5 Best Insurance Brokerage Stocks To Buy Now

In this article, we discuss 5 best insurance brokerage stocks to buy now. If you want to see more stocks in this selection, check out 11 Best Insurance Brokerage Stocks To Buy Now. 

5. Brown & Brown, Inc. (NYSE:BRO)

Number of Hedge Fund Holders: 29

Brown & Brown, Inc. (NYSE:BRO) offers insurance products and services in the United States, Canada, Ireland, and the United Kingdom. It has four main business segments – Retail, National Programs, Wholesale Brokerage, and Services. On April 25, Brown & Brown, Inc. (NYSE:BRO) reported a Q1 non-GAAP EPS of $0.84 and a revenue of $1.12 billion, outperforming Wall Street estimates by $0.03 and $50 million, respectively. It is one of the best insurance brokerage stocks to invest in. 

On April 25, Brown & Brown, Inc. (NYSE:BRO) declared a $0.115 per share quarterly dividend, in line with previous. The dividend is payable on May 17, to shareholders of the company as of May 8. 

Citi analyst Michael Ward upgraded Brown & Brown, Inc. (NYSE:BRO) on April 18 to Buy from Neutral with a price target of $69, up from $62. The analyst favors property and casualty brokers over underwriters due to their lower balance sheet risk. Despite some difficulties faced by Brown & Brown, Inc. (NYSE:BRO) recently, including tough comparisons in employee benefits, dealer services headwinds, and disruptions caused by Hurricane Ian, the company is poised for growth, according to the analyst. 

According to Insider Monkey’s fourth quarter database, 29 hedge funds were bullish on Brown & Brown, Inc. (NYSE:BRO), compared to 27 funds in the prior quarter. Select Equity Group is the largest stakeholder of the company, with 17.2 million shares worth $983.40 million. 

TimesSquare U.S. Small/Mid Cap Growth Strategy made the following comment about Brown & Brown, Inc. (NYSE:BRO) in its Q4 2022 investor letter:

“With the improving backdrop for insurance companies, we began a position in Brown & Brown, Inc. (NYSE:BRO). An independent insurance broker specializing in property, casualty, employee benefits, personal lines, and ancillary services, we believe that Brown will benefit as insurance pricing broadly increases and the company has consistently higher margins than peers. The recent weakness in its shares provided a particularly attractive opportunity for building our position.”

4. Arthur J. Gallagher & Co. (NYSE:AJG)

Number of Hedge Fund Holders: 36

Arthur J. Gallagher & Co. (NYSE:AJG) offers insurance and reinsurance brokerage, consulting, and third-party claims settlement and administration services to businesses and organizations across the globe. The company is divided into two main segments – Brokerage and Risk Management. On April 27, Arthur J. Gallagher & Co. (NYSE:AJG) declared a $0.55 per share quarterly dividend, in line with previous. The dividend is payable on June 16, to shareholders of record on June 2. 

On April 27, Arthur J. Gallagher & Co. (NYSE:AJG) reported a Q1 non-GAAP EPS of $3.03 and a revenue of $2.71 billion, outperforming Wall Street estimates by $0.04 and $20 million, respectively. 

Raymond James analyst C. Gregory Peters raised the firm’s price target on Arthur J. Gallagher & Co. (NYSE:AJG) on May 1 to $240 from $215 and reiterated a Strong Buy rating on the shares. The analyst believes that the company’s growth and margins will be above the industry average until 2024.

According to Insider Monkey’s fourth quarter database, 36 hedge funds were bullish on Arthur J. Gallagher & Co. (NYSE:AJG), compared to 37 funds in the last quarter. Phill Gross and Robert Atchinson’s Adage Capital Management is the biggest stakeholder of the company, with 1 million shares worth $193 million. 

Here is what Cooper Investors Global Equities Fund has to say about Arthur J. Gallagher & Co. (NYSE:AJG) in its Q1 2022 investor letter:

“In terms of underlying businesses, the portfolio holdings are going well and largely reported solid numbers during earnings season with positive language around the outlook for 2022. Our insurance broker Arthur J Gallagher is a stand-out performer, delivering low-double-digit organic revenue growth at the same time as margin expansion – this is a business that benefit from higher interest rates, emerging risks and inflating premiums. While rising rates, supply chain constraints and war in Europe represent a myriad of challenges for many industries, our view is that our management teams are highly experienced focused operators. They are well equipped to deal with these challenges, having shown great resilience and flexibility during many crises, the most recent example (COVID) proving yet again the power of their business models.”

3. Willis Towers Watson Public Limited Company (NASDAQ:WTW)

Number of Hedge Fund Holders: 36

Willis Towers Watson Public Limited Company (NASDAQ:WTW) provides advisory, broking, and solutions services. The company operates in two main segments – Health, Wealth and Career and Risk & Broking. On April 27, Willis Towers Watson Public Limited Company (NASDAQ:WTW) reported a Q1 non-GAAP EPS of $2.84, beating Wall Street estimates by $0.04. Revenue increased 4% to $2.2 billion with organic growth of 8%, however, it missed Street consensus by $20 million. It is one of the best insurance brokerage stocks to invest in. 

On May 1, Baird analyst Mark Marcon maintained an Outperform rating on Willis Towers Watson Public Limited Company (NASDAQ:WTW) but lowered the firm’s price target on the shares to $257 from $259. The analyst acknowledged that some targets are taking longer to achieve than initially anticipated, but he still likes the company. He noted that organic revenue growth, margins, and free cash flow are gradually improving, the valuation is reasonable, and the majority of the business is not sensitive to economic cycles. Additionally, the company continues to return cash to shareholders.

