Search CompleteMarkets

...r compensation, because production fuels revenue. All else is expense. So it's...ons about profits solely on minimizing taxes, though, might not have the retai...

... insurance carriers have served to fuel the flames. Insureds are demanding tha...rence has to made up on other kinds of taxes. Because all agents are in thi...

... often going against the very business judgments that made the acquiring firm's CEOs successful. Why does this happen? Different reasons crop up, but more often than not it's some combination of: (1 ) The ego and emotions of the acquirer; (2 ) assumptions of false synergies; and (3 ) too much focus on revenue growth. Ego and Emotion: Some growth-by-acquisition entrepreneurs feel compelled to fuel expansion by consummating the latest deal. Without a deal, the owner can't justify their existence (ego) . How about the firm that lost out in past negotiations and is determined not to lose again (emotion)? Or the situation in which the buyer and seller are friends? These and other examples can easily cause the acquirer to pay for value that doesn't exist. Buyer beware! ... Value (NPV) of future cash flows (discounted at the acquiring firm's cost of capital) compared with the purchase price. When the NPV of the cash flows exceeds the purchase price, value is added. If it's that simple, what are the hang-ups? Future cash flows are only estimates, based on assumptions of incremental commission revenue, account attrition rates, agency operating expense costs, effective tax rates, and other factors. When conducting an acquisition, do your homework. Know exactly what you're buying. Know who'll own the entire book of business. Know the retention rates. Know the producer capabilities and all the severance packages and employment agreements. Analyze the combined carrier offering to determine where you can enhance company agreements. Understand areas in which you can exploit cross-selling opportunities. Plan the ...

...on entrepreneurs feel compelled to fuel expansion by consummating the latest ...cy operating expense costs, effective tax rates, and other factors. When cond...

... circumstances' affecting the financial stability of the company and the quality of the insurance protection being provided. Monitoring the financial condition of carriers has clearly become an on-going legal responsibility. It is also emerging as a public relations issue for agents. Comparisons between the insurance industry and the S&L situation are frequent fodder for the press. And the recent failures of several Life insurance carriers have served to fuel the flames. Insureds are demanding that agents have adequate information on insurance companies. It is part of the package of professional services that they are expecting the independent agent to provide. Most of the E&O claims charging agents with lack of due diligence in selecting insurers that became insolvent have so far been settled out of court for small sums. But the number of cases is going up ... the ones that have to deliver the higher cost of insurance to the public. Insurance companies must participate in the guaranty funds, but the cost for the funding eventually can be traced back to the customer in all but a handful of states. Some states. Some states permit companies to recoup these assessments directly by increasing rates or surcharging policyholders. Others allow companies to credit the assessments against state premium taxes, which often go to support necessary community services, and the difference has to made up on other kinds of taxes. Because all agents are in this together, we see an enhanced role for agents associations in the area of company insolvency protection. State and local groups can and should establish formal watchdog' procedures. Some associations do this now, but many do so only on an informal ...

... circumstances' affecting the financial stability of the company and the quality of the insurance protection being provided. Monitoring the financial condition of carriers has clearly become an on-going legal responsibility. It is also emerging as a public relations issue for agents. Comparisons between the insurance industry and the S&L situation are frequent fodder for the press. And the recent failures of several Life insurance carriers have served to fuel the flames. Insureds are demanding that agents have adequate information on insurance companies. It is part of the package of professional services that they are expecting the independent agent to provide. Most of the E&O claims charging agents with lack of due diligence in selecting insurers that became insolvent have so far been settled out of court for small sums. But the number of cases is going up ... the ones that have to deliver the higher cost of insurance to the public. Insurance companies must participate in the guaranty funds, but the cost for the funding eventually can be traced back to the customer in all but a handful of states. Some states. Some states permit companies to recoup these assessments directly by increasing rates or surcharging policyholders. Others allow companies to credit the assessments against state premium taxes, which often go to support necessary community services, and the difference has to made up on other kinds of taxes. Because all agents are in this together, we see an enhanced role for agents associations in the area of company insolvency protection. State and local groups can and should establish formal watchdog' procedures. Some associations do this now, but many do so only on an informal ...

... circumstances' affecting the financial stability of the company and the quality of the insurance protection being provided. Monitoring the financial condition of carriers has clearly become an on-going legal responsibility. It is also emerging as a public relations issue for agents. Comparisons between the insurance industry and the S&L situation are frequent fodder for the press. And the recent failures of several Life insurance carriers have served to fuel the flames. Insureds are demanding that agents have adequate information on insurance companies. It is part of the package of professional services that they are expecting the independent agent to provide. Most of the E&O claims charging agents with lack of due diligence in selecting insurers that became insolvent have so far been settled out of court for small sums. But the number of cases is going up ... the ones that have to deliver the higher cost of insurance to the public. Insurance companies must participate in the guaranty funds, but the cost for the funding eventually can be traced back to the customer in all but a handful of states. Some states. Some states permit companies to recoup these assessments directly by increasing rates or surcharging policyholders. Others allow companies to credit the assessments against state premium taxes, which often go to support necessary community services, and the difference has to made up on other kinds of taxes. Because all agents are in this together, we see an enhanced role for agents associations in the area of company insolvency protection. State and local groups can and should establish formal watchdog' procedures. Some associations do this now, but many do so only on an informal ...