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Brown & Brown's (BRO) Subsidiary Buys Assets of Brookstone

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Zacks Equity Research
·3 min read
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Brown & Brown, Inc.’s BRO subsidiary Brown & Brown Lone Star Insurance Services, Inc. acquired considerably all assets of Brookstone Insurance Group, LLC.

BrookStone Insurance Group is a full-service independent insurance agency, which provides commercial and personal insurance solutions to customers throughout the greater Dallas-Fort Worth metro area. It offers a wide range of insurance services. Commercial insurance, personal insurance, employee benefits, individual health, life insurance and many other insurance products are placed with various insurance companies on the behalf of their clients.

It intends to make the process of purchasing insurance as simple as possible, while offering individualized attention to each customer.

BrookStone Insurance Group maintains seven locations in and around the DFW metroplex, and is currently growing to expand the reach throughout Texas.

Rationale Behind the Deal

With this acquisition, Brown & Brown will leverage the expertise of Brookstone’s agency in customer service and market. Thus, this partnership will enable Brown & Brown to boost its operations in Texas with the new talent and valued customer relationships of Brookstone and also enhance its product portfolio.

As far as Brookstone is concerned, this transaction will provide them with more growth opportunities.

Inorganic Growth Story

Brown & Brown and its subsidiaries pursue frequent buyouts in order to achieve top-line growth, global expansion, add capabilities and boost operations. Its revenues have grown as a result of its continued focus on net new business growth and acquisitions. Notably, this latest transaction marks the fifth buyout by the insurance broker in the third quarter of 2020. In the first six months of 2020, the insurer closed 10 transactions with estimated annual revenues of $85 million.

Consistent investments along with solid earnings will likely aid this Zacks Rank #2 (Buy) insurance broker in its inorganic efforts. These acquisitions drive Brown & Brown’s commission and fees, which, in turn, boost revenue growth.

From 1993 through the second quarter of 2020, the company acquired 546 insurance intermediary operations. It continues to make investments to drive growth and margins.

Another Acquisition in the Same Space

There have been a number of significant acquisitions in the insurance domain of late. Recently, Arthur J. Gallagher & Co. AJG acquired La.-based The Kirksey Agency, Inc. to boost its agricultural capabilities.

Price Performance

Shares of Brown & Brown have risen 22.6% in the past year, outperforming the industry’s growth of 6.1%. The company’s efforts to ramp up growth and capital position should continue to drive shares higher.

 


Other Stocks to Consider

Some other top-ranked companies in the insurance industry are eHealth EHTH and Donegal Group Incorporation DGICA, each sporting a Zacks Rank #1 (Strong Buy) at present. You can see the complete list of today’s Zacks #1 Rank stocks here.

eHealth surpassed estimates in each of the last four quarters, the average being 82.02%.

Donegal surpassed estimates in each of the last four quarters, the average being 86.44%.

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