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... x No Thanks Loading.. Profile Checksheet Of Agency Heading Toward Bankruptcy 4/30/2013 by CompleteMarkets Editor , Chris Burand This content has not been rated yet. How healthy is your agency? This checksheet and financial analysis criteria can give you the answer. Use these 10 items to check the financial health of your agency: Trust ratio under 1.1 x More than 15% of accounts receivable more than 90 days old Commission growth greater than 5% Producer compensation greater than 30% on renewal Debt service greater than profit Made acquisitions equal to 25% or more of total current revenue at price above 1.5x in last three years Property/Casualty commission per producer less than $250,000 Revenue per employee less than $90,000 Expense budget not prepared or monitored monthly Salary caps and compensation planning for staff not set at start of each year If you checked three or more of these items, you're in the danger zone! Here's an analysis of the basic criteria you can use for agency financial analysis: BALANCE SHEET ANALYSIS TRUST RATIO Cash plus accounts receivable/premiums payable should ___ be greater than 1.1x. If less than 1.0x, you're spending carrier premium. RECEIVABLES RATIO Accounts receivable/premiums payable. The lower the ___ better. Should be .65 or less; if above 1.0, you're advancing funds. CURRENT RATIO Current assets/current liabilities. Should be greater ___ than 1.1 x. If less than 1.0x, must retain profits. NUMBER OF DAYS WORKING CAPITAL Current assets minus current liabilities equals net ___ working capital. Total agency expense divided by 365 ...

... law, the borrower must use the proceeds to repair the property or the lender will be entitled to apply them to the loan. The fact that the property is being repaired does not excuse the owner/borrower from meeting mortgage payments. Thus the owner may have to default on the loan, giving the lender an excuse to take the insurance proceeds if no payment can be made. This is not always undesirable. As a result of the insurance payments, the owner may be able to pay off the loan and demolish the building-which could be more desirable than the owner's pre-quake condition, since the owner might then have some insurance money and own the land free and clear of debt. When the value of the property before the earthquake was less than the loan, the borrower may find that bankruptcy provides an excellent opportunity to restructure the debt and regain some equity. The rules of bankruptcy are complicated. However, a bankrupt borrower can, under the right circumstances, force the lender to reduce the loan to the value of the property and then pay interest on the loan at the reduced amount. When the property is rebuilt, the owner may have some equity because it will now be worth more than the reduced loan. Moreover, the property can be designated as cash flow as a result of lower debt. For many people bankruptcy is not acceptable. On filing bankruptcy, all of an individual's assets become subject to control of the court. However, a partnership or real estate investment company with a limited number of properties in its asset and operational base may greatly benefit by filing ...

... own your home, have your own business, and drive a new car. Though you are not rich, you are comfortable. It will be a shame to lose it all if someone sustains injuries by your car or at your home or place of business. You have insurance you say; you have standard auto liability insurance. The limits are $100,000 for a single person and a total of $300,000 for multiple people. Suppose you are responsible for any accident involving a shuttle taking ten people to the airport. Three hundred thousand dollars allows on average $10,000 per person. That is hardly enough to cover the emergency room fees let alone any surgery, rehabilitation, lost wages and other medical expenses. If there is a fatality, you may consider bankruptcy. Your business has a small storefront on a busy street. A middle-aged executive comes into your place of business following a rainstorm. Your floor is wet and slippery, and the executive slips and falls. He strikes his head, loses consciousness, and goes into a coma. Your general business liability insurance has the same limit as your auto insurance - $100,000. It may cover part of the hospital bill, but the official says he is permanently disabled and sues you for future wages for $1 million. Since your business is a sole proprietorship, bankruptcy beckons. Your son invites a friend over for a swim in your pool. He dives into the shallow end strikes his head and suffers traumatic brain injury. Sadly, the damage is permanent- with standard liability ...

