Allstate Agency Purchase/ Good or Bad Idea
- Thread starter newbeguy
- Start date
The first thing I'd find out is how competitive Allstate is in that area. If they aren't competitive it could be a long hard road. You will get some business just because of the Allstate name, but you're at the mercy of Allstate. If they decide to increase rates to the point of not being competitive you're SOL.
Whether or not that's a good price I couldn't say. I recall hearing one time that Allstate will buy an agent's book of business for 1.5 times revenue. If that's true, then $350k is a little high.
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- #3
- 11,995
You're going to need a lot more information than that. Allstate bonuses heavily depend on numbers such as retention, loss ratio, etc.
Books can sell for more than 3X revenue, so at under 2X it's quite possibly a good deal. The biggest problem you're going to have is that you're going to be indicaptive and that comes with it's own set of challenges (and advantages). Contrary to what the advertising tells us, the property and casualty industry isn't always about price and the fact of the matter is Allstate is usually going to have at least some areas they're competitive in along with great brand recognition. In coastal areas they've been killing their home insurance books, but that's probably not a problem in Ohio.
This is also a small book. The bad news is it's a small book, the good news is it's entirely possible that you can qualify for scratch agent bonuses even with a book that small which can be huge.
Have you talked to the Allstate recruiters? They're going to be able to shed a LOT more light on the ins and outs of the deal. You might also want to talk to some other local agents and tell them you're interested in buying X agents book and without getting into a ton of particulars, ask them their thoughts; it's a small community and they generally have a good idea of how things are going in the market and generally just assume be helpful.
Books can sell for more than 3X revenue, so at under 2X it's quite possibly a good deal. The biggest problem you're going to have is that you're going to be indicaptive and that comes with it's own set of challenges (and advantages). Contrary to what the advertising tells us, the property and casualty industry isn't always about price and the fact of the matter is Allstate is usually going to have at least some areas they're competitive in along with great brand recognition. In coastal areas they've been killing their home insurance books, but that's probably not a problem in Ohio.
This is also a small book. The bad news is it's a small book, the good news is it's entirely possible that you can qualify for scratch agent bonuses even with a book that small which can be huge.
Have you talked to the Allstate recruiters? They're going to be able to shed a LOT more light on the ins and outs of the deal. You might also want to talk to some other local agents and tell them you're interested in buying X agents book and without getting into a ton of particulars, ask them their thoughts; it's a small community and they generally have a good idea of how things are going in the market and generally just assume be helpful.
- 9,744
As Scott (sman) says, check to make sure the Line 10 (preferred auto) rates are competitive. Everything else is academic.
$350,000 is 1.75 times. Hmmm. What kind of terms?
Complete disclosure: at one time I was an Allstate employee.
$350,000 is 1.75 times. Hmmm. What kind of terms?
Complete disclosure: at one time I was an Allstate employee.
I would want to see the last 3 year tax returns. 700 k in prem. & 200K in commissions ? What Is the commission rates in Fla ? That is almost 28% & I was under the impression that their rate was like 10%. Now I know you can get some increase in Commish. Rates if you hit certain financial goals but that is a pretty hefty hike. Is this outside brokered Business ? The Fla. Pool ? Where is that pool of commission pay coming from ? I would also ask another Allstate agent in Fla. about the local market but not one in the back door of the guy you are buying. The agent you ask may well try & do away with another agent in his back yard & steer you wrong or try & buy the other agent out themselves. Good Luck !
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Hello all- I am very new here in the forum. This is my first actual post though I have been "monitoring" for some time. I am in the New York Metro Area and like so many others I considering the Allstate Exclusive Agent arrangement along with the possibility of going American or Independent. I know there are ups and downs associated with any move and nothing will be perfect. What I am looking for is some up to date in 2016 thoughts about all these possibilities? Allstate seems pretty good to me BUT I have an additional interest in Commercial (CPP) BOPs and other insurance lines like EPLI and Professional Responsibility. My background is in the insurance industry but ALWAYS on the backside (that is arguing claims on behalf of my clients and employees etc). Can anyone point me in the right direction to find non-biased or independent opinions about the quality of opportunities? Also any suggestions for me in terms of "selling" for someone who needs a starting point within the industry?Thanks for speaking up folks!
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