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Brown & Brown Upped to Hold

Zacks Equity Research

On Jan 17, Zacks Investment Research upgraded Brown & Brown Inc. (BRO) to a Zacks Rank #3 (Hold) from a Zacks Rank #4 (Sell) following the acquisition of The Wright Insurance Group, LLC. The acquisition will enable Brown & Brown to be a part of the national flood insurance program (:NFIP), and serve as a premier service provider to the government-sponsored insurance programs and proprietary national and regional programs.

Why the Upgrade?

Early this month, Brown & Brown inked a merger deal to acquire The Wright Insurance Group, LLC for a total net consideration of $602.5 million. The company expects the entire transaction to close by Apr 2014.

Brown & Brown has undertaken several acquisitions in the recent past to augment its wide range of insurance product and service portfolio as well as leverage its client base. These initiatives should aid the company’s earnings performance going forward.

Some of its latest acquisitions include certain assets of O'Neil Financial Services, Agency Services Consolidated Inc., Preserve Extended Protection Plan Inc. as well as some assets of ICA, Inc.

The acquisitions at Brown & Brown are 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 has delivered positive earnings surprises in three of its last four reported quarters with an average beat of 2.6%.

Some of the better-ranked stocks in the insurance space that are worth considering include CNO Financial Group, Inc. (CNO), Kemper Corporation (KMPR) and FBL Financial Group Inc. (FFG). All these stocks carry a Zacks Rank #1 (Strong Buy).

Read the Full Research Report on CNO
Read the Full Research Report on FFG
Read the Full Research Report on KMPR
Read the Full Research Report on BRO

Zacks Investment Research