Brown & Brown (BRO) Strengthens Portfolio With DealerMax
Brown & Brown, Inc.’s BRO unit, Brown & Brown Dealer Services (“BBDS”), has acquired the assets of DealerMax. This acquisition is expected to strengthen BRO’s presence in the Northeast.
Berwyn, PA-based DealerMax, founded in 1982, offers vehicle service contracts, rental cars, payment reinsurance and consulting. The company caters to dealer customers in Pennsylvania and across the Northeast. With the addition of DealerMax, Brown & Brown will be able to leverage the expertise of DealerMax in the finance and insurance (F&I) automotive industry.
The buyout will strengthen the presence of BBDS in Pennsylvania and provide BRO with better growth opportunities in terms of F&I product offerings. This marks the second acquisition by Brown & Brown in the first quarter of 2024.
BRO and its subsidiaries continuously make strategic acquisitions to expand on a global scale, add capabilities, boost 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 the insurer in generating solid cash flows for deployment in growth initiatives.
From 1993 through the fourth quarter of 2023, the company acquired 644 insurance intermediary operations. In 2023, BRO acquired 33 companies.
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 insurer will continue to work on its acquisition pipeline, acquiring companies that fit its operational and strategic layout.
Price Performance
Shares of this Zacks Rank #2 (Buy) insurance broker have gained 20.3% year to date compared with the industry’s growth of 12.8%. 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 Other Industry Players
Marsh & McLennan Companies, Inc.’s MMC Marsh McLennan Agency (“MMA”), a division of MMC’s Marsh business, recently closed buyouts of two middle-market agencies of Louisiana, Querbes & Nelson (“Q&N”) and Louisiana Companies. The twin buyouts are expected to strengthen the capabilities of MMA as well as solidify its presence significantly across Louisiana. The addition of Q&N is expected to bolster the business insurance and employee health and benefits offerings suite of MMA.
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.
Aon plc AON recently announced that it has acquired the technology assets and intellectual property of Humn.ai. Aon, a professional services firm, will benefit from enhanced offerings to clients, further improving its core value proposition. The new capability will provide tools and data-powered insights, which are expected to improve business decision making.
Acquisitions and partnerships form one of the main growth strategies at Aon and the company has sealed many acquisitions over the past few years. Its acquisitions are mainly aimed at the expansion of its health and benefits business, flood insurance solutions, and risk and insurance solutions operations. Strategic collaborations also boost AON’s capacity and make it one of the largest insurance brokers.
Another Stock to Consider
Another top-ranked stock from the insurance industry is Ryan Specialty Holdings, Inc. RYAN, carrying a Zacks Rank #2 at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Ryan Specialty beat earnings estimates in two of the last four quarters and matched the mark twice, the average surprise being 5.05%. Year to date, the insurer has gained 27.4%.
The Zacks Consensus Estimate for RYAN’s 2024 earnings and revenues suggests a rise of 28.2% and 19.5%, respectively, from the prior-year reported figures.
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