (OTC:HVRRY) , both these of which hold a Zacks Rank #2 (Buy).

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