Brown & Brown sets $150 million synergy target from Accession acquisition

By Mia MacGregor

June 10 - (The Insurer) - Brown & Brown has set a target of achieving $150 million in synergies by the end of 2028, following the agreement to buy Accession Risk Management Group, with its CEO stating the deal will be "a major step" towards its goal of reaching $8 billion of revenue.

During an investor call on Tuesday, Brown & Brown executive vice president, chief financial officer and treasurer Andrew Watts outlined that the anticipated Ebitda benefits from the deal will stem from two main areas.

Firstly, modest revenue synergies of $20 million will be realized through commission harmonization, optimization with carrier partners and leveraging collective capabilities to boost new business and improve retention.

Secondly, expense synergies of approximately $130 million will be achieved through vendor optimization, involving pricing and redundancy, and operational optimization.

To achieve these synergies, Brown & Brown plans to invest approximately $200 million to $250 million through the end of 2028. To ensure successful integration, Watts said that the company has established an integration management office with cross-functional teams.

Additionally, Watts announced plans to issue incremental one-time equity grants with an initial value of approximately $125 million, which will be expensed over the next five to seven years and will vest in five to seven years.

The company expects to close the transaction in the third quarter, having already cleared HSR requirements, with only a few pending approvals in foreign jurisdictions, according to Watts.

The $9.825 billion deal will integrate The Risk Strategies team into Brown & Brown's retail segment, with Accession CEO John Mina joining its retail leadership team.

On the investor call, Brown & Brown CEO Powell Brown highlighted that acquisitions have helped grow his company from approximately $300 million in revenue in 2000 to nearly $5 billion last year.

"Our acquisition of Accession will be a major step in our journey to the next intermediate goal of $8 billion and beyond," he said.

Accession operates mainly in the middle market and "aligns very well with Brown & Brown and further deepens our industry leadership," the executive said.

He said that Brown & Brown has completed more than 690 acquitions in total, while Accession has also been highly acquisitive, completing over 190 acquisitions since its inception in 1997.

"They have a very successful M&A playbook and integration plan, much like Brown & Brown. The combination will position us to enhance future M&A opportunities," Brown said.

Accession had 2024 pro forma adjusted revenue of $1.7 billion and adjusted Ebitda of $600 million.

"Accession today looks a lot like Brown & Brown 10 years ago. It's a premier North American insurance distribution platform with a fully integrated business model and is the ninth largest privately held insurance broker. Risk Strategies makes up 70% of the business while One80 is 30%. And as you know, here at Brown & Brown, retail is about 60% of our total revenue and specialty distribution is about 40%," Brown said.