Stifel Nicolaus Upgrading Gallagher & Co.

Stifel Nicolaus is upgrading shares of Arthur J. Gallagher & Co.

to Buy from Hold, and it has a $35 price target on shares. In a note to clients, Stifel Nicolaus writes, "Rapidly shrinking reserve releases (for 17 publicly-traded insurers that have reported 2Q11 results so far, aggregate releases dropped by about 49% y/y, a 400 bps calendar-year combined ratio increase) are eroding underwriting profits. The industry's quickly deteriorating underwriting profitability should continue bolster price discipline, which in turn should expand AJG's revenues and margins." Shares of AJG are up 32 cents in pre-market trading to $28.54.