ROLLING MEADOWS, Ill. - Arthur J. Gallagher & Co., a global insurance brokerage, risk management, and consulting services firm, has acquired Shepard Insurance Group, a retail insurance broker specializing in high-net-worth clients in the Northeast U.S. and Florida. The terms of the transaction, announced today, were not disclosed.
Shepard Insurance Group, based in Old Greenwich, Connecticut, will continue to operate from its current location. Steve Shepard, Kyle Shepard, and their associates will join Gallagher, working under the direction of Brendan Gallagher, who leads Gallagher's Northeast region retail property/casualty brokerage operations.
J. Patrick Gallagher, Jr., Chairman and CEO of Arthur J. Gallagher & Co. (NYSE:AJG), expressed enthusiasm for the acquisition, stating, "Shepard Insurance Group is well regarded for their client service and will expand our high-net-worth offerings in the Northeast."
Arthur J. Gallagher & Co., headquartered in Rolling Meadows, Illinois, is known for providing a wide range of services in approximately 130 countries worldwide. The addition of Shepard Insurance Group is expected to enhance the company's offerings to high-net-worth clients in strategic locations.
The acquisition is part of Arthur J. Gallagher & Co.'s broader strategy to expand its market presence and service offerings through strategic acquisitions. The company's leadership believes that the integration of Shepard Insurance Group's expertise will complement and strengthen Gallagher's existing operations in the region.
This news is based on a press release statement from Arthur J. Gallagher & Co.
In other recent news, Arthur J. Gallagher & Co. has been making significant strides in its business operations and financial performance. The insurance brokerage firm reported a 13% increase in revenue across its Brokerage and Risk Management segments, despite challenges like a miss in the Risk Management segment's revenue bonus and unrealized foreign exchange expenses. Goldman Sachs (NYSE:GS) recently adjusted its stance on the company, moving it from a "Buy" to a "Neutral" rating, citing slowing premium financing and potential pressure on adjusted EBITDAC margins.
The company has been actively expanding its global footprint through strategic acquisitions. Recent purchases include THB Chile, Peabody Insurance Agency, Scout Benefits Group, Adept Benefits, and Filos Agency. These acquisitions are expected to bolster Gallagher's market presence in regions such as Chile, Michigan, Oklahoma, the Pacific Northwest, and New York.
Analysts from BMO Capital Markets have raised their price target for the company's shares to $325.00 from the previous $312.00, citing expectations of higher growth from both inorganic and organic strategies. They project that Arthur J. Gallagher's growth will outpace consensus estimates in the coming years. These are all recent developments in the company's ongoing strategy to expand its international footprint and enhance its service offerings across the globe.
InvestingPro Insights
Arthur J. Gallagher & Co.'s acquisition of Shepard Insurance Group aligns with its strong market position and growth strategy, as reflected in recent InvestingPro data. The company's revenue growth of 15.8% over the last twelve months and quarterly growth of 11.87% in Q3 2024 underscore its expansion efforts. This growth trajectory is further supported by an EBITDA increase of 23.38% in the same period, indicating effective integration of acquisitions and operational efficiency.
InvestingPro Tips highlight AJG's financial stability and shareholder-friendly policies. The company has maintained dividend payments for 40 consecutive years and has raised its dividend for 14 consecutive years. This consistent dividend growth, coupled with a current dividend yield of 0.78%, demonstrates AJG's commitment to returning value to shareholders while pursuing strategic acquisitions.
The acquisition of Shepard Insurance Group, specializing in high-net-worth clients, could contribute to AJG's already impressive profitability. With a gross profit margin of 43.51% and an operating income margin of 24.21% in the last twelve months, AJG shows strong financial performance that may be further enhanced by this strategic move.
Investors should note that AJG is trading near its 52-week high, with a price at 99.48% of its 52-week high. While this reflects market confidence, it also suggests a premium valuation, as indicated by its P/E ratio of 56.53 and Price to Book ratio of 5.52.
For a more comprehensive analysis, InvestingPro offers 11 additional tips for AJG, providing deeper insights into the company's financial health and market position.
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