Brown & Brown, Inc.’s (BRO - Free Report) unit Brown & Brown Dealer Services (BBDS) has acquired all the assets of First Resource, Inc.
Indianapolis, IN-based First Resource offers its dealer partners finance and insurance (F&I) products and sales training, F&I performance management and customer retention strategies.
Rationale Behind the Deal
Addition of First Resource to Brown & Brown’s portfolio will help the acquirer leverage latter’s experience in auto F&I industry. The acquisition will provide the BBDS operation with valuable depth and experience and the acquired company will serve the dealer partners of BBDS in the great state of Texas and throughout the southwest.
Inorganic Growth Story
Brown & Brown pursues buyouts for boosting top-line growth. Notably, this transaction marks the first buyout in of the insurance broker in the third quarter of 2020. In the first six months of 2020, the insurer made seven acquisitions
Consistent investments along with solid earnings help this Zacks Rank #3 (Hold) insurance broker in inorganic efforts and buyouts. These strategic acquisitions assist Brown & Brown to drive commission and fees, which, in turn, will boost revenue growth. In the first quarter of 2020, its commission and fees increased 12.8% year over year and registered top-line growth, witnessing CAGR of 8.8% over the past five years (2014-2019).
Brown & Brown maintains a disciplined focus on acquiring companies that are strategic fits. The company has acquired 500 insurance intermediary operations in more than two decades. It continues to make investments to drive growth and margins.
Other Acquisitions in the Same Space
There have been a host of acquisitions in the insurance space of late, given the significant capital available. Recently, Marsh & McLennan Companies’ (MMC - Free Report) unit Oliver Wyman acquired a minority stake in Corridor Platforms and Arthur J. Gallagher & Co. (AJG - Free Report) closed the buyout of Cunnington & Associates, Inc. and Barrett, Liner & Buss, LLC. Sun Life Financial Inc. (SLF - Free Report) acquired 80% stake in InfraRed Capital Partners ("InfraRed").
Shares of Brown & Brown have gained 17.3% in the past year against the industry’s decline of 1.6%. The company’s efforts to ramp up growth and its solid capital position should continue to drive shares higher.
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