Brown & Brown (BRO) Completes Kentro Buyout, Boosts UK Presence
Brown & Brown, Inc. BRO recently closed the acquisition of Kentro Capital Limited, boosting Brown & Brown’s presence in parts of England. Headquartered in London, Kentro is an insurance industry group having Nexus, Xenia, Millstream, Capstone Brokers and Spectrum Risk Management companies under its umbrella. Kentro manages more than £500 million of gross written premium.
These entities focus on product specialization and underwriting discipline in their efforts to ramp up growth. Thus, the addition of Kentro to the acquirer’s portfolio will add specialty capabilities as well as consolidate its presence in London.
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 insurance broker made 13 acquisitions in the first half of 2023.
Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments. It intends to make consistent investments to drive organic growth and margins. 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 Brown & Brown in generating solid cash flows for deployment in strategic initiatives. It has maintained a strong liquidity position, with $0.6 billion of cash and cash equivalents.
Shares of this Zacks Rank #3 (Hold) insurance broker have gained 25.8% year to date, outperforming the industry’s rise of 13.3%. A sustained operational performance, higher commissions and fees, and a sturdy capital position will help the broker retain the momentum.
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Given the insurance industry’s adequate capital level, players, like Arthur J. Gallagher & Co. AJG, have been pursuing strategic mergers and acquisitions.
Arthur J. Gallagher & Co. recently acquired WLA Insurance, LLC, dba Altman Insurance Services. The buyout will help AJG consolidate its presence in the South Central region.
AJG’s merger and acquisition pipeline is quite strong, with about $700 million of revenues, associated with about 55 term sheets either agreed upon or being prepared.
Stocks to Consider
Some better-ranked insurers from the insurance industry are Aon plc AON and Ryan Specialty Holdings RYAN.
Aon plc currently carries 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 AON’s 2023 and 2024 earnings per share indicates a year-over-year increase of 6.5% and 13%, respectively. In the year-to-date period, AON has gained 9.1%.
AON’s earnings surpassed estimates in two of the last four quarters, missing twice, the average beat being 0.5%.
The Zacks Consensus Estimate for Ryan Specialty Holdings’ 2023 and 2024 earnings per share indicates a year-over-year increase of 20.9% and 21.2%, respectively. In the year-to-date period, RYAN has gained 18.3%.
RYAN’s earnings surpassed estimates in two of the last four quarters, missed once, and met estimates in one, the average beat being 2.4%. The stock presently carries a Zacks Rank #2.
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