Brokerage acquires gov. programs servicer in bid for flood biz

The major brokerage’s decision to expand its presence in NFIP through acquisitions echoes trends across the industry.

Catastrophe & Flood

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Brown & Brown, Inc., the nation’s seventh largest insurance brokerage, announced it will purchase Uniondale, N.Y.-based Wright Insurance Group for $602.5mn—$587.5mn for Wright’s government programs business  and $15mn for Wright National Flood Insurance Co. and its statutory surplus.

Wright, which is owned by Aquiline Capital Partners, operates as a service provider for government-sponsored insurance programs, as well as national and regional programs. Last year, it raked in revenues of $114mn.

That lucrative programs business is the largest component of the deal and was the prime motivator for Brown & Brown, the company said in a statement. Wright’s work in the flood insurance space was particularly desirable, as it will help Brown & Brown leapfrog into a “substantial presence” in the National Flood Insurance Program.

“Wright has added a unique asset with a national position in the Wright WYO flood program,” said J. Powell Brown, CEO and president of Brown & Brown. “We look forward to the opportunities ahead combining the skills and expertise of our new Brown & Brown teammates from Wright with the Brown & Brown platform to continue to serve Wright’s valued client base.”

Aquiline CEO Jeff Greenberg said Brown & Brown are an “ideal owner” of Wright as they “share our positive outlook for the business.”

Wright management will remain in place and report to Brown & Brown Regional Vice President Tony Grippa and Regional Executive Vice President Chris Walker.

The acquisition reflects recent trends in the industry relating to merger and acquisition (M&A) activities.

According to a recent report from Berkery Noyes Financial Technology, M&A activity in the insurance sector rose 16% in 2013. A survey of industry leaders conducted by the Insurance Information Institute expects the trend to continue.

III senior vice president and chief economist Dr. Steven Weisbart attributed the increase in M&A activity to rising expenditures within the industry.

“One way to lower expenses is by consolidations,” Weisbart said. “75% of [survey] respondents expect an increase in consolidation among insurers and reinsurers in 2014.”

The Brown & Brown-Aquiline deal is expected to close in April, subject to approvals, the brokerage said.

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