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Brown & Brown (BRO) Expands in New York With Dealer Specialties

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Brown & Brown, Inc.’s (BRO - Free Report) subsidiary Brown & Brown Dealer Services (BBDS) has acquired all the assets of Dealer Specialties. The buyout will help the acquirer expand its international footprint.

Formed in 1989, Dealer Specialties, an independent sales and service organization, is the leading provider of vehicle data collection, image generation, window labeling services, pricing analytics and inventory management and marketing. It provides solutions to new and used car dealers. It also provides finance and insurance (F&I) products and sales support to automotive and powersport dealers across New York.

The acquisition of Dealer Specialties will provide BBDS with a wealth of experience in F&I products and services. The buyout will enable the acquirer to strengthen the presence of BBDS in New York.

On the other hand, the customers of Dealer Specialties will gain from the diversified products and services offered by Brown & Brown.

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 third buyout for BRO in the second quarter of 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) have been pursuing strategic mergers and acquisitions.

Arthur J. Gallagher & Co. acquired Menlo Park, CA-based Valerie Frederickson & Company, Inc. in May 2022. 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.

Price Performance

Shares of Brown & Brown have gained 10.9% in a year against the industry’s decrease of 9.1%. Brown & Brown’s efforts to ramp up growth and capital position should continue to drive its shares.

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Stocks to Consider

Some better-ranked insurers include Ryan Specialty Group Holdings, Inc. (RYAN - Free Report) and Cincinnati Financial Corporation (CINF - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for RYAN’s 2022 and 2023 earnings has moved 3.4% and 4.3% north in the past 30 days. Ryan Specialty delivered a four-quarter average earnings surprise of 19.7%.

The Zacks Consensus Estimate for CINF’s 2022 and 2023 earnings has moved 3.6% and 1.7% north, respectively, in the past 30 days. Cincinnati Financial delivered a four-quarter average earnings surprise of 32.5%.

In the past year, shares of AJG, RYAN and CINF have gained 11%, 37% and 2.2%, respectively.

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