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... encouraged to join the agency with the promise of equity, or they may earn equity in accounts over time based on achieving agency goals. We've been involved with clients in other innovative uses of equity. One recent example is when agency A transferred a portion of its retail business to agency B in return for a percentage of equity in agency B. Agency B was better suited than agency A to handle the retail business. As a result of the transfer in equity, both agencies gained in value. Agency principals should consider equity ... analysis of the transaction indicates a favorable cost/benefit relationship. Releasing equity in return for something else of value may include a number of attractive arrangements. One of the most intriguing arrangements that Harbor Capital Advisors has been involved with relates to an opportunity presented by a large Life insurance company seeking equity in agencies with commercial expertise. In this case, the Life company wanted to purchase up to 51% of the agency equity in exchange for the ability to write Commercial insurance for the company's clients. The benefits to the agency principal ... an up-front cash payment plus a five-year payout, and the increased value in the remaining agency-owned equity due to new Commercial commissions from the cross-sales. Property/Casualty insurance companies are another excellent source for leveraging equity. In many cases, an insurance company will take an equity position in the agency in return for a book transfer and/or a guaranteed level of new business. Very often, the agency principal is given the opportunity to retrieve the equity based on achievement of prescribed performance objectives. Equity also can be leveraged to achieve ...

...cy A transferred a portion of its retail business to agency B in return for a ...r suited than agency A to handle the retail business. As a result of the trans...

... health insurance and payroll taxes have already been paid for. If you factor a $375,000 asset into the picture, the investment returns explode, going from negative 9% to 69% per year! Not a bad return for a sleepy' business like retail insurance brokerage. Conclusion The most common mistake agency principals make in evaluating reinvestment in their agency is that they think only in terms of cash flow, rather than value creation. They ask Why hire an account executive (or a new producer) if the net ... , as measured in terms of your quality of life and the opportunity cost of having you not producing new business, is greater. So we will pay the money. All we ask is that you use the free time as productively as possible. Use it for large account production, or use it to mentor our other producers, or to bird-dog additional sales talent. However you use it, take all that you have learned up to now, and capitalize on that knowledge for the good of the agency and for the sake ... nbsp;is a Principal with Reagan & Associates, an Atlanta-based management consulting firm that serves insurance agents, brokers and companies, as well as financial institutions. He would appreciate your comments at [email protected] . This article originally appeared in The National Underwriter, Property/Casualty Edition, and is reproduced with permission. Login or Register (for FREE) to gain access to thousands of other great articles. Need more reasons to join? Need insurance for you, your business or your family? Get quality appointments - Save ...

...urn for a 'sleepy' business like retail insurance brokerage. Conclusion The m...

...luded in NY) Cold Storage Retail/ Wholesale Staffing (Excluded in ...enewed Coverage / Gap in Coverage Large Losses / Poor Claims Experience ...