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... x No Thanks Loading.. Finding A Compatible Business Combination 4/30/2013 by CompleteMarkets Editor , Catherine Oak This content has not been rated yet. &# 160 FINDING A COMPATIBLE BUSINESS COMBINATION by Catherine Oak Over the past few years, many firms have entered into a merger, acquisition, or some type of cluster arrangement with another firm or a producer with a book of business. And often the venture has turned out to be unsuccessful. Many mistakes are made because the participants don't take enough time to effectively evaluate the business combination they're considering. This can cause real problems for all parties involved. Firms make the wrong decisions for many reasons. Among the more common reasons are: (1 ) not having enough information about the other party to make an astute decision; (2 ) searching for a quick fix for a loss of markets, or (3 ) finding a deal with a price that seems' good. A recent IIAA study reported that only 46,000 independent insurance agencies exist now, compared to 53,500 five years ago. The study also indicated that 26% of these remaining businesses have been acquired or merged with another firm in the past few years. COMPATIBILITY ISSUES The most difficult part of creating a successful business combination is determining whether the parties are compatible and if a combined entity will be an improvement. Many firms think the key to a good deal is the price. This is far from true. Determining the appropriate price is much easier than finding a suitable party to conduct an ongoing business relationship with. It's like trying to ...

... x No Thanks Loading.. Business Combinations: Surviving/Thriving With A Merger 4/30/2013 by CompleteMarkets Editor , Carol Hammes This content has not been rated yet. BUSINESS COMBINATIONS: SURVIVING/THRIVING WITH A MERGER by Carol Hammes These guidelines will help you meet the challenges of merging your agency. Most industry observers believe that the number of insurance companies will shrink by 50% within this decade, as the strategic need to reduce loss and expense ratios fuels mergers and acquisitions. Achieving economies of scale by reducing geographic spread or focusing on more profitable lines and products has become imperative for national and regional companies alike. In the long term, the trend of carrier consolidation and spinning off non-core business will probably be good for the Independent Agency System. But in the short term, it will create even more challenges for most independent agencies. Faced with consolidation among insurance carriers, the resulting change in operating/placement strategies, and the need to further streamline their internal operations, merger activity has also increased among independent agencies. Current business combination activity is so widespread that experts predict that the number of independent agencies will shrink from approximately 40,000 at the end of the year 2000 to only 20,000 by the end of 2005. Many small to medium-sized agencies are finding that they cant compete in a marketplace where insurance companies are requiring far larger premium commitments every year. Larger agencies, faced with perpetuation concerns and growth plateaus, are increasingly receptive to merger and acquisition overtures from larger agents/brokers, insurance companies, or financial institutions. Although the pressures of premium ...

... ) Please consider the following: 1. Would you recommend this company? 2. What about this company do you like/dislike? 3. Why did you choose this rating? Submit This Anonymously Submit Cancel Contact Us contact_phone Click to call Unfollow First name: Last name: Email: Are you sure you want to deactivate your CompleteMarkets Company Profile Deactivate Cancel Loading.. About Us Services Jobs PR Newsletters Employees Articles Blog Photos Group Connections Reviews IMMS Library Immerse yourself in our stacks. Take some time and browse through our library. We have thousands of articles, checklists, tip sheets, sales letters, and more! Communications Marketing Customer Service Planning Finance/Accounting Risk Management Human Resources Selling Legal and E&O Technology Life/Financial Services Glossaries Management Resources & Links Categories Popular Recent All Back Combining Insurance And Financial Services: Reality Check 4/30/2013 10:36:15 PM by CompleteMarkets Editor , Carol Hammes This content has not been rated yet. COMBINING INSURANCE AND FINANCIAL SERVICES: REALITY CHECK by Carol Hammes After the Barnett decision in Florida and the subsequent passage of the Gramm-Leach-Bliley Financial Services Modernization Act, a flurry of activity began to create broader financial service organizations that provided insurance together with other products. Carol Hammes evaluates the bank/agency relationship. &# 160 Financial institutions have been in the insurance business for many years, with some states granting savings and loans and banks in small towns the right to have insurance departments and with seven large grand-fathered' national bank holding companies allowed to remain in the insurance business after most were shut off. There were more than ...