... mortgages or dividend-paying stocks. Risk #4 : Stock Market Fluctuations. Because it's practically impossible to forecast what will happen to stocks, many retirees fall prey to major stock market losses. One major stock market downturn, and your nest egg could disappear in the blink of an eye. How to deal with it: First of all, the SOA says retirees and older workers should limit their stock market exposure. If you do invest in the stock market, be sure to diversify your stocks and spread your money among different investment classes and individual securities. This will greatly decrease your risk. You might also consider investing in financial products that invest in stocks, but guarantee against the loss of principal, such as mutual funds. Risk #5 : Disappearing Retirement Funds. If your employer declares bankruptcy, what happens to your pension? If your annuity insurer becomes insolvent, where does that leave you? Many terrible things can happen to your retirement funds but there are ways to manage these risks. How to deal with it: Before you invest your money do your homework. Find out your employer's credit rating to determine if they might be at risk for bankruptcy. Look into your insurance company's claims-paying ability rating. Of course, you are already protected from many of these risks. If your employer does go out of business, the Pension Benefit Guaranty Corp. will insure your defined-benefit pension plan (up to certain limits.) Annuity companies are covered by state insurance guaranty funds up to specified limits which means if the insurer becomes insolvent, the claims will still be paid. Login ...

... nondiscriminatory, which usually means you must offer the same package to basically all your employees. Many other rules also apply, such as how much can be contributed. A Non-Qualified plan is much simpler, with far fewer rules to follow. But to be non-qualified it MUST be discriminatory. You must limit it to a group of management or highly compensated employees. UNFUNDED To avoid a number of unpleasant issues, such as immediate taxation to the employee and possible inadvertent classification as a qualified' plan, the plan must be technically unfunded. Unfunded' does not mean that the company cannot set aside money to pay for the future obligation. But it does mean that if the company chooses to do so, any money set aside must remain available to the general creditors of the company in the event of bankruptcy. A Rabbi Trust' is sometimes used to restrict further the way set-aside money can be used. Basically, a Rabbi Trust ensures that the set-aside money can only be used to pay for the deferred compensation obligation, unless, of course, the company goes bankrupt. In the event of bankruptcy, the money in the Rabbi Trust becomes available to the general creditors of the company. Remember, the company does not get a tax deduction for deferred compensation until the money is actually paid to the producer. Any money set aside must be done with after-tax dollars. CONSTRUCTIVE RECEIPT, ' ECONOMIC BENEFIT' The producer must not receive Constructive Receipt' or Economic Benefit. Constructive Receipt means that there must be some chance that the money might not get paid. This is usually met by specifying certain ...

... , financial or otherwise, of the Seller and the assets to be sold to the Buyer hereunder. A material adverse change in the condition of the Seller's business shall be deemed to include (but shall not be limited to) loss of Subject Accounts which, in the aggregate, produced Net Annual Commissions of more than S5,000 in the aggregate. Loss of a Subject Account shall include (i ) expiration of any insurance policy in effect for such account during the 12 months ending November 30, 19_, without the same being renewed, (ii) receipt by the Seller of notice that a Subject Account does not intend to renew its business through the facilities of the Seller when current insurance business expires, (iii) the filing by or against a Subject Account of any petition under bankruptcy or other insolvency laws or (iv) acquisition (or execution of a binding agreement to acquire) of substantially all of the assets or capital stock of a Subject Account. (h ) The Seller shall have purchased, at its own expense, the run-off or tail endorsement under its errors and omissions policy as required pursuant to section 14(z ) hereof. For the period from the execution hereof through the closing hereunder, the Seller shall (i ) continue to operate its business in the normal, usual and customary fashion consistent with the manner in which it has been operated heretofore; (ii) endeavor, to the best of its ability, to renew all insurance coverages scheduled for renewal between the execution of this Agreement and the Accounting Date; (iii) process all renewals ...

...r hand, corporate lay-offs and bankruptcies are being announced almost every d...

