What Do You Think this Agency "Hypothetical" Could Sell For?

todd02

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Say you have an Agency that has 3 million in premium, 87% retention, ALL personal lines P&C, 2.5 lines per household, 3200 PIF, Agency renewals 500,000.
Current Net Agency Profit around 200,000 Yr.

What would that type of Agency fetch on the market at sell? 1.5 X renewals? 2X?

In Dallas/Ft Worth Market, Large Farmers Captured Agency.

Let me emphasize that it is not for sale, simply curious...
 
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It will definitely depend on the Texas market and how competitive/happy farmers agents are right now in your territory. Assuming you have mostly preferred business and a sub 60% loss ratio, I would guesstimate closer to 2x than 1.5x, with a slight chance at up to 2.25x.

Personal lines usually go for slightly more than commercial lines (unless somebody really wants a specific company in the independent world). Preferred personal lines go for more than standard or non standard.
 
Re: What Do You Think this Agency "Hypo" Could Sell For?

cant believe there isnt ANY commercial business in this book.
 
Re: What Do You Think this Agency "Hypo" Could Sell For?

cant believe there isnt ANY commercial business in this book.

You are correct there is 60,000 premium, 16 PIF of commercial.

Loss ratios are crazy due to our storms/tornadoes.
2009,2010 positive by 400,000 - 2011,2012 negative by 350,000.
 
Re: What Do You Think this Agency "Hypo" Could Sell For?

You are correct there is 60,000 premium, 16 PIF of commercial.

Loss ratios are crazy due to our storms/tornadoes.
2009,2010 positive by 400,000 - 2011,2012 negative by 350,000.


If your loss ratio is over 60% that lowers the overall value of the agency depending how Farmers pays their loss ratio bonus. I'm independent now, but I know most agents wouldn't buy a book with a high loss ratio because of missing out on the bonus income and also the threat of having the contract pulled for not being profitable for the carrier. You could probably get 1x -1.5x time though but check Agent Equity they have Farmers books listed there you can compare values to.


https://www.agencyequity.com/listings/farmers-insurance-agencies-for-sale

Finding a smaller $1M range book to buy in my area that is profitable has been a tough task for me so far.
 
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Re: What Do You Think this Agency "Hypo" Could Sell For?

still cant believe a book that size has such little commercial, you should stumble on 10 times that just from clients in the book...

just saying, not argueing
 
Re: What Do You Think this Agency "Hypo" Could Sell For?

Say you have an Agency that has 3 million in premium, 87% retention, ALL personal lines P&C, 2.5 lines per household, 3200 PIF, Agency renewals 500,000.
Current Net Agency Profit around 200,000 Yr.

What would that type of Agency fetch on the market at sell? 1.5 X renewals? 2X?

In Dallas/Ft Worth Market, Large Farmers Captured Agency.

Let me emphasize that it is not for sale, simply curious...


I am sure you know the answer to your question. If you work for farmers and you have that type of agency you know what the other agents are selling at. Usually if they have good rates and competitive they go for about 2-2.5X renewals. That is what Allstate agency go for...farmers should be the same.
Independent usually max out at 2X from what I have seen..more like 1.5X renewals if you can find them.
 
Re: What Do You Think this Agency "Hypo" Could Sell For?

I am sure you know the answer to your question. If you work for farmers and you have that type of agency you know what the other agents are selling at. Usually if they have good rates and competitive they go for about 2-2.5X renewals. That is what Allstate agency go for...farmers should be the same.
Independent usually max out at 2X from what I have seen..more like 1.5X renewals if you can find them.

So, why do captives get a higher multiple than independents?
 
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