Purchasing Existing Book of Business with Allstate

[Guest]

IM0101, dude, use a little bit of common sense man, my God, we all know it is a two million in premium not commission.....

realize he is NEW and not entirely sure what he is saying or the words he is using.....

*** people with no common sense annoy the hell outta me

 

[Insurance-Guy]

Office staff is 100% key thing on this. It seems that you are paying about 2x earnings which is about right. I purchased my IA agency at just a little below 2 but I had worked there for 8 years and I knew ways to cut overhead...so it made sense for me. The only thing I would say is if you are making 175k I hope you don't thing you will be earning more in this deal? Also I have hired several people and insurance sales boils down to product knowledge! You can be the best sales person in the world but you must learn the products and that is going to take some time and that is why your experienced CSRs are soooo important. Treat them good and they will treat you good. If you can go and talk to both of them and see what their intentions are.

Good luck and keep us posted.

 

[CaptiveBroke(r)]

You say the 12 month earnings on the book is $1,970,848 and the purchase price is $400,000?

I believe you are meaning to say that the earned premium on the book is $1,970,848. If that is correct than you are paying 2x which is fair in today's Allstate fiasco market.

New agents are catered to by Allstate, especially those that start out of the gate as front runners.

Managers don't know anything about running an agency. All they know to tell you is that you need certain results, what color your office must be and to check your spam mail for dozens of emails from them daily.

If you are thick skinned and dedicated to growth, Allstate may be a good fit.

Make certain to check policy growth (or loss), earnings, loss ratio and PIF for the last 12 months and ask what the selling agent's ALI was for 2010....only to get some idea of how the agency was received by customers (not always accurate but may be an indication of how customers were serviced).

I had a long successful tenure with Allstate but to be quite honest, as I look back, if I had to do it again, I would have entertained starting as an independent agent.

Could be a good move. Think long and hard. Don't believe Allstate management. Have lenghty discussions with the selling agent, interview the support staff, check out the demographics of the office and the lease available by landlord and speak with other Allstate agents in your area.

You may want to further explain what you mean when you say that Allstate "guarantees a purchase price of $308,000 at any time"?

 

[xrac]

Allstate agents are bailing out or being forced out by the dozens. Mother Allstate is cutting the commission rates. Every state has multiple books of business for sale. Read some of the other threads where this has been discussed and get on the RunningClock newsletter.

I Am Thinking About Becoming Allstate Agent

 

[7107]

THANK YOU EVERYONE!!! I am glad I cam on this forum for some insight. Truth be told, it is my best friends fathers book being sold. Allstate wants him out and has put me on what I consider to quick of a time frame. After discussing further with the seller last night and showing him the charts that were provided to me, it turns out there was no LIfe Insurance being calculated into the simulated #'s. This raised a flag that there may be more on the back side that I do not know. You are right, knowing nothing about this business and getting into a complicated deal like this may not be the best idea. I saw this opportunity as a way to eventually get to the $200,000+ yearly income I always wanted with more job security. Of course everything sounds great up front but the more thought you put in the more the reality sets in. I have no clue where the economy is going, where Allstates rates are going, or how the business works. Sure I can manage a lot with 150+ cars with over 20 employyess but someone told me the other day; Just because Jordan was a great basketball player did not make him a great baseball player. I saw this as an opportunity to become financially secure with the possibilty of haveing more locations down the road. My income is great now but it could really end at anytime. It sounded like there was more stability in this opportunity. I appreciate everyones thoughts.

 

[Josh]

As long as you keep producing and have a solid marketing plan, you should be fine.

I've spoken with some Allstate agents recently and the commission change is misleading. They are bonusing different and allegedly if you're hitting your numbers, it's about the same or better comp, just a lower base commission.

 

[infoe]

THANK YOU EVERYONE!!! I am glad I cam on this forum for some insight. Truth be told, it is my best friends fathers book being sold. Allstate wants him out and has put me on what I consider to quick of a time frame. After discussing further with the seller last night and showing him the charts that were provided to me, it turns out there was no LIfe Insurance being calculated into the simulated #'s. This raised a flag that there may be more on the back side that I do not know. You are right, knowing nothing about this business and getting into a complicated deal like this may not be the best idea. I saw this opportunity as a way to eventually get to the $200,000+ yearly income I always wanted with more job security. Of course everything sounds great up front but the more thought you put in the more the reality sets in. I have no clue where the economy is going, where Allstates rates are going, or how the business works. Sure I can manage a lot with 150+ cars with over 20 employyess but someone told me the other day; Just because Jordan was a great basketball player did not make him a great baseball player. I saw this as an opportunity to become financially secure with the possibilty of haveing more locations down the road. My income is great now but it could really end at anytime. It sounded like there was more stability in this opportunity. I appreciate everyones thoughts.

you seem like a smart guy and not emotionally tied to this, so I will offer advise. I hate doing so when people are not going to listen either way.

I will second what a previous poster said. If I were you I'd open up an independant and funnel ALL your car lot sales to your insurance agency and then you'll be talking serious dough. Allstate has done this with a dealer I know in South Florida...their making a killing and quickly number one agency in Florida.

Even if you did decide to go with allstate...I'd go scratch and benefit from the new agent commission structure.

xrac said it best...allstate, increasing rates, increased negativity feeling from their current agents, decrease in commission. If you look at some of my other posts I considered Allstate but alas

If your new to P&C insurance but smart and a hard worker I would not be afraid to open up an allstate independant agency and have them train you and rely on the mothership's support as a crutch you learn everything you need then go completely independant.

 

[7107]

Thanks Everyone, I Think I Am Going To Hold Off. Just Does Not Seem To Be The Right Time To Drop $400,000 Into A Expensive To Obtain Issurance Company. I Will Hold Out And See Where This Economy Takes Us. Several People Have Informed Me That If I Were To Take Over The Book Of Business And For Some Reason Loose More Clients Than Anticipated With A Combination Of A Slow Start, I Could Be In Some Serious Trouble. I Just Do Not Think I Want To Have A 3 Month Watinging Period To Get In Office. Seems Like Alot Could Happen To Not Just The Ecomomy, But The Current Rates Allstate Could Change And The Undetermined Amount Of Clients I Could Loose In The Book While The Sale Is Being Finalized. Thanks Again!!

 

[infoe]

Thanks Everyone, I Think I Am Going To Hold Off. Just Does Not Seem To Be The Right Time To Drop $400,000 Into A Expensive To Obtain Issurance Company. I Will Hold Out And See Where This Economy Takes Us. Several People Have Informed Me That If I Were To Take Over The Book Of Business And For Some Reason Loose More Clients Than Anticipated With A Combination Of A Slow Start, I Could Be In Some Serious Trouble. I Just Do Not Think I Want To Have A 3 Month Watinging Period To Get In Office. Seems Like Alot Could Happen To Not Just The Ecomomy, But The Current Rates Allstate Could Change And The Undetermined Amount Of Clients I Could Loose In The Book While The Sale Is Being Finalized. Thanks Again!!

No Problem,

P.S.

I Like The Way You Put Caps At The Beginning Of Each Word.

 

[BTFuzz]

Well, I'm glad to see you guys talked 7107 in off the ledge. Very sound advice given by all and I would echo the sediments...not based on personal experience, but everything I've heard. I know a few Allstate agents and what they've told me is exactly what is being posted.