Arthur J. Gallagher expands and buys shares in Edelweiss Insurance

As part of its efforts to expand outside the United States, Arthur J. Gallagher & Co. AJG acquired a minority stake in Edelweiss Insurance Brokers Limited. The transaction is subject to regulatory approval.

Headquartered in Mumbai, India, Edelweiss Insurance is a wholly owned subsidiary of Edelweiss Group, a leading diversified financial services conglomerate in India. The company has branches in other key cities of India such as Delhi, Kolkata and Bangalore. Edelweiss Insurance offers general insurance solutions to individuals and institutions across India.

The acquisition is expected to complement Arthur J. Gallagher’s core brokerage offerings and also help consolidate the company’s commercial insurance business in India. The company noted that the growing commercial and specialty market in India is supported by strong demand for specialized insurance such as renewable energy, infrastructure and cyber liability. Therefore, making buyouts in India is strategic for the company.

Arthur J. Gallagher derives approximately one-third of its revenues from international operations. Based on the number and volume of its non-U.S. acquisitions, the Zacks Rank #3 (Hold) insurance broker expects its international share of total revenues to grow. Recent acquisitions have helped it expand into New Zealand, Australia and the UK.

Arthur J. Gallagher is one of the world’s top five brokers. In the first quarter of 2019, the company completed 11 brokerage acquisitions, which should add approximately $70 million to annual revenues. The recent acquisition is the sixth in the second quarter. Given its solid capital position, the company is well positioned to pursue more strategic buyouts.

Shares of Arthur J. Gallagher are up 8.6% since the beginning of the quarter, outpacing the industry’s gain of 5.6%. The company’s policy of increasing its growth profile and strong capital position should continue to increase share prices.

Due to the significant capital available, there have been many acquisitions in the insurance space recently. Brown & Brown of Kentucky, Inc., a subsidiary of Brown & Brown, Inc. BRO, acquired United Development Systems, Inc. Hartford Financial Services Group, Inc. HIG has received all regulatory approvals necessary to complete the acquisition of The Navigators Grupa, Inc. NAVG.

You can see see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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