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Brown & Brown's Subsidiary Buys Assets of Bright & Associates

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Zacks Equity Research
·3 min read
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Brown & Brown, Inc.’s BRO subsidiary Brown & Brown Dealer Services (“BBDS”) acquired Bright & Associates, Inc. and its affiliate Auto Care Essentials, LLC (collectively, Bright & Associates).

Formed in 1977, this Missouri-based Bright & Associates is an independent sales and service organization. It provides finance and insurance (F&I) products and sales support to the automotive, marine, power sport and RV markets. The firm also markets paint and fabric protection products and services through its Auto Care Essentials business.

Rationale Behind the Deal

The acquisition of Bright & Associates will provide Brown & Brown with a wealth of experience in F&I products and services. The buyout will enable the acquirer to extend the presence of BBDS in Missouri and Illinois.

Also, the capabilities and expertise of Brown & Brown and its subsidiary, BBDS, will provide benefits, improved products as well as services for the customers of Bright & Associates.

Inorganic Growth Story

Brown & Brown and its subsidiaries pursue frequent buyouts 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 first buyout by the insurance broker in the fourth 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 #3 (Hold) insurance broker in its inorganic efforts. These acquisitions drive Brown & Brown’s commission and fees, which 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.

Acquisitions in the Industry

There have been a number of significant acquisitions in the insurance domain of late. Recently, Arthur J. Gallagher & Co. AJG acquired NY-based Merriam Agency to boost its repertoire. Arch Capital Group Ltd. ACGL agreed to acquire Watford Holdings Ltd. WTRE for $622 million in cash.
You can see the complete list of today’s Zacks #1 Rank stocks here.

Price Performance

Shares of Brown & Brown have risen 34.1% in the past year compared with the industry’s growth of 14.4%. The company’s efforts to ramp up growth and capital position should continue to drive shares higher.

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