Arthur J. Gallagher & Co. AJG acquired PIATX, LLC. The terms of the transaction have not been revealed yet.
San Antonio-based PIATX, LLC, founded in 2009, provides unbiased employee benefits advice to small businesses and individuals. Being an employee benefits broker and consultant, it remains focused on delivering responsive and innovative coverages and services to businesses across Texas. The company offers a wide range of insurance options.
The addition of PIATX will, thus, boost the acquirer’s existing benefit capabilities in San Antonio. Moreover, the buyout will help Arthur J. Gallagher to expand its presence and capabilities in the Texas small group benefits space.
Notably, the latest acquisition marks Arthur J. Gallagher’s eighth buyout in the fourth quarter of 2020. The company’s robust capital position along with sustained solid operational performance should continue to back its inorganic efforts.
Inorganic Growth Story
Acquisitions enable this Zacks Rank #3 (Hold) insurance broker to expand into desirable geographic locations, extend its presence in retail and wholesale insurance and reinsurance brokerage services markets, and increase the volume of general services currently provided. Its inorganic pipeline remains strong, with revenues of about $350 million associated with 40 term sheets either agreed upon or being prepared.
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In the first nine months of 2020, the company completed 17 mergers, representing $151.2 million of annualized revenues. Revenue growth rates have generally been 2.5-15% for 2020 acquisitions. The buyouts provide the company with incremental capabilities and services to assist clients across Australia, the U.K., Europe and the United States. The company remains focused on its long-term growth strategies of delivering organic revenue growth, and pursuing mergers and acquisitions.
Other Acquisition in the Same Space
There have been a host of acquisitions in the insurance space of late, given significant capital availability. Brown & Brown’s BRO subsidiary, Hull & Company, LLC, acquired assets of South & Western, and all issued and outstanding shares of its affiliate, S&W Premium Finance Company, Inc. Assurant AIZ acquired HYLA Mobile in an effort to consolidate its position as a leader in trade-in and upgrade programs. Marsh & McLennan Companies, Inc.’s MMC unit Marsh & McLennan Agency LLC recently acquired the independent agency, INSPRO in Nebraska.
Price Performance
Shares of Arthur J. Gallagher have gained 33% in a year outperforming the industry’s increase of 3.5%. Efforts to ramp up the company’s growth profile and capital position should help shares gain further.
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