Brown & Brown’s (BRO) Unit Buys Assets of Kerxton Insurance

The Blackstone Group L.P. (BX) chief executive officer (CEO), Stephen A. Schwarzman, received about 85% pay hike in total compensation package to $786 million in 2017.

Brown & Brown, Inc.’s BRO unit, Brown & Brown Insurance Agency of Virginia, has recently purchased all the assets of Kerxton Insurance Agency, Inc. and Fitness Underwriters, Inc. (together known as Kerxton Insurance). With this buyout, both companies are expecting to accelerate growth within the respective industries as well as the marketplace.

Details of the Transaction

Established around 1964, Kerxton Insurance offers a broad range of personal and business insurance products and services, which includes insurance solutions for health and fitness clubs under the Fitness Underwriters brand name. The company caters to clients in the Mid-Atlantic region and across the United States. Post acquisition, Kerxton Insurance will shift its base to Brown & Brown’s existing Manassas, VA-based office as well as operate under the management of Bill Strachan, president of Brown & Brown Insurance.

Benefits of the Transaction

The transaction will bring the resources and growing talent together and help expediting the acquirer’s growth in DC Metro marketplace and beyond. With annual revenues of about $5 billion, Kerxton Insurance will not only boost Brown and Brown’s overall flourish but also add substantial value to its product and service portfolio.

Additionally, the company will be able to diversify its operations and improve overall performance. Notably, the insurance broker anticipates making consistent investments in such prudent acquisitions, thereby driving organic growth and margin expansion in turn. Moreover, such strategic initiatives will help steer the commission and fees to ultimately propel revenue growth in the near term.

Zacks Rank and Share Price Movement

Brown & Brown holds a Zacks Rank #2 (Buy). Shares of Brown & Brown have outperformed the industry in a year’s time. The stock has rallied 19.2% compared with the industry’s rise of 14.8%. We expect sustained operational performance, strategic initiatives and a robust capital position to drive the shares higher in the near term.

Other Stocks to Consider

Investors also interested in other stocks worth considering from the insurance industry may look at Radian Group Inc. RDN, Alleghany Corporation Y and American Financial Group, Inc. AFG, each sporting a Zacks Rank #1 (Strong Buy). You can see the complete list of today’s Zacks #1 Rank stocks here.

Radian Group offers mortgage and real estate products and services in the United States. The company delivered positive surprises in three of the last four quarters with an average beat of 7.87%.

Alleghany Corporation provides property and casualty reinsurance and insurance products in the United States and internationally. The company came up with positive surprises in two of the last four quarters with an average beat of 2.91%.

American Financial provides property and casualty insurance products in the United States. The company pulled off positive surprises in all the trailing four quarters with an average beat of 26.31%.

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