Valuation Help - Personal Lines Book of Business

Discussion in 'Insurance Agency Acquisition and Valuation Forum' started by robtmccarthy, Oct 14, 2015.

  1. robtmccarthy
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    robtmccarthy Well-Known Member

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    State:
    Connecticut
    so looking at purchasing another book of business. this one is an odd mix to me. it's about 90% personal auto.
    Interestingly not your typical progressive stuff. Very tough to value. I believe there is some cross sell opportunity since the owner has built the business and from what i can tell hasn't attempted to cross sell home or renters.

    my main interest in this book is the significant volume with one of my preferred carriers.
     
  2. HCCIA
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    HCCIA Well-Known Member

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    I recently tried to purchase a 90% auto book. It was pretty much all crap business. Tons of issues. Loss ratio over 100%. High cancellation rate. High turnover rate. But...If I got it cheap enough, I could weed out the bad and cross-sell all other lines.

    What is the retention ratio? Loss ratio?

    I offered 1x commission. 60% up front - balance over 3 yrs based on retention. It was a win-win for me. The problem was keeping his key employee that basically ran the place. She didn't want to come along for the ride. Another agent came in and gave him 1x commission with 100% up front with NO contingencies. There were just too many unknowns. I lost the deal.

    Looking back - I should have gone for it. With the cross-sell potential, it would have been profitable in yr 2! Good luck!
     
  3. thecommercialguy
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    thecommercialguy Well-Known Member

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    @robtmccarthy - I'm new to the arena of valuations and acquisitions. Is this your first purchase? Have you bought other books?

    Hayato
    closingcommercial.com
     
  4. Brelsford
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    Brelsford Member

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    Did you ever find out your answer? I've professionally valued over a 100 insurance agencies of all kinds. I would love to offer my help, if you are still in this predicament.
     
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