BRO Announces Acquisitions

Zacks

Brown & Brown of Kentucky Inc. a subsidiary of Brown & Brown Inc. (BRO) has agreed to acquire selected assets of O'Neil Financial Services, Agency Services Consolidated Inc. as well as certain assets of Preserve Extended Protection Plan Inc. However, the terms and value of the deal remain undisclosed.

O’Neil Financial Services and Agency Services Consolidated Inc. offer extended warranty and auto protection products to different auto dealerships in Indiana, Ohio and West Virginia.

Following the acquisition, O’Neil Financial Services’ operations will be combined with the assets of Agency Services Consolidated and both will jointly work as Brown & Brown’s branch location of recreational vehicle and auto division.

Brown & Brown with all its subsidiaries offers a wide range of insurance and reinsurance products and services to its clients across the United States. The product portfolio of the company includes various risk management, administration of third parties and other services.

Given 20 years of experience in auto warranty and protection product industry for O’Neil Financial Services and Agency Services and their market leading position in the same, the acquisition is expected to provide Brown & Brown’s recreational vehicle and auto division a strong presence in auto warrant and protection product field.

Preserve Extended Protection Plan Inc. operates as a managing general agent for national extended warranty program for the RV industry and the acquisition of it is expected to fuel Brown & Brown’s increasing national position in RV warranty space.

Moreover, Agency Services Consolidated and Preserve Extended Protection Plan jointly have annualized revenues of $2.1 million and that of O’Neil Financial Services totals nearly $1.9 million. These numbers are expected to fuel the top-line growth of Brown & Brown in future periods.

The acquisition by Brown & Brown was primarily supported by its strong balance sheet and its ability to generate healthy cash flow, which in turn, is owing to its continued solid operational performance across all four business divisions.

Brown & Brown is consistently treading the inorganic route to ramp up its growth profile. In Jul 2013, the company also acquired insurance and risk management broker, Beecher Carlson Holdings Inc.

Among others adopting the inorganic route include Arthur J. Gallagher & Co. (AJG) which closed the acquisition of London-based Giles Group of Companies. The all-cash transaction cost the company £233 million or $366.4 million (£237 or $368.6 million in net cash, less the value of tax and other assets acquired).

Mercer, the consulting wing of Marsh & McLennan Companies Inc. (MMC), also announced its intention to purchase the pension wind-up operations of PricewaterhouseCoopers (PwC) in Canada in August.

Brown & Brown presently carries a Zacks Rank #3 (Hold). A better-ranked stock in the insurance space is Alleghany Corp. (Y) with a Zacks Rank #1 (Strong Buy).

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