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Brown & Brown (BRO) Expands Global Presence With Buyout

Brown & Brown, Inc.’s BRO subsidiary, Brown & Brown of Massachusetts, Inc. has purchased Smithwick & Mariners Insurance, MidCoast Insurance and Chapman & Chapman Insurance. The addition of Smithwick & Mariners will boost Brown & Brown’s presence in parts of England.

Smithwick & Mariners was founded in 1987 to cater to the evolving needs of the marine industry. Gradually, the insurer evolved its capabilities to provide innovative risk solutions to business owners and individuals across Maine and greater New England. The buyout will boost the acquirer’s capabilities to serve the marine industry while Smithwick & Mariners will be able to leverage BRO’s compelling portfolio. This marks the fifth acquisition by Brown and Brown in the quarter to date.

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 10 acquisitions in the first half of 2022.

Brown & Brown’s impressive growth is driven by organic and inorganic means across all segments.  Brown & Brown 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 $2.4 billion of cash and cash equivalents.

Shares of this Zacks Rank #3 (Hold) insurance broker have gained 9.2% in a year, outperforming the industry’s rise of 4.2%. 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, Sun Life Financial Inc. SLF and Marsh & McLennan Companies, Inc. MMC have been pursuing strategic mergers and acquisitions.

Arthur J. Gallagher has acquired Watkins Insurance & Benefits, LLC. The addition to the acquirer’s portfolio will strengthen Watkins Insurance’s presence in the Central Louisiana marketplace and provide the brokerage insurer with growth opportunities.

AJG’s merger and acquisition pipeline is quite strong, with about $350 million of revenues, associated with about 40 term sheets either agreed upon or being prepared.

Sun Life has agreed to acquire a 51% interest in Advisors Asset Management, Inc. (“AAM”) for $214 million (C$280 million). The acquisition of AAM will enable SLF to extend its top-notch alternative investment capabilities to new clients.  

Sun Life considers acquisitions a prudent approach to ramp up its growth profile. Strategic buyouts have positioned it as the second-largest dental network in the United States, consolidated its footprint in Vietnam, Indonesia and India, and expanded its wealth business in Hong Kong.

Marsh & McLennan Companies, Inc.’s subsidiary, Marsh McLennan Agency acquired a leading independent agency, Steinberg & Associates, Inc., to expand and enhance its personalized client service approach within the Mid-Atlantic region.

Acquisitions are one of the core growth strategies of Marsh & McLennan, helping it expand product offerings, benefit customers and strengthen its global presence.

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

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Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report
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