According to Insider Monkey’s fourth quarter database, 36 hedge funds were bullish on Willis Towers Watson Public Limited Company (NASDAQ:WTW), compared to 42 funds in the prior quarter. Jean-Marie Eveillard’s First Eagle Investment Management is the biggest stakeholder of the company, with approximately 5 million shares worth $1.20 billion. 

Here is what Artisan Partners specifically said about Willis Towers Watson Public Limited Company (NASDAQ:WTW) in its Q3 2022 investor letter:

“Willis Towers Watson Public Limited Company (NASDAQ:WTW) shares rose 2% in the quarter. This modest increase made it one of our best performers during a difficult quarter. Absent significant news, the business continues to benefit from a hard insurance market. Results are still lagging peers, but the management team seems to be making progress in closing the gap. In the meantime, the company is returning significant amounts of capital to shareholders. Over the past eight months, it has repurchased $4 billion in stock and reduced the share count by 15%. And there is more on the way. This is a good business in a fantastic industry trading at 12X normalized earnings . We believe it is worth much more.”

2. Marsh & McLennan Companies, Inc. (NYSE:MMC)

Number of Hedge Fund Holders: 52

Marsh & McLennan Companies, Inc. (NYSE:MMC) is a professional services company that offers advice and solutions to clients across the globe in the fields of risk, strategy, and people. The company is divided into two main segments – Risk and Insurance Services, and Consulting. The Risk and Insurance Services segment provides various risk management services, including risk advice, transfer, and control, as well as insurance and reinsurance broking, advisory, and analytics solutions. 

On April 20, Marsh & McLennan Companies, Inc. (NYSE:MMC) reported a Q1 non-GAAP EPS of $2.53 and a revenue of $5.9 billion, outperforming Wall Street estimates by $0.06 and $40 million, respectively. 

Gregory Peters, an analyst at Raymond James, increased the price target on Marsh & McLennan Companies, Inc. (NYSE:MMC) on April 21 from $185 to $195 and maintained an Outperform rating on the shares. The analyst thinks that Marsh & McLennan Companies, Inc. (NYSE:MMC) is better positioned to report organic revenue growth than Aon, and if the company’s cost-saving measures are combined with this growth, it could result in more potential margin expansion. 

According to Insider Monkey’s fourth quarter database, 52 hedge funds were bullish on Marsh & McLennan Companies, Inc. (NYSE:MMC), compared to 55 funds in the prior quarter. Ric Dillon’s Diamond Hill Capital is the biggest stakeholder of the company, with 1.7 million shares worth $287.7 million. 

ClearBridge All Cap Growth Strategy made the following comment about Marsh & McLennan Companies, Inc. (NYSE:MMC) in its Q4 2022 investor letter:

“We increased our financials exposure with Marsh & McLennan Companies, Inc. (NYSE:MMC), which is the world’s largest insurance broker and operates two consulting businesses, Mercer and Oliver Wyman. The company benefits from attractive insurance industry dynamics, durable underlying revenue drivers and a strong margin/free cash flow profile. MMC has demonstrated the ability to grow revenue in excess of GDP growth, particularly during periods of strong property & casualty commercial industry pricing like the current environment, while experiencing more modest revenue declines than overall GDP during past recessions. The insurance brokerage segment does not take underwriting risk but instead earns fees and commissions based on services provided, resulting in low capital intensity and strong free cash flow generation. In aggregate, we believe MMC’s business will be durable during recessionary periods. Risks include a valuation on the higher end of the stock’s historical range, limited exposure to changes in GDP growth and the likelihood that shares would lag balance sheet intensive financials in a rebound.”

1. Aon plc (NYSE:AON)

Number of Hedge Fund Holders: 56

Aon plc (NYSE:AON) is a global professional services company that provides advice and solutions related to risk, retirement, and health. Its services include commercial risk solutions like retail brokerage and global risk consulting, as well as health solutions like health and benefits brokerages and health care exchanges. On April 14, Aon plc (NYSE:AON) declared a $0.615 per share quarterly dividend, a 9.8% increase from its prior dividend of $0.560. The dividend is payable on May 15, to shareholders of record on May 1. 

On April 18, Citi increased Aon plc (NYSE:AON)’s price target from $340 to $344 and maintained a Neutral rating on the shares in anticipation of Q1 results. The analyst still prefers property and casualty brokers over underwriters because they pose less balance sheet risk. In the commercial lines, the firm sees property pricing firmness and adequate reserves. However, Citi is slightly cautious about auto insurance due to recent misses and persistent volatility in loss trends. 

According to Insider Monkey’s fourth quarter database, 56 hedge funds were bullish on Aon plc (NYSE:AON), compared to 49 funds in the earlier quarter. 

Polen International Growth Strategy made the following comment about Aon plc (NYSE:AON) in its Q4 2022 investor letter:

“Aon plc (NYSE:AON) reported broad-based growth across business units and geographies. This growth was driven by solid new business wins, robust retention and renewals, and a “modest” boost from pricing due to inflation on asset values. In the wake of Hurricane Ian, the reinsurance unit continues to show their ability to flex their analytics muscle and create innovative solutions for insurance carrier clients looking to diversify and offload risk. Stepping back, we see Aon as a durable, highly cash flow generative business that is performing well in a difficult macro backdrop, as we would expect, and we maintain our positive view on the long-term potential of the business in the years ahead.”

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