Brown & Brown (BRO) Expands in Florida With Caton-Hosey Buyout
Brown & Brown, Inc. BRO recently announced that it has entered an agreement to purchase Caton-Hosey Insurance. This acquisition is expected to boost Brown & Brown’s presence in the Florida market. This transaction is expected to close by early January 2024, pending certain conditions.
Caton-Hosey will leverage the opportunities and resources of BRO, aiding it to strengthen its position as an insurer. Caton-Hosey provides distinctive insurance and personal service solutions to commercial and individual customers in Florida. Rex Caton took on the leadership of Caton Insurance from his father, Richard Caton, and with the joining of John Hosey in 1993, the firm became Caton-Hosey Insurance. This marks the 10th acquisition by Brown & Brown in the quarter-to-date period.
Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand on a global scale, add capabilities, boost its operations and improve margins. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues. Consistent operational results have been aiding Brown & Brown in generating solid cash flows for deployment in growth initiatives.
Brown & Brown’s impressive growth is supported 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. The company will continue to work on its acquisition pipeline, acquiring companies that fit BRO’s operational and strategic layout.
Shares of this Zacks Rank #2 (Buy) insurance broker have gained 23.5% year to date, outperforming the industry’s rise of 9.3%. A persistent operational performance, higher commissions and fees, and a sturdy capital position will help the broker retain the momentum.
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Acquisitions by Industry Players
Arthur J. Gallagher & Co. AJG recently closed the buyout of The Evans Agency. The acquisition was announced last month. The acquisition will consolidate the acquirer’s presence in Western New York.
Arthur J. Gallagher is growing through mergers and acquisitions, most of which are within its Brokerage segment. AJG has a solid merger and acquisition pipeline with about 45 term sheets either agreed upon or being prepared, representing more than $450 million of annualized revenues. Revenue growth rates generally range from 5% to 20% for 2023 acquisitions. It continues to expect M&A capacity upward of $3 billion through the end of 2023 and another $3.5 billion in 2024 without using any equity.
Marsh & McLennan Companies, Inc.’s MMC business, Oliver Wyman, recently agreed to buy SeaTec Consulting Inc., which caters to aerospace, defense, aviation and transportation industries. This move is expected to boost Oliver Wyman’s position in the aviation space.
The acquisition underscores Marsh & McLennan's strategic inorganic growth approach, exemplified by various purchases across its operating units. These acquisitions have facilitated entry into new regions, expansion in existing ones, diversification into new businesses and the development of new segments. The prudent acquisitions position the company for sustained long-term growth.
Other Stock to Consider
A top-ranked stock from the brokerage insurance space is Erie Indemnity ERIE, sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.
Erie Indemnity delivered a four-quarter average earnings surprise of 10%. ERIE has gained 33% year to date. The Zacks Consensus Estimate for ERIE’s 2023 and 2024 earnings per share is pegged at $8.53 and $9.85, indicating a year-over-year increase of 49.4% and 15.5%, respectively.
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