All State Agencies for Sale ..lots of them ?

Jan 24, 2016

  1. mkmaem
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    mkmaem New Member

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    While i have been casually watching listings for agencies , specifically AllState , I have noticed a large increase in the number of agencies for sales nationally . This appeared around 6 months after All State latest earnings ( 2015 - Q4 ) report and talk of more stringent under writing policies for auto , rate increases of up to 20 % and some talk of a decrease in commissions . I am considering a purchase of an agency but am likely a year away . I have typically been told ( by some agents , Field managers ) that this is largely due to fact that there are a lot of agents retiring . I have as well noticed that book value as estimated on one of the loan sites oddly shows an increase in their value ? This makes little sense that increased supply would see increase in price but that is what i am currently witnessing . Any views ( please avoid the opportunity to bash All state or capitives without supplying any facts thanks )
     
    Last edited: Jan 25, 2016
    mkmaem, Jan 24, 2016
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  2. moonlightandmargaritas
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    moonlightandmargaritas Guru

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    One word, not two. Allstate!
     
  3. skeet282
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    skeet282 Expert

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    I associate with a few Allstate agents here in Ohio. The ones I know have been around for a long time and are very good size agencies. From what I've seen, they build books up and then sell them off. They make big money from you by doing so. They may not necessarily be retiring. Just selling the book for more cash flow because of the incentives involved for them to do so. Just my 2 cents....
     
    skeet282, Jan 24, 2016
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  4. insurance1822
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    insurance1822 Guru

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    The main company that finances Allstate agency acquisitions (PPC Loan) has an interest in perpetuating sales of agencies. In general the book values are down, mainly due to their variable compensation. Base compensation can change based off variables that are largely outside of your control (such as customer surveys.) If you think "good service" can lead to good survey results, you're sourly mistaken. That's a separate topic you can research. In general, their compensation is constantly being attacked from the corporate level as the company is incredibly anti-agent. Thus you'll notice a saturation (at all times) of agencies for sale. Once an agent is there long enough, they start realizing the dire situation they're in. Allstate has recently changed their buyout terms as many agents CAN'T get a buyer for their books. They're selling them back to the company as per their contract (the company will buy back at 1.5x...) which of course Allstate can (and frequently does..) change their end of the contract. Now, they pay the agent over the course of 2 years.

    Their will be agencies in certain areas that (as the result of fortunate circumstance..) will command higher values (just like anything.) Agencies in FANTASTIC LOCATIONS that produce well (simply because where they are..) will go for higher. These are few & far between & this isn't the normal.

    The company is constantly changed their guidelines, compensation, rules, procedures etc. They do so with ZERO regard for the agency force. Most agency owners in the regular market realize quickly that they can't run a business in these situations. Many wise up & realize how severely they're being screwed & sell their agencies to go IA.

    Now it's variable compensation. Previously it was 'expected results' which meant if you didn't meet your metrics, you got a letter that your contract was being terminated & you had 90 days to sell. Certain metrics were asking 3x the previous years market average in lieu of sweeping rate increases & a tightening of new business. Many were forced out, many saw the writing on the wall. This was about 5 years ago when Joe Lacher & Mark Lenave were w/ the company. Of course, they're since gone. Current management is under Matt Winter who's been w/ the company a long time. He previously ran their life division, which of course they just gutted, sold off & screwed the EFS's on their compensation. Now, he's running the P&C. They will move him elsewhere & bring in some other corporate guy who will continue the onslaught against agencies.

    In any evaluation, you must pull off the top 1% and bottom 10%. The average Allstate agency owner situation is grim & I advise staying away from it. I have seen great agency owner's get forced out. People who grew their books, put in their time, had profitable operations year after year etc. I have personally witnessed Allstate double their rates & double their production requirements for an agency to hit bonus. I realized then, that this company is truly abhorrent. You put all your eggs in a basket & you're no longer in control.

    Honestly, I can go on & on. You could buy an agency & make money for sure. But once you've done it a few years, you WILL regret your decision.
     
  5. sman
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    sman Guru

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    sman, Jan 25, 2016
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  6. ModernInsurance
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    ModernInsurance Super Genius

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    As a former Allstater, insurance1822 pretty much covered all the bases. There are ways to really make some good money in the first year or so while on the enhanced commission schedule for new biz, but that will wane and you'll be left with the aforementioned mess.
     
  7. Dave864
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    Dave864 Expert

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    Also as a former Allstate producer, it's hard as hell to sell a policy in my state. They aren't competitive on auto and home + their home coverage sucks. I went indy and made 3x more in my first year.

    If you're looking to buy a captive agency, Nationwide is the way to go (mostly because they're slowing turning into independent agencies). If you like selling insurance, go indy by yourself or join a small agency as a 1099 contractor.
     
    Dave864, Jan 28, 2016
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  8. indienoise
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    Nationwide is sorta semi captive, sorta not. Of the captive opportunities, they are the best for sure. Compensation is still good, and you have a lot of options to sell outside of nationwide. (when I left, their market access program had five preferred carriers to sell, Encompass was added early 2015, and III offered appointment by subcode for travelers and the hartford). NW also matches part of your investment in buying indy agencies, and their intra-agency transfer discount for rolling to nationwide is HUGE. Commercial brokerage is pretty good, too.
    Problem is, you still cant grow your III book to more than 25% of total premium, and you don't own that book-they do. Agency principal still "owns" the NW book, but same stipulation on selling as any other captive. They do encourage perpetuation within your family though. Same BS with life sales as the rest though.
    It looked like they were slowly going indy like you said, but with the rebranding it actually stopped looking that way. First big warning sign was killing off the titan brand and they stopped extended commissions for titan branded locations as of 1/1/16. I'd been looking at leaving for a good 3-4 months, and was upfront with the agency principal while I was still running the Titan location. His last ditch effort was to ask Nationwide if he could rebrand my office and allow me to operate more or less indy on his behalf, their answer was no.
    So sure, for a captive opportunity it's good but indy is still better. Took me 10 months to grow my book to nearly the same size it was after 2 years with Nationwide. Only I actually own it. :D
     
    Last edited: Jan 28, 2016
  9. RicFlairII
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    RicFlairII Expert

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    I am ex-Allstate, sold mine a few years ago.

    There are not a lot of Allstate agents retiring, whoever is telling you that
    is full of BS. Allstate doesnt sit around and allow agents to retire whenever
    they feel like it.

    The ones who are of that age already left years ago. The ones who
    want to sell now are newer agents who cannot make it, or agencies who
    are 2nd generation, and can not meet the production requirements.

    Buying an Allstate agency is an insane proposition, IMO.
     
  10. stankup1
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    stankup1 Super Genius

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    Hi,
    I am thinking about writing life insurance through
    Allstate to their current customers. Are the products competitive and anything else you
    can advise.

    Thanks,
    Stan
     
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