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Brown & Brown's (BRO) Unit Buys Insurance Management Group

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Brown & Brown’s (BRO - Free Report) unit Brown & Brown of South Carolina, Inc. recently acquired the assets of Insurance Management Group, Inc. (IMG).

IMG, established in 1977, is a full-service broker. The company represents many of the top insurance companies in the business. It offers a wide range of employee benefits and property and casualty insurance products and services. It serves businesses and individuals across South Carolina. It develops good benefits plan for the insurance companies that help them to retain the top employees.

The addition of IMG to the portfolio of Brown & Brown will strengthen the latter's presence in South Carolina and enhance its growth opportunities.

As far as IMG is concerned, the combination will help strengthen its ability to cater to clients.

This recent transaction marks the fourth buyout for this Zacks Rank #3 (Hold) insurance broker in the ongoing quarter. Consistent investments along with solid earnings help the company in its inorganic efforts and buyouts. These strategic buyouts help Brown & Brown to increase commissions and fees, which, in turn, drive revenues.

Brown & Brown maintains a disciplined focus on acquiring companies that are strategic fits. This insurer closed 18 transactions through the third quarter of 2019 with annualized revenues of $86 million.

Mergers and acquisitions are central to its growth strategy, demonstrated by the more than 500 agency acquisitions so far. It remains focused on making investments to drive organic growth and margin expansion.

Recently, there have been a number of acquisitions in the insurance brokerage industry, given the significant capital available. Arthur J. Gallagher & Co. AJG acquired Halifax, Nova Scotia-based Sinclair Billard and Weld Limited, and CJM Solutions + Inc., dba SBW Employee Benefits.

Shares of Brown & Brown have gained 43.5% year to date, outperforming the industry’s increase of 38.2%. The company’s efforts to ramp up growth and its solid capital position should continue to drive shares higher.

Stocks to Consider

Some better-ranked stocks from the same space are Fanhua Incorporation FANH and Erie Indemnity Company ERIE. While Fanhua sports a Zacks Rank #1 (Strong Buy), Erie Indemnity carries a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Fanhua distributes insurance products and provides property and casualty insurance, life insurance and participating insurance products in China. The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 13.44%.

Erie Indemnity provides sales, underwriting and policy issuance services on behalf of the Erie Insurance Exchange.  The company beat the Zacks Consensus Estimate in three of the last four reported quarters, the average beat being 4.90%.

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