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Brown & Brown (BRO) Strengthens Portfolio With CTI Buyout

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Brown & Brown, Inc.’s (BRO - Free Report) subsidiary Brown & Brown of Massachusetts, LLC has acquired substantially all the assets of Claim Technologies Incorporated (CTI). The buyout will help the acquirer boost its portfolio of services.

CTI, founded in 1990, offers a wide variety of benefit plan audits to governmental and private employers throughout the United States. Its claim administration expertise is utilized by benefit consultants, public accounting firms, and actuarial firms to conduct healthcare claim audits for their clients.

The addition of CTI is likely to strengthen the wide-ranging portfolio of services and capabilities of Brown & Brown. This will enable the acquirer to evaluate the performance of administrators of employee benefit plans.

With this recent transaction, CTI will continue to offer quality audit services to its customers.

Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues. The latest transaction was the second buyout for BRO in first-quarter 2022.

Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments. Also, strategic acquisitions and mergers help it spread its operations. The insurance broker closed two acquisitions in the first quarter with annual revenues of approximately $65 million.  Brown & Brown intends to make consistent investments in boosting organic growth and margin expansion. Its solid earnings have allowed the company to expand its capabilities, with the buyouts extending the company’s geographic footprint.

Consistent operational results have been aiding this Zacks Rank #3 (Hold) insurance broker in generating solid cash flows for deployment in strategic initiatives. Brown & Brown exited first-quarter 2022 with cash and cash equivalents of $1.7 billion, which grew more than two-fold from the 2021-end level.

Given the insurance industry’s adequate capital level, players like Arthur J. Gallagher & Co. (AJG - Free Report) and Aon plc (AON - Free Report) are pursuing strategic mergers and acquisitions.

Arthur J. Gallagher & Co. has acquired Hruska Insurancenter, Inc. AJG boasts an impressive inorganic story. The company has a strong merger and acquisition pipeline. Arthur J. Gallagher’s revenues are geographically diversified with strong domestic and international operations and a compelling product and service portfolio. A solid capital position supports AJG in its growth initiatives and it thus remains focused on continuing its tuck-in mergers and acquisitions.

Aon plc purchased the actuarial software platform Tyche to boost its insurance consulting capabilities for clients. Aon undertakes strategic buyouts every now and then to boost its capabilities and provide advanced solutions to clients. AON spent $14 million on buyouts in 2021 and has sealed many acquisition deals over the past few years. Its acquisitions mainly aim at expanding its health and benefits business, flood insurance solutions, and risk and insurance solutions operations.

Price Performance

Shares of Brown & Brown have gained 11% in a year against the industry’s decrease of 7.6%. Brown & Brown’s efforts to ramp up growth and capital position should continue to drive its shares.

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Stock to Consider

A better-ranked stock from the insurance space is W.R. Berkley Corporation (WRB - Free Report) , sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

W.R. Berkley’s earnings surpassed estimates in each of the last four quarters, the average earnings surprise being 27.08%.

The Zacks Consensus Estimate for WRB’s 2022 and 2023 earnings has moved 6.3% and 6.2% north, respectively, in the past 30 days.

Shares of Arthur J. Gallagher, Aon and W.R. Berkley have gained 10.3%, 9.3% and 29%, respectively, in the same time frame.