Re/insurance broking firm, Arthur J. Gallagher & Co (AJG)., has announced the renewal of its equity financing program for acquisitions.
The firm has registered seven million shares for issuance in connection with brokerage and risk management acquisitions, in addition to two million shares that remain available for issuance from previously.
It has also established an at-the-market equity program under which it may sell up to a total of three million shares.
AJG says that it intends to use the net proceeds of sales under this program to fund future acquisitions, although the proceeds can also be used for general corporate purposes.
It adds that the actions are considered to be consistent with its past capital management practices, which, together with its existing $1.5 billion stock repurchase authorization, provides it with “the flexibility to adjust our capital structure depending upon prevailing market conditions and acquisition funding needs.”
AJG greatly expanded its reinsurance capabilities last year with the acquisition of Willis Re – since rebranded as Gallagher Re – which was put up for offer as part of the regulatory terms of the failed merger between Aon and WTW.
So it’s possible that AJG could be looking to expand its reinsurance division even further by raising this new equity capital, potentially with additional bolt on acquisitions of smaller, specialist brokers.
Earlier notable acquisitions by AJG in the reinsurance space include captive and alternative risk transfer solutions provider Artex, which in turn took over Horseshoe in 2019 – a Bermuda-headquartered provider of insurance management fund administration, advisory and corporate services to the ILS market.
The broker could therefore also be eyeing further acquisitions in the alternative capital space following this equity raise, having previously shown keen interest in this area and having already built strong capabilities here.
