Brown & Brown Inc.
) recently announced a merger agreement to acquire The Wright
Insurance Group, LLC (Wright) for a total net consideration of
$602.5 million. Brown & Brown expects the entire transaction
to close by Apr 2014.
Founded in 1978, Wright operates as a fee-based private specialty
insurance company that administers and underwrites property and
casualty risks through three distinct segments.
The purchase consideration comprises $587.5 million of cash
payments for the programs business, $7.5 million for Wright
National Flood Insurance Company (WNFIC) and another $7.5 million
for WNFIC statutory surplus.
Following the acquisition, Wright will continue to operate from
its existing offices and all its operations will be part of the
National Program Division of Brown & Brown.
The acquisition will enable Brown & Brown to be a part of the
national flood insurance program (NFIP) and serve as a premier
service provider to the government sponsored insurance programs,
and to proprietary national and regional programs.
Additionally, the partnership will enrich Brown & Brown's
risk management product portfolio and also provide it with an
expanded client base. The deal will also give Brown & Brown
strong growth opportunities banking on Wright's market expertise
and its solid infrastructure and relationships with clients.
Furthermore, the transaction is expected to yield $108 million in
future tax benefits for Brown & Brown.
Wright is expected to generate net revenues of $121 million for
the first twelve months of operation post the closing of the
deal. This translates into a year-over-year improvement over
adjusted net revenue of $113.7 million in 2013. The bottom line
of Wright is also expected to benefit significantly from this
The acquisition at Brown & Brown was primarily supported by
its strong cash position, which in turn, is owing to its
continued solid operational performance across all four business
Brown & Brown is consistently treading the inorganic route to
ramp up its growth profile. In Dec 2013, Brown & Brown of
Kentucky Inc., a subsidiary of Brown & Brown, had agreed to
acquire selected assets of O'Neil Financial Services, Agency
Services Consolidated Inc. and Preserve Extended Protection Plan
Prior to that, in Jul 2013, the company had acquired insurance
and risk management broker Beecher Carlson Holdings Inc. Earlier
this month, Brown & Brown acquired certain assets of ICA,
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Among others adopting the inorganic route is
Arthur J. Gallagher & Co.
), which acquired Rock Island-based Cleaveland Insurance Group,
for an undisclosed amount.
Mercer, the consulting wing of
Marsh & McLennan Companies Inc.
) announced that it intends to purchase the pension wind-up
operations of PricewaterhouseCoopers (PwC) in Canada in August,
Brown & Brown presently caries a Zacks Rank #4 (Sell). A
better-ranked stock in the insurance space is
Aspen Insurance Holdings Ltd.
) with a Zacks Rank #1 (Strong Buy).