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Arthur J. Gallagher & Co. AJG recently acquired M.J. Schuetz Insurance Services Inc. The terms of the deal have been kept under wraps.
Indianapolis, IN-based Schuetz Insurance provides property and casualty, surety and bonding services across the Midwest with industry expertise in construction, landscaping, manufacturing and real estate.
The addition of Schuetz is expected to enhance the retail brokerage operations of Arthur J. Gallagher in the Midwest.
AJG also acquired Austin, TX-based Howe Insurance Group LLC, which is doing business as DMc Insurance Partners in December 2024. DMc Insurance Partners seems to be a prudent pick by AJG since it is a personal lines-focused insurance agency that caters to small business owners across Austin.
With this acquisition, Arthur J. Gallagher will leverage the strong capabilities of DMc Insurance Partners to strengthen the personal lines and small business capabilities of AJG in the market.
Arthur J. Gallagher has an impressive inorganic story with buyouts in the Brokerage and Risk Management segments. Since Jan. 1, 2002, this Zacks Rank #3 (Hold) insurance broker had acquired 725 companies so far. Revenue growth rates generally ranged from 5% to 15% for 2024 acquisitions.
The company completed 27 new brokerage mergers, totaling $173.9 million of estimated annualized revenues in the first nine months of 2024. The company is growing through mergers and acquisitions, most of which are within its Brokerage segment. AJG has a strong merger pipeline of more than 100 companies representing about $1.5 billion of annualized revenues. Of these 60 term sheets are signed or being prepared, representing about $700 million of annualized revenues.
A solid capital position ensuring continuous cash inflow supports AJG in its growth initiatives. It remains focused on continuing its tuck-in mergers and acquisitions. The insurer continues to expect about $3 billion of capacity to fund M&A in 2024 and $4 billion in 2025 using only free cash and incremental borrowings.
In December 2024, AJG also agreed to acquire AssuredPartners. Pending customary regulatory approvals, the transaction is expected to be completed during the first quarter of 2025. By integrating AssuredPartners, the acquirer is expected to further expand Gallagher's retail middle-market property and casualty and employee benefits focus across the United States, build on new business opportunities by leveraging Gallagher's expertise, data and analytics and expansive product offerings.
The move will further reinforce Gallagher's capabilities across multiple niche practice groups and create opportunities for Gallagher's wholesale, reinsurance and claims management businesses.
AJG also acquired Sheila J. Butler & Company, Dawson & Keenan Insurance Ltd. and Hann Insurance Brokers Pty Ltd. in December 2024. Financial details of all these deals are yet to be disclosed. These transactions are expected to expand AJG's retail brokerage capabilities, provide growth opportunities for retail brokerage operations, enhance the existing benefits consulting capabilities and expand the geographical footprint.
The brokerage insurer’s revenues are geographically diversified with strong domestic and international operations, with international operations contributing about one-third of revenues. Arthur J. Gallagher’s long-term growth strategies should help it deliver organic revenue improvement and pursue strategic mergers and acquisitions. AJG is focused on productivity improvements and quality enhancements that should help it post sturdy numbers in the future.