How much to buy an established insurance agency? For example Farmers or AllState

[khabosha]

An insurance agent that sells car insurance, rental and life in my area is considering retirement. The agent has a client book of nearly 1,000 clients. The agent makes about $95,000 yearly. How much you think is worth buying the whole thing for? Of course I'll need to get licensed. I'm willing to do all that if buying that book is worth the price of which I'd like help from you guys.

In other words, if I'm an insurance agent who has an office and quite successful with a book of nearly 1000 clients, how much would you pay to take over and run it if I were to retire?

Let's say the price is right, what are the basic steps I need to take to make this transaction happen?

Office rent is $500 a month which isn't bad compared to what the agent is making...

Sorry if this is in the wrong forum. New to this.

 

[goillini52]

How much you think is worth buying the whole thing for?

In other words, if I'm an insurance agent who has an office and quite successful with a book of nearly 1000 clients, how much would you pay to take over and run it if I were to retire?

 

[Allen Trent]

An insurance agent that sells car insurance, rental and life in my area is considering retirement. The agent has a client book of nearly 1,000 clients. The agent makes about $95,000 yearly. How much you think is worth buying the whole thing for? Of course I'll need to get licensed. I'm willing to do all that if buying that book is worth the price of which I'd like help from you guys.

In other words, if I'm an insurance agent who has an office and quite successful with a book of nearly 1000 clients, how much would you pay to take over and run it if I were to retire?

Let's say the price is right, what are the basic steps I need to take to make this transaction happen?

Office rent is $500 a month which isn't bad compared to what the agent is making...

Sorry if this is in the wrong forum. New to this.

Based on what you have mentioned, it doesnt appear to be worth buying. Appears to be a low end type of pollcy mixture that has some of the worst lapse rates in the business.

 

[khabosha]

Based on what you have mentioned, it doesnt appear to be worth buying. Appears to be a low end type of pollcy mixture that has some of the worst lapse rates in the business.

Even if it's under 100k?

 

[Markthebroker]

Some investments are bad choices, no matter how cheap they are.

 

[khabosha]

Some investments are bad choices, no matter how cheap they are.

Can you elaborate on why you think this is a bad investment?
This lazy agent that I am talking about started in 2015 at $35k a year and 47k in 2016 , 67k in 2017, $78k in 2018 and $95k in 2019... it is only growing.

 

[Allen Trent]

Are you looking at his actual financials of the business?

If he only made 95k in comm, rent -phones-utilities will be a couple Grand a month. Staff person will need to be paid, E&O insurance will be 200-300 a month. Self employment taxes, etc.

Based on the product types you mentioned, it likely means inferior carriers & not top shelf.

So far, you have not given us anything to base any positive reasons to buy.

Buying it is an investment. You shouldn't base your decision to buy a job. Other jobs won't require you to buy it, so this needs to be exceptional.

As an investor, I am not buying. If I have 100k to invest I can make other investments that net me 5-10k a year without me having to run it 60 hrs a week in marginal personal lines markets of renters & auto.

Check the lapse rate for sure. You could start scratch & possibly use the 100k in your business, not the business he poorly created.

 

[Markthebroker]

Can you elaborate on why you think this is a bad investment?
This lazy agent that I am talking about started in 2015 at $35k a year and 47k in 2016 , 67k in 2017, $78k in 2018 and $95k in 2019... it is only growing.

If he is only making $95k off 1,000 clients, that is not encouraging. Based on my average clients size and commission, I would make exactly $1,019,230.70 with 1,000 clients.

 

[AZDave]

Seems to be just a slew of Allstate and Farmers agency's for sale out there. Most of the agents being pushed out and under extreme pressure to hit the numbers or leave.

If you buy it you will have to drink the corporate koolaid. Like Allen said, you'll be limited to high priced policy to sell in a super competitive market. Plus being limited to just one company and under pressure to produce or else is not fun.

P&C agency values are determined by gross revenue. A 2-3 times multiple is common for a preferred, high retention Indy book. As for a Captives book, don't know.

Since your new in this business, you would be crazy to blindly buy. Go work for an agency and see if you even like this shi*y great business first.

 

[PA Bill]

A guy I know was in line to inherit the Budweiser distributor here in Philly. But Yeungling really ate into the market share and his father blamed it on him, so his dad got mad and fired him. But dad did give him 150k to buy an Allstate agency which wasn't in the best neighborhood.
But the company constantly feeds him leads and he worked at it. He's doing great. What this agency is worth I don't know. But my point is that you can have a nice business with one of these deals. Just do your homework!