... /30/2013 10:38:56 PM by CompleteMarkets Editor This content has not been rated yet. &# 160 COBRA EXTENDS HEALTH BENEFITS The Consolidated Omnibus Budget Reconciliation Act is better known as COBRA. Its acronym sounds venomous, but COBRA is the antidote for people who have just lost their jobs or experienced a change in status that would otherwise end their Health coverage. The 10-year-old act requires qualifying employers to continue to provide Health insurance to eligible employees for a specified period after they have been released from their jobs. COBRA takes effect in these circumstances: Death of a covered employee (of course, benefits apply to the family of the deceased) Divorce or legal separation from a covered employee Employee is called to active military duty Employee's dependent child exceeds the plan's eligibility age Employer declares bankruptcy Termination for normal causes or a reduction of worker hours below minimum hours for plan eligibility COBRA may expire or be terminated under these conditions (current legislation before Congress may affect some of these conditions): At the end of the 18-, 29-, or 36-month maximum period of effective coverage stated in the plan's terms The date the employer ceases to provide any Group Health plan When an employee or a beneficiary fails to pay the required premium After an employee becomes eligible for Medicare When the employee or beneficiary obtains coverage under another plan To fulfill its legal obligation, the employer should coordinate every change relevant to the issues just listed in a worker's employment status with the health plan administrator. Login or Register (for FREE) to gain access to thousands of other great articles. Need more ...

... mentioned earlier, unless an experienced producer generates at least $250,000 in premium, the acquirer probably can't count on the producer to grow the agency, no matter how many leads they receive. As a result, the acquirer will need to rebuild the sales force from the get-go. Does your bank have the skill to develop a successful insurance sales force from ground zero? Another skill set is technical. These skills are becoming more critical because insurance companies have lost so many people with good technical expertise. This increases the burden on insurance agency personnel — and will be critical for banks selling insurance. Suppose the insurance agency doesn't or can't (in this tough marketplace) offer adequate coverage to a commercial client with whom the bank has a loan. The client has a claim and declares bankruptcy and/or files an E&O suit against the agency/bank. If the company goes bankrupt, the bank finds itself with a loan that it caused to go bad. Based on the hundreds of agencies I've visited, I'd estimate that more than 90% of all customers have never even been offered the coverages they need, much less purchased them. When buying an agency, make sure the employees have the technical skills required to keep your clients solvent. CULTURE CLASH Cultural differences play a key role in the failure of most acquisitions. This is because the buyer's expectations, and thus the price they pay, usually depend on how the buyer relates to their employees and customers and how the buyer expects customers and employees to respond to the inevitable changes. Reactions rarely meet these ...

... three books: Saving Lives! Proven Methods to Eliminate Job-Site Fatalities, Crisis Management: Planning and Media Relations for the Design and Construction Industry andShe has also produced two videotapes on crisis management and working with the news media. Reid can be reached at (303) 322-3211, e-mail [email protected] or visit www.janinereid.com . What To Do When The Sky Starts Falling. &# 160 Exhibit 1: Crisis Audit Natural Disaster Lightning Earthquake Extended severe cold/heat Extreme snow/ice conditions Flood/drought Hurricane/Tornado/Tsunamis Operations Accident involving a company vehicle Bomb threat Construction delay Cost over-run Employee Safety and Health Chronic safety problem Exposure to carcinogens Injury/fatality of an employee or non-employee Personal injury suit Regulatory citations Labor Relations Negotiations Organizing drive Unfair labor practices Violent strike/work stoppage Management Issues Bankruptcy Contractual dispute with client resulting in litigation Death of owner or key employee Employee raiding by a competitor Loss of key customer Crisis in the same industry Someone else's crisis on your property (guilt by association) Kidnap, ransom, extortion Hostile takeover attempt Key employee starts competing company Management succession Merger/acquisition Murder Negative publicity due to rumors Negative publicity relating to political contributions Reorganization/downsizing Serious cash flow problems Sudden market shift Terrorism Data/telecommunications failure/loss of critical data Design error/issue Sabotage by extremist environmental group Explosion Fire Major utility failure Neighborhood/community group opposition to a project Structural/subsidence collapse Environmental Accidents/Liabilities Groundwater contamination Air quality problem Gas leak Long-term exposure of toxic chemicals to the community Release of toxic chemicals into the air or waterways Employee/Management Misconduct Bribery/kickbacks ...