Brown & Brown's (BRO) Unit Acquires RLA Insurance's Assets

Brown & Brown, Inc. (NYSE:BRO) unveiled that its subsidiary, Peachtree Special Risk Brokers, LLC acquired the assets of RLA Insurance Intermediaries. The latter will function as a new stand-alone operation in Brown & Brown’s Wholesale Brokerage segment.

RLA Insurance operates as a wholesale insurance broker, which provides professional lines, property and casualty (P&C), and healthcare coverages. It serves retail insurance agents, thereby, catering to the evolving business needs across the United States.

With the deal, Brown & Brown will leverage RLA Insurance’s market knowledge as well as strong technical and efficient client management skills to offer its customers an enhanced portfolio of products and services.

Brown & Brown seems to be pursuing buyouts for boosting top-line growth. Notably, this marks the sixth buyout for the brokerage firm in the first quarter of 2020. The company closed 23 buyouts in 2019, with annualized revenues of $105 million.

The move reflects Brown & Brown’s efforts to expand and strengthen the foothold of its Wholesale Brokerage segment. The transaction is also expected to benefit the segment, which markets and sells excess and surplus commercial and personal lines insurance, primarily through independent agents and brokers. The Wholesale Brokerage segment accounted for nearly 13% of the company’s total commission and fees in 2019.

We also believe that such initiatives undertaken by Brown & Brown will drive commission and fees, which, in turn, will boost revenue growth. Commission and fees improved 18.7% year over year in 2019 and registered top-line growth, witnessing a CAGR of 8.7%, over the past five years (2014-2019).

Shares of the Zacks Rank #2 (Buy) brokerage firm have gained 25.6% in a year, significantly outperforming the industry’s growth of 6.6%. We believe that the company’s efforts are likely to help retain its momentum in the long run.

Other Stocks to Consider

Some other top-ranked stocks from the same space are eHealth, Inc. (NASDAQ:EHTH) , Arthur J. Gallagher & Co. (NYSE:AJG) and Aon plc (NYSE:AON) . While eHealth currently sports a Zacks Rank #1 (Strong Buy), Arthur J. Gallagher and Aon plc carry a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank stocks here.

eHealth, Arthur J. Gallagher and Aon beat the Zacks Consensus Estimate in the last reported quarter by 65.86%, 7.41% and 1.61%, respectively.

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