... x No Thanks Loading.. Valuation And Structuring Of Business Combinations 4/30/2013 by CompleteMarkets Editor , Carol Hammes This content has not been rated yet. VALUATION AND STRUCTURING OF BUSINESS COMBINATIONS by Carol Hammes There are three key elements that must be considered when valuing and structuring a business combination between insurance agencies. In the August issue of The Middleton Letter we addressed the first of these items, the growth potential of the agency. Before deciding how much to pay, you need to determine a probable estimated growth rate under the new ownership. In making this determination a buyer has to evaluate historical trends and ownership considerations as well as the type of business that has been written and the effects of the insurance cycles and economy on that business. The second major factor to consider is the risk that the anticipated growth rate might not be achieved. A book of business that has been relatively stable under one situation may have a much greater attrition rate under new ownership. The average agency will lose around 6% of its personal lines clients and 8% of its Commercial lines accounts every year due to normal attrition. Under the best circumstances, the attrition rate will usually double during the first year after the sale of the agency. In situations when the seller is staying on as a producer or when the agencies have merged or clustered with the same personnel, there will probably be less disruption. But if the book of business is being moved to a new location for servicing and if that servicing will be done by different people, attrition could be much higher. The following are ...

... ) Please consider the following: 1. Would you recommend this company? 2. What about this company do you like/dislike? 3. Why did you choose this rating? Submit This Anonymously Submit Cancel Contact Us contact_phone Click to call Unfollow First name: Last name: Email: Are you sure you want to deactivate your CompleteMarkets Company Profile Deactivate Cancel Loading.. About Us Services Jobs PR Newsletters Employees Articles Blog Photos Group Connections Reviews IMMS Library Immerse yourself in our stacks. Take some time and browse through our library. We have thousands of articles, checklists, tip sheets, sales letters, and more! Communications Marketing Customer Service Planning Finance/Accounting Risk Management Human Resources Selling Legal and E&O Technology Life/Financial Services Glossaries Management Resources & Links Categories Popular Recent All Back Combining Incentive Compensation With Employee Evaluations 4/30/2013 12:00:00 AM by Al Diamond , CompleteMarkets Editor This content has not been rated yet. An effective Incentive Compensation Program will benefit your staff - and your agency. An Incentive Compensation Program (ICP) is designed to remove the subjectivity from the process of increasing compensation for performance. We have written and assisted many ICPs and recommend that you contact Agency Consulting Group, Inc. should you want to construct one for your agency. The construction of ICPs is typically based on advances in productivity (revenue per employee) combined with department and/or agency profitability. If the individual manages a larger book of business (service employees) or manages his or her function for a larger client base (for instance, administrative employees ...

... x No Thanks Loading.. External Growth With Successful Acquisitions 4/30/2013 by CompleteMarkets Editor , Carol Hammes This content has not been rated yet. EXTERNAL GROWTH WITH SUCCESSFUL ACQUISITIONS by Carol Hammes Be prepared to do an acquisition before the opportunity presents itself. INTRODUCTION Most agencies will have the opportunity to acquire or merge with at least one other agency during the next year. Market conditions are forcing the owners of smaller agencies to seek business partners in order to meet the needs of their clients more effectively. Owners of larger agencies who are tired of the hassles and perhaps fearful that agency values will continue to decline are opting for retirement sooner than they had originally planned. Merger and acquisition activity has been heating up in recent years, with current estimates indicating that 10 or 12 business combinations are being consummated every day. Whether you're actively looking for them or not, chances are that potential deals have been or will be presented to you shortly. Be prepared! An acquisition might be just the catalyst your agency needs to get off of dead center — or it could literally drive you into the ground. The temptation to seize upon an opportunity before the competition gets the chance to steal it away from you can be overwhelming. Many ill-fated business combinations have been made defensively. YOUR ACTION PLAN Because of the need to act quickly when an opportunity arises, it's important to have an action plan that will force you to assess the situation rationally, within the context of your agency's goals and objectives. A written set of questions and guidelines can take the emotional content out of the decision ...

... ) . These expenses are fixed, because up to a point they don't vary by book size. If 25% of these noncommission expenses are attributable to maintaining the agency, then fixed annual expenses per agency equals $31,450. Using the company's average results, the following expenses will be incurred on a small book of $250,000 written and earned premium: 70% loss ratio ($ 175,000) 14% commission rate (commissions for smaller agencies are lower due to lower contingencies) ($ 35,000) 15% LAE ($ 37,500) 12.75% (75% of 17%) noncommission variable expense ($ 31,875) Excluding the 25% of fixed noncommission expense per agency, total expenses equal $279,375 for a combined ratio of 111.8% . Including fixed expenses per agency, total expenses equal $310,825 for a combined ratio of 124%! As a percentage of written premium, fixed expense equals 12.58% of expense! Compare these results to the company's average book of $740,000 direct written premium per agency: 70% loss ratio ($ 525,000) 14.5% commission ($ 108,750) 15% LAE ($ 112,500) 12.75% (75% of 17%) noncommission variable expense ($ 95,625) Excluding the 25% of fixed noncommission expense per agency, the total equals $841,875, for a combined ratio of 112.25% . Add the fixed expenses per agency, and the total equals $873,325 for ...

