Looking for advice from Allstate Agents

[banker]

Can anyone offer advice regarding purchasing an existing Allstate Agency? What are the some of the key data you would look at in considering a purchase? Is it earned Premium, # of accounts, type of accounts, etc... Can you give me an idea of what to look at to calculate the book's value for sale price? What about office personnel?

Any information on how an insider would evaluate a purchase would be greatly appreciated.

 

[FELLNINS]

I would do a cost ratio overhead vs commissions for the last 3 yrs. The type of business ratio (commercial vs personal). What is their reputation in the area, and how old is the book of business etc..........make sure you have an accountant look at it!!!!!!! Check with your DOI and make certain all of their filings are in line.

Good Luck!!!!!!!!!!!!!!!!!!!!!

 

[banker]

Thanks. When you say overhead, are you looking at all expenses including salaries and commissions paid? Can you advise on what an acceptable cost ratio would be? What should I be looking for there?
With the type of business, should I be looking for a certain percentage of commercial to personal? There is a good reputation in the area and the book is about 18 years young. Is a more seasoned book better than starting with a newer book?
I appreciate your feedback. Happy New Year!

 

[moonlightandmargaritas]

I am an ex-Allstate employee. A couple of things that might be of some help to you...

Allstate buyers have to be Allstate approved. Before you shed too much blood, sweat and tears - get approved.

BOBs (books of business) are compared and quoted in "PIF" or policies in force. Agents are generally looking to get 2x what the book is paying in the way of any asking price. Lots of variables to consider in negotiating down from there. Make sure you have a "hold back" in the deal, just in case the accounts are not quite as loyal as the seller represented. If you're paying for accounts, you've got to be able to keep 'em!

Expense ratios are irrelevant. The three-year-ago expense ratio is ancient history...

More important is what it could, and should be. If you can't make any operational improvements, why buy it?

 

[Soaringagent]

Why are you looking into Allstate insurance? Just wondering...

 

[dtodd]

My understanding is Allstate will do a TPP (termination payback provision) or somthing along those lines that is equal to 1.5 the book of business. So if I understood it correct the Agent is a lock for the 1.5 of the book and anything more than that is gravy; depending on the building and furnishings etc.

As a ex allstate employee what is your feelings about the company. I am starting due diligence on a agency in NC and live in SC. I am trying to find out if Allstate is competitive in NC. The county is one inlands so it is not directly on the coast. I agree on the hold back. The other good thing I found out is that the policies can be transferred to another local agent but that the commission stays with the AOR agent of record or book of business.

I am an ex-Allstate employee. A couple of things that might be of some help to you...

Allstate buyers have to be Allstate approved. Before you shed too much blood, sweat and tears - get approved.

BOBs (books of business) are compared and quoted in "PIF" or policies in force. Agents are generally looking to get 2x what the book is paying in the way of any asking price. Lots of variables to consider in negotiating down from there. Make sure you have a "hold back" in the deal, just in case the accounts are not quite as loyal as the seller represented. If you're paying for accounts, you've got to be able to keep 'em!

Expense ratios are irrelevant. The three-year-ago expense ratio is ancient history...

More important is what it could, and should be. If you can't make any operational improvements, why buy it?

 

[banker]

I have a family member with Allstate in NY and I like the brand name recognition.

 

[RayGroupInsurance]

I am currently an Allstate agent, purchased my agency in October 2007. Some of the important factors to me were the retention, average number of policies per household, and average time each policy has been on the books.

As someone else mentioned, you are going to be looking at about 2x the annual commission. That number goes up with the size of the book. A friend of mine purchased a book that does about $200,000 in commissions and he paid a little over 3x that for it. Obviously a bigger book is going to be more valuable because it's a lot easier to live on $200,000 than $50,000.

PM me if you need help finding any of that info, I can tell you which reports to get from the seller.

 

[bobson]

A friend of mine purchased a book that does about $200,000 in commissions and he paid a little over 3x that for it.

Over 3x??? Are you serious?

 

[xrac]

I am currently an Allstate agent, purchased my agency in October 2007. Some of the important factors to me were the retention, average number of policies per household, and average time each policy has been on the books.

As someone else mentioned, you are going to be looking at about 2x the annual commission. That number goes up with the size of the book. A friend of mine purchased a book that does about $200,000 in commissions and he paid a little over 3x that for it. Obviously a bigger book is going to be more valuable because it's a lot easier to live on $200,000 than $50,000.

PM me if you need help finding any of that info, I can tell you which reports to get from the seller.

So how has it worked out for you? How is retention? Any addition cross selling? Any regrets?