Brown & Brown's Unit Acquires Northeast Dealer Consultants

Brown & Brown’s (NYSE:BRO) subsidiary Brown & Brown of Kentucky, Inc. has acquired the assets of Northeast Dealer Consultants (NEDC). However, financial terms of the transaction were kept under wraps.

NEDC serves its dealer clients with finance and insurance (F&I) performance and compliance management in the US states.

Per the deal, NEDC will be fully merged into Brown & Brown Dealer Services.

The acquisition of NEDC will provide Brown & Brown with a wealth of experience in F&I performance and products. NEDC will cater Brown & Brown Dealer Services with an enhanced impression in upstate New York. The buyout will enable the acquirer to extend its presence in the northeast.

This recent transaction marks the third buyout for this Zacks Rank #2 (Buy) insurance broker in the first quarter of fiscal 2020. Consistent investments along with solid earnings help the company in its inorganic efforts and buyouts. These strategic buyouts help Brown & Brown to increase commissions and fees, which, in turn, drive revenues.

Brown & Brown maintains a disciplined focus on acquiring companies that are strategic fits. It closed 23 transactions with approximately $105 million of annual revenues. The company has acquired 500 insurance intermediary operations in more than two decades. It continues to make investments to drive growth and margin expansion.

Other Acquisitions in the Same Space

Recently, there have been a number of acquisitions in the insurance industry, given the significant capital available. Arthur J. Gallagher & Co. (NYSE:AJG) acquired full-service wholesale insurance broker CMS, LLC.

Also, Aon plc (NYSE:AON) has entered into an agreement with Willis Towers Watson Public Limited Company (NASDAQ:WLTW) to combine in an all-stock deal, which is expected to cater to unmet client requirements and fight the evolving insurance industry threats. Subject to certain closing conditions, the transaction is expected to close in the first half of 2021. This buyout is the insurance sector's largest deal, which combines the world’s second and largest insurance brokers.

The combination of these companies would likely help them fight the age of risks, such as climate change, cybersecurity etc.

Insurance brokers have been looking out for ways to fight evolving threats and boost their portfolios.

Shares of Brown & Brown have gained 44.6% in the past year, outperforming the industry’s growth of 10.8%. The company’s efforts to ramp up growth and its solid capital position should continue to drive shares higher.

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

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