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Arthur J. Gallagher Adds Ashmore & Associates to its Portfolio

Arthur J. Gallagher & Co. AJG has acquired Ashmore & Associates Insurance Agency, Inc. to enhance its brokerage services in the South Central region of the United States. The financial details of the deal were not disclosed.

Lubbock, TX-based Ashmore & Associates was established in 1984. The company offers property & casualty (P&C), employee benefits consulting and risk management insurance services. The retail insurance broker caters to its commercial and personal lines clients in the central region of United States. The acquired company is an expert in insuring the manufacturing, healthcare and energy industries. Thus, the buyout will be another feather in the acquirer’s cap. Post acquisition, Ashmore & Associates will continue to operate from its current location.

Ashmore & Associates’ exemplary client service, robust market relationships and depth of expertise will be substantially value accretive to Arthur J. Gallagher’s client portfolio. Moreover, the acquired company’s solid foothold in West Texas and insurance specializations will enable Arthur J. Gallagher to extend its geographic footprint in the area. Hence, this acquisition will boost the acquirer’s brokerage services in the South Central region.

Notably, this is the 13th takeover by the company this year. Recently, Arthur J. Gallagher purchased McNeary Inc., to strengthen its Southeastern P&C and employee benefits operations. 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. Notably, the buyouts are almost exclusively 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. 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. MMC and Hannover Rück SE HVRRY, both these of which hold a Zacks Rank #2 (Buy).

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