Brown & Brown (BRO) Completes Buyout of Gremesco, Stock Up

Brown & Brown, Inc.’s BRO subsidiary Bridge Specialty Group, LLC has acquired substantially all assets of Gremesco of New Jersey, LLC. Share gained 0.5% in the last trading session.

Bridge Specialty, launched in February 2021 by Brown & Brown, is a team of companies focused on bringing the power of collective size and specialty to the wholesale brokerage marketplace. Bridge Specialty represents more than 180 excess and surplus line carriers that support more than $3 billion of premium volume book.

Gremesco of New Jersey caters to surplus commercial and personal lines insurance through the leading carriers in the industry. It provides services to the construction and similar high-risk industries in New York and New Jersey.

With the acquisition, Brown & Brown and its subsidiary will leverage the competence and experience of Gremesco of New Jersey for better growth opportunities. The acquisition is expected to bolster the growth of the strong network of brokers in Bridge Specialty Group’s across New Jersey and New York.

This transaction will enable Gremesco of New Jersey to provide wider market access to its customers as well as support them with better service, knowledge, and professionalism.

The latest transaction marks the fourth buyout of the insurance broker in third-quarter 2021. In the second half of 2021, it completed four acquisitions with annual revenues of approximately $44 million.

Inorganic Growth Story

Brown & Brown along with its subsidiaries pursues frequent buyouts in order to achieve top-line growth. Its revenues received a boost as a result of a persistent focus on net new business growth and acquisitions.

Consistent investments and solid earnings will likely aid this Zacks Rank #2 (Buy) insurance broker in carrying out its inorganic efforts, expand its capabilities, and extend its geographic footprint. Acquisitions drive Brown & Brown’s commission and fees, which, in turn, boost revenue growth.

From 1993 through second-quarter 2021, the company acquired 565 insurance intermediary operations. It remains well poised with its low leverage, capital structure, and access to additional capital to fund its merger and acquisition activities. Consistent operational results have helped Brown & Brown generate solid cash flows to be deployed in strategic initiatives.

The stock has risen 30.6% in the past year compared with the industry’s growth of 17.4%. The company’s efforts to ramp up growth and capital position should continue to drive its shares.

Zacks Investment Research
Zacks Investment Research


Image Source: Zacks Investment Research

Other Acquisitions in the Same Space

Given the insurance industry’s adequate capital level, the players are pursuing strategic mergers and acquisitions. Arthur J. Gallagher & Co. AJG acquired Files Agribusiness, LLC. Marsh McLennan’s MMC Marsh McLennan Agency has acquired Vaaler Insurance.

Another Stock That Warrants a Look

Another top-ranked stock from the same space is Willis Towers Watson Public Limited Company WLTW, carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Willis Towers surpassed estimates in each of the last four quarters, with the average surprise being 13.52%.


Want the latest recommendations from Zacks Investment Research? Today, you can download 7 Best Stocks for the Next 30 Days. Click to get this free report

Marsh & McLennan Companies, Inc. (MMC) : Free Stock Analysis Report

Arthur J. Gallagher & Co. (AJG) : Free Stock Analysis Report

Brown & Brown, Inc. (BRO) : Free Stock Analysis Report

Willis Towers Watson Public Limited Company (WLTW) : Free Stock Analysis Report

To read this article on Zacks.com click here.

Zacks Investment Research