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Brown & Brown's Unit Boosts Service Portfolio With Buyout

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Brown & Brown, Inc.’s (BRO - Free Report) unit Brown & Brown of Kentucky, Inc. recently purchased almost all the assets of Automotive Development Group, LLC. This latest transaction will not only enable the acquirer to boost its presence but also its growth in the auto warranty and Finance and Insurance (F&I) training domain.

As a performance improvement company, Automotive Development Group helps its U.S.-based auto dealer clients receive F&I training as well as auto warranty and related products. On completion of the consolidation, the team at Automotive Development Group will join the insurance broker’s personnel handling auto, RV and powersports practice.

Brown & Brown addressed the need for a well-established platform to improve the efficiencies and functionality of its products and services in the growing auto/F&I domain. This association will benefit both companies’ respective clients in terms of enhancing their business proficiencies by creating an advanced program that will deliver them insurance products.

Automotive Development Group will bring in annual revenues of about $11 million and more enhanced solutions that will aid the insurance broker’s clients.

Automotive Development Group’s addition to Brown & Brown’s portfolio will render an opportunity to the clients to drive business growth at a faster pace by capitalizing on the best possible insurance offerings and training available in the industry.

The latest buyout will also boost the Commercial Programs, which provides products and services to specific industries, trade groups and market niches. We anticipate that the Automotive Aftermarket under this program is expected to enhance its service offering.

Inorganic strategies like these have assisted the company to fuel growth as well as expand its operations. Also, these tactical initiatives have helped Brown & Brown to increase its commissions and fees, which in turn has resulted in revenue growth.

Zacks Rank and Share Price Movement

Currently, Brown & Brown carries a Zacks Rank #3 (Hold). Shares of the company have gained 6.1% year to date, outperforming the industry’s 3.9% rise. We expect the company’s sustained operational performance, higher commissions and fees plus a solid capital position to push the stock higher in the near term.


Stocks to Consider

Some better-ranked stocks from the insurance industry are Alleghany Corporation (Y - Free Report) , Markel Corporation (MKL - Free Report) and The Navigators Group, Inc. (NAVG - Free Report) , each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.     

Alleghany provides property and casualty reinsurance and insurance products in the United States and internationally. The company delivered positive surprises in three of the last four quarters with an average beat of 17.61%.

Markel markets and underwrites specialty insurance products in the United States, the United Kingdom, Canada and internationally. The company came up with positive surprises in two of the last four quarters with an average beat of 15.54%.  

Navigators Group underwrites marine, property and casualty plus professional liability insurance products and services in the United States and internationally. The company pulled off positive surprises in three of the last four quarters with an average beat of 14.66%.

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