Brown & Brown's (BRO) Unit Buyout to Serve Clients Better

Brown & Brown, Inc.’s BRO wholly owned subsidiary The Advocator Group, LLC recently acquired Professional Disability Associates, LLC. The buyout will add capabilities to its service portfolio. The financial details of the acquisition have been kept undisclosed.

Professional Disability Associates operates as an innovative disability services company, boasting as an industry leader in offering specialty claims management services, which comprise medical file review, vocational services and claim consulting. The firm caters to major disability insurers, reinsurers and self-insured employers while generating annual revenues of about $15 million. Professional Disability Associates will continue functioning from its offices in Portland, ME.

The team at Professional Disability Associates will chip in with strong expertise and resources, which in turn can aid Brown & Brown to improve the quality of services made available to its clients. The transaction will allow both the insurance broker and Professional Disability Associates to add more depth and value to a suite of services offered to carriers, clients and for enhancing customer relationships.

The acquisition will prove to be a great tactical move for Brown & Brown, with the insurance broker being optimistic in leveraging Professional Disability Associates’ solid presence, experience, valued client relationships and business insights. Hence, this inorganic action will help the insurance broker further strengthen its service portfolio and be one step closer to offering a comprehensive line of services and solutions to its existing and future clientele base.  

The latest integration will not only fortify the buyer’s operations in the aforementioned region but also assist in ramping up its inorganic growth profile and boost margin expansion. Moreover, the company is expected to gain traction from this transaction in terms of reinforcing its product and service portfolio.

The above-mentioned inorganic strategies have braced the company to fuel growth as well as expand its scope of operations. Also, these calculated initiatives have bolstered Brown & Brown to increase its commissions and fees, which in turn, drove revenue growth. In fact, for 2018, the company projects to gross revenues between $8 million and $11 million.

Zacks Rank and Share Price Movement

Currently, Brown & Brown holds a Zacks Rank #2 (Buy). Shares of the company have rallied 13.3% year to date, outperforming the industry’s 8.6% rise. We expect the company’s sustained operational performance, higher commissions and fees plus a solid capital position to push the stock higher in the near term.  

 

Other Acquisitions in the Insurance Space

We have noticed insurers treading the inorganic path to enrich portfolio for a while now. The insurance industry has been stealing the show of late with scores of acquisitions on the back of its all-time high available capital resource.

Recently, Arthur J. Gallagher & Co. AJG acquired 100% equity interest in Reassurance Holdings, Inc., including Coverdell & Co., Inc. and Carefree Marketing, Inc. to consolidate its insurance brokerage services as well as firm up its affinity operations in the Northern region of the United States. Kemper Corporation KMPR has purchased Infinity Property and Casualty Corporation for $1.6 billion, envisioning a market leading position in nonstandard auto insurance domain.

Last month, Assurant, Inc. AIZ bought The Warranty Group to add stimulus to its footprint as an ace provider in the vehicle protection business.

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

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