Selling Your Insurance Broker Business? There's never been a better time to sell!
Selling Your Insurance Business?Despite the recession there's never been a better time for selling your insurance business with demand and consequently prices high.
Agglomeration of books of business and size are still driving factors when it comes to negotiating commission levels with the big Insurance companies. It's also sale time in the overstretched re-imnsurance sector at the moment!
Kris Oldland looks at the options for
Insurance Brokers in the UK who might be thinking of selling their businesses...
The Most Important Deal of Your LifeYou have spent the majority of your adult life working hard and slowly nurturing your company to a position of strength. Your reputation as an honest and efficient business person is a proud reflection on your work and the fact that many of your long standing clients are now trusted friends is testament to this. So how do you put a price on your life's work and can you really walk away knowing that the business will be in safe hands?
When considering selling, it is vital that you establish a clear cut succession plan to ensure that you receive the correct financial reward for your career's work. It will take time and careful consideration to find the option that works best for you and there are plenty of questions to be raised before you choose which path is best for you.
In practice there are six main options for those looking to pass on or sell their business. Of course each situation is different and often a compromise between these will be required. However as a general rule at least one of the following scenarios will fit with most acquisitions within the broking sector.
Possibly the simplest option is to persuade your fellow directors to buy you out. This can often be agreed quickly and without too many problems as you are dealing with people whose trust and understanding you have gained over the years.
The integrity of the business remaining unaffected and the lack of disturbance on your client base and staff are also great advantages.
However, this form of buy out is dependant on finance being readily available to the remaining members of the board so it is not always viable.
Alternately an individual could sell their shares to an external third party.
There is some risk in this as the wrong person coming in could cause difficulