Brown & Brown Acquires Gaston & Associates To Improve Services - Analyst Blog

Although shares of Brown & Brown Inc. BRO dropped 0.4% to $30.67 over the last two trading sessions, the asset acquisition of Gaston & Associates is now making headlines. This dip in stock price can be attributed to broader market conditions. The acquisition was carried out by a subsidiary of Brown & Brown, namely Brown & Brown of New York, Inc.

Gaston & Associates is a renowned entity in the property and casualty, and employee benefits insurance space. With more than a century-old presence, the firm has an impressive history of serving residents of New York and the Northeastern United States.

As per the terms of the deal, Frederick K. Gaston, the majority shareholder of the acquired entity and his team will operate from the Rye Brook, NY location of Brown & Brown. Brown & Brown's Markham F. Rollins, III will head the whole body.

Through the aforementioned transaction, Brown & Brown intends to utilize Gaston's expertise in risk management to enhance its capacities as a financial services provider.  Here, it is worth mentioning that Gaston's remarkable performance is reflected in its annual revenue generation of $2.4 million. Notably, there are certain subsidiaries of Brown & Brown that offer a number of risk management services. Hence, the acquisition will enable it to capitalize on Gaston's resources to boost its risk management operations.

Brown & Brown has been upfront in its merger and acquisition activities. This strategy plays a significant role in the company's success. In fact, Brown & Brown has undertaken more than 250 M&A or contract extensions with existing partners over the last fourteen years. The latest deal is another such endeavor by the company that we believe will help it perform impressively going forward. Therefore, we expect the company's long-term growth to be 10.70%.

Currently, Brown & Brown has a Zacks Rank #3 (Hold). However, better-ranked players in the industry that look attractive at the current levels include Aon plc AON, Cninsure Inc. CISG and Erie Indemnity Company ERIE. All these stocks carry a Zacks Rank #2 (Buy). 

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