Arthur J. Gallagher Buys Strong Financial, Grows In Nebraska

Arthur J. Gallagher & Co. (NYSE:AJG) recently acquired Strong Financial Resources, Inc. to expand its presence in Nebraska. Terms of the deal remained undisclosed.

Aurora, NE-based Strong Financial Resources is a retail insurance brokerage company that was established in 1996. The company primarily caters to its clients in Central and Southeastern Nebraska with group and individual health, welfare and retirement products and services. The buyout is expected to help the acquirer to expand its footprint in Nebraska and boost organic growth capabilities. The company has witnessed positive organic growth for 22 quarters in a row. The last reported quarter too benefited from robust organic growth as well as higher revenues and solid margin expansion, which helped the bottom line surpass the Zack Consensus Estimate.

Arthur J. Gallagher pursues strategic acquisitions that not only strengthen its portfolio but also add capabilities to it. The company’s impressive growth is driven by organic sales, acquisition and mergers. Buyouts not only widen the company’s geographical footprint but also enhance its portfolio of services. Furthermore, such deals strengthen its position in retail and wholesale insurance brokerage services and risk management industries.

To date, this is the fourth buyout by the company in the second quarter. Notably, Arthur J. Gallagher made 10 acquisitions in the year-ago quarter.

Shares of Arthur J. Gallagher have gained 6.10% year to date, underperforming the Zacks categorized Insurance Broker industry’s 8.57% increase. Nonetheless, the company intends to pursue smaller tuck-in mergers in 2017. Arthur J. Gallagher stated that its merger and acquisition pipeline remains strong with about $200 million of revenues. We expect strategic endeavors to drive the shares higher.

Arthur J. Gallagher carries a Zacks Rank #3 (Hold).

Stocks to Consider

Some better-ranked stocks from the insurance industry are eHealth, Inc. (NASDAQ:EHTH) , American Financial Group, Inc. (NYSE:AFG) and ProAssurance Corporation (NYSE:PRA) .

eHealth provides private online health insurance services in the United States and China. The company posted 596.15% positive surprise in the last reported quarter. The stock flaunts a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

American Financial Group engages primarily in property and casualty (P&C) insurance with focus on specialized commercial products for businesses. The company posted 23.36% positive surprise in the last reported quarter. The stock flaunts a Zacks Rank #1.

ProAssurance provides property and casualty insurance, and reinsurance products in the United States. The company posted 12.72% positive surprise in the last reported quarter. The stock carries a Zacks Rank #2.

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