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Brown & Brown's (BRO) Unit to Acquire Special Risk Managers

Zacks Equity Research

Brown & Brown, Inc.’s BRO unit Brown & Brown Programs (CA), Inc. recently agreed to acquire the assets of Special Risk Insurance Managers, Ltd. The acquisition, following the fulfillment of certain conditions, is expected to be completed on Jan 1, 2020.

Special Risk, in operation since 1991, is an incorporated Managing General Agent (MGA), specializing in providing innovative insurance products and programs that meet the needs of specialty insurance product market in Canada. As an MGA, Special Risk Insurance Managers has entered into contracts with a number of the world's largest insurers. The company provides quotes, issues policies and manages claims. It also provides products that best suit client needs and at best prices. Special Risk offers a complete selection of insurance coverage for all aspects of diverse activities.

The addition of Special Risk will strengthen the presence of the acquirer in the insurance brokerage market in Canada.

As far as Special Risk is concerned, the combination will provide it with major insurer opportunities, enhanced Lloyd’s relationships and innovative products for retail brokers.

Brown & Brown maintains a disciplined focus on acquiring companies that are strategic fits. The Zacks Rank #3 (Hold) insurer closed 18 transactions through the third quarter of 2019 with annualized revenues of $86 million. Mergers and acquisitions are central to its growth strategy, demonstrated by the more than 500 agency acquisitions so far. It remains focused on making investments to drive organic growth and margin expansion.

Recently, there have been a number of acquisitions in the insurance industry, given the significant capital available. Arthur J. Gallagher & Co. AJG acquired New South Wales-based Blueleaf Consulting Pty Ltd.

Shares of Brown & Brown have gained 38.7% year to date, outperforming the industry’s increase of 34.9%. The company’s efforts to ramp up growth and its solid capital position should continue to drive shares higher.


Stocks to Consider

Some better-ranked stocks in the same space include Kemper Corporation KMPR and EverQuote, Inc. EVER, each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Kemper provides property and casualty, and life and health insurance to individuals and businesses in the United States. The company beat the Zacks Consensus Estimate in the trailing four quarters, the average beat being 16.40%.

EverQuote enables consumers to shop for auto, home, and life insurance quotes. It serves carriers, agents, financial advisors, and indirect distributors and aggregators. The company surpassed the Zacks Consensus Estimate in the trailing four quarters, the average beat being 84.25%.

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