... . About Us Services Jobs PR Newsletters Employees Articles Blog Photos Group Connections Reviews IMMS Library Immerse yourself in our stacks. Take some time and browse through our library. We have thousands of articles, checklists, tip sheets, sales letters, and more! Communications Marketing Customer Service Planning Finance/Accounting Risk Management Human Resources Selling Legal and E&O Technology Life/Financial Services Glossaries Management Resources & Links Categories Popular Recent All sales consultant Articles tagged with sales consultant Back Producer Success Lesson 1 This content has not been rated yet. Randy Schwantz 6/3 /2015 12:00:00 AM Producer Success Lesson 1 Nothing happens until somebody sells something. To make sales happen, IMMS.com Key Sales Consultant Randy Schwantz has created a comprehensive series of 43 Producer Success Lessons. Used singly or in combination, these powerful tools can help your producers build their skills - and grow their sales. All Articles by Randy Schwantz Comments (0 ) Producer Success Lesson 10 This content has not been rated yet. Randy Schwantz 5/20/2015 12:00:00 AM PRODUCER SUCCESS LESSON 10: PREPARE YOURSELF FOR PHONE CALLS by Randy Schwantz Nothing happens until somebody sells something. To make sales happen, IMMS.com Key Sales Consul.. All Articles by Randy Schwantz Comments (0 ) Producer Success Lesson 11: Visual Rapport This content has not been rated yet. Randy Schwantz 5/29/2015 12:00:00 AM Nothing happens until somebody sells something. To make sales happen, IMMS.com Key Sales Consultant Randy Schwantz has created a comprehensive series of 43 Producer Success Lessons. Used singly ...

... Seller: The vast majority of agencies are sold as an "asset sale." A "C " corporation asset sale is taxed twice. The IRS views the process as a two-stage event, even if you see it differently. As you might expect, the IRS wants a big piece of each stage. First, the corporation sells everything, including the book of business. This generates enormous income at the corporate level, all of which is subject to full corporate taxation. Even in smaller independent agencies, this tax usually represents about 34% of the sale price. Second, what's left is paid to you, the owner. Usually, this payment is a "long-term capital gain," so the IRS will want only 28% more. If this happens to you, the combined federal tax will come to 52.5%, not counting possible state and local taxes. Never forget, the buyer had to pay taxes on the money before paying you. Buyer: Since almost all the value of an agency comes from the book of business, the primary asset sold is an "intangible" asset, which must be deducted evenly over 15 years. So someone who buys an agency's assets for $150,000 can deduct $10,000 per year for 15 years. Oddly enough, most people don't get excited about deductions they can take 15 years from now. PLANNING ALTERNATIVES: HOW TO SAVE BIG BUCKS! There are a number of tools to improve an asset sale. An experienced planner can mix and match them to generate substantial savings. Non-compete agreement: If ...

... a formal partnership. Cluster members commonly retain ownership of their expirations and good will, and may continue to some extent to do business under their individual business names. A cluster' is not a recognized legal form of organization. The cluster agreement must spell out what the rights and obligations of the members are. I will first consider a simple unincorporated cluster. I will then discuss a cluster with an overlying corporation. A cluster retains many advantages of individual proprietorship. Members retain ownership and control of their individual businesses. Relative simplicity of operation is preserved. A cluster also may bring business advantages over a proprietorship. Members may be able to get assistance from other agents. Members may be able to share markets. Members may qualify for other benefits not available to individuals, such as all being combined for company profit sharing purposes, or better errors & omissions coverage. Members may share expenses and reduce their costs. Other members of the cluster may be potential purchasers of the agent's business on his retirement. A cluster brings risks as well. No corporate protection for lawsuits exists under an unincorporated cluster agreement. The cluster may be held to be a general partnership, with individual liability for debts of other members or the cluster. For this reason, the members must take care to avoid partnership appearances. They should continue to do business in their individual names, and with their own letterhead. They should also be certain that all members carry adequate insurance, and give evidence of coverage to other cluster members. The cluster agreement should protect individual members from raiding of accounts by other members, ...