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Brown & Brown (BRO) to Improve Service Portfolio With Buyout

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Brown & Brown, Inc.’s (BRO - Free Report) unit Texas Security General Insurance Agency, LLC, recently purchased essentially all the assets of Loving and Etheredge, Inc. d/b/a Texas Commercial Insurance Facilities (TCIF) and its affiliate Arkansas Insurance Facilities, Inc. (AIF). With this buyout, the company expects to boost its brokerage operations as well as fortify its footprint in Texas and Arkansas.

Established in 1990, TCIF operates as a managing general agent for Texas retail insurance agents, offering commercial and personal surplus lines insurance, pertaining to property and casualty business. AIF also provides the same services for the retail agents in Arkansas and both companies together boast generating annual revenues of about $2 million. On completion of this transaction, the teams at TCIF and AIF will become part of Brown & Brown’s Wholesale Brokerage Division as branch locations of Texas Security.

The acquisition is anticipated to improve the insurance broker’s service portfolio, which in turn, will be useful to cater to the company’s clients more efficiently. Both TCIF and AIF have built a reputation for themselves, offering their clients with top-notch services and stability that created solid and long-lasting relationships with retail agents and carrier partners. Apart from expanding its base in Texas and Arkansas, the insurance broker expects the integration to add substantial value to its service portfolio.

Moreover, the consolidation is likely to enhance the acquirer’s service offering at Wholesale Brokerage business, dealing in excess and surplus commercial as well as personal lines insurance.

Further, on Jun 18, 2018, the insurance broker’s arm also bought substantially all the assets of C & C Risk Services, LLC. This integration will not only enable Brown & Brown to drive its brokerage platform but also reinforce its foothold across Texas and Florida.

Therefore, strategic buyouts and mergers have always aided Brown & Brown to fuel growth as well as expand its operations. Also, these tactical moves assisted Brown & Brown to elevate its commissions and fees, which in turn, propelled revenue growth.

Zacks Rank and Share Price Movement

Brown & Brown currently holds a Zacks Rank #2 (Buy). Shares of the company have gained 10.4% year to date, outperforming the industry’s rise of 3.4%. 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.



 

 

Other Acquisitions in the Insurance Space

We have been noticing insurers adopting an inorganic growth path to build portfolio strength for some time now. The insurance industry has been making waves of late with consecutive consolidations on the back of its available capital resource, remaining at an all-time high.

Recently, The Navigators Group, Inc. (NAVG - Free Report) closed the buyout of Bracht, Deckers & Mackelbert NV (BDM) as well as its affiliated insurance company, Assurances Continentales – Continentale Verzekeringen NV (ASCO). Also, Arthur J. Gallagher & Co. (AJG - Free Report) acquired Finergy Solutions Pty Ltd and Avantek Pty Ltd.

Further, Alleghany Capital Corporation, a wholly-owned subsidiary of Alleghany Corporation (Y - Free Report) , announced that its subsidiary Jazwares, LLC has taken over Russ Berrie and Applause brands.

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

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