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Brown & Brown (BRO) Subsidiary Buys Assets of South & Western

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Brown & Brown, Inc. (BRO - Free Report) subsidiary, Hull & Company, LLC, has acquired considerably all of South & Western General Agency, Inc. (South & Western) assets as well as all issued and outstanding shares of South & Western’s affiliate, S&W Premium Finance Company, Inc.

Formed in 1974, Addison, TX-based South & Western is the premier managing general agency in the mid-south and southwest, providing specialty property and casualty insurance products across Texas, Arkansas, Louisiana, Mississippi, Oklahoma, and Tennessee.

The company specializes in personal lines, farm and agribusiness, commercial transportation and specialty commercial property and casualty insurance products. It also offers insurance premium financing through S&W Premium Finance Company.

With this acquisition, Brown & Brown will leverage the expertise of South & Western in offering property and casualty insurance products.

Notably, this latest transaction marks the sixth buyout by the insurance broker in the fourth quarter of 2020. During the nine months ended Sep 30, 2020, it closed 16 transactions, with estimated annual revenues of $116 million.

Inorganic Growth Story

Brown & Brown along with its subsidiaries pursues frequent buyouts in order to achieve top-line growth. Its revenues have grown as a result of its continued focus on net new business growth and acquisitions.

Consistent investments along with solid earnings will likely aid this Zacks Rank #2 (Buy) insurance broker in its inorganic efforts. The acquisitions drive Brown & Brown’s commission and fees, which, in turn, boost revenue growth.

From 1993 through the third quarter of 2020, the company acquired 552 insurance intermediary operations. It remains well-positioned with its capital structure and has been able to access sufficient capital via its $1.1 billion available cash to fund growth. Moreover, consistent operational results have helped Brown & Brown to generate solid cash flows to be deployed in strategic initiatives.

Shares of Brown & Brown have risen 17.9% in the past year, outperforming the industry’s growth of 3.5%. The company’s efforts to ramp up growth and capital position should continue to drive shares higher.

 

Other Acquisitions in the Same Space

There have been a host of acquisitions in the insurance space of late, given the significant capital availability. Recently, Arthur J. Gallagher & Co. (AJG - Free Report) closed the buyout of Jenkintown, PA-based Premier Brokerage Services, Inc. Assurant (AIZ - Free Report) 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 - Free Report) unit Marsh & McLennan Agency LLC (MMA) recently acquired the independent agency INSPRO in Nebraska.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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