Arthur J. Gallagher Strengths Foothold In North Central US

Arthur J. Gallagher & Co. (NYSE:AJG) has acquired The Buchholz Planning Corporation (“BPC”) to enhance its employee benefits brokerage and consulting services in the North Central region of the United States. The financial details of the deal were not disclosed.

Madison, WI-based BPC, which was established in 1968, caters to middle-market and large businesses and individuals across the U.S. The company offers employee benefits consulting and brokerage services. The acquired company is also an expert in insuring the healthcare organizations with its life and disability insurance solutions. Thus, the buyout is expected to be substantially value accretive for the acquirer. Post acquisition, BPC will continue to operate from its current location.

BPC has made a name for itself in the delivery of creative products and exemplary client service with the support of its expert professionals. The acquired company’s solid healthcare expertise, robust market relationships and team-based client service environment will enrich Arthur J. Gallagher’s client portfolio. Moreover, BPC’s strong foothold in Wisconsin and insurance specializations will boost the acquirer’s brokerage services in the North Central region.

Notably, this is the 15th takeover by the company this year. Recently, Arthur J. Gallagher purchased KRW Insurance Agency, Inc. to improve and strengthen its brokerage services in the Midwestern region of the U.S. In the first quarter of 2016, Arthur J. Gallagher completed eight buyouts with annualized revenues of over $30 million.

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.

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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.

Stocks to Consider

Some better ranked insurance brokers are Marsh & McLennan Companies, Inc. (NYSE:MMC) and Hannover Rück SE (OTC:HVRRY) . Both these stocks hold a Zacks Rank #2 (Buy).

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