Yahoo Finance Brown & Brown (BRO) to Expand UK Presence With Buyout
Brown & Brown, Inc. BRO has inked a deal to buy Kentro Capital Limited. The acquisition, when it materializes, will boost Brown & Brown’s presence in parts of England. Following the fulfillment of closing conditions, the acquisition will close in the fourth quarter of 2023.
Headquartered in London, Kentro is an insurance industry group having Nexus, Xenia, Millstream, Capstone Brokers and Spectrum Risk Management companies under its umbrella. Kentro manages more than £500 million of gross written premium.
These entities focus on product specialization and underwriting discipline in their efforts to ramp up growth. Thus, the addition of Kentro to the acquirer’s portfolio will add specialty capabilities as well as consolidate its presence in London.
Brown & Brown and its subsidiaries continuously make strategic acquisitions to expand globally, add capabilities and boost operations. Also, these strategic buyouts help Brown & Brown increase commissions and fees, which, in turn, drive revenues. The insurance broker made 11 acquisitions in the first quarter of 2023.
Brown & Brown’s impressive growth is driven 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.
Consistent operational results have been aiding Brown & Brown in generating solid cash flows for deployment in strategic initiatives. It has maintained a strong liquidity position, with $0.5 billion of cash and cash equivalents.
Shares of this Zacks Rank #2 (Buy) insurance broker have gained 15.3% year to date, outperforming the industry’s rise of 7.6%. A sustained operational performance, higher commissions and fees, and a sturdy capital position will help the broker retain the momentum.
Given the insurance industry’s adequate capital level, players, like Arthur J. Gallagher & Co. AJG, have been pursuing strategic mergers and acquisitions.
Arthur J. Gallagher recently acquired Allied Risk Management through Artex Risk Solutions, Inc., AJG’s captive and alternative risk transfer solutions subsidiary. The buyout will help AJG consolidate its portfolio of professional services.
AJG’s merger and acquisition pipeline is quite strong, with about $350 million of revenues, associated with about 45 term sheets either agreed upon or being prepared.
Other Stocks to Consider
Some other top-ranked insurers from the insurance industry are Erie Indemnity (ERIE) and Ryan Specialty Holdings RYAN.
Estimates for Erie Indemnity’s 2023 and 2024 earnings have moved 3.9% and 11.7% north, respectively, in the past 30 days. ERIE sports a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.
The Zacks Consensus Estimate for ERIE’s 2023 and 2024 earnings per share indicates a year-over-year increase of 26.1% and 13.6%, respectively. In the year-to-date period, ERIE has lost 7.9%.
The Zacks Consensus Estimate for Ryan Specialty Holdings’ 2023 and 2024 earnings per share indicates a year-over-year increase of 15.7% and 23.3%, respectively. In the year-to-date period, RYAN has gained 6.5%.
RYAN’s earnings surpassed estimates in two of the last four quarters, missed in one, and met estimates in one, the average beat being 2.67%. The stock carries a Zacks Rank #2.
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Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report
Brown & Brown, Inc. (BRO) : Free Stock Analysis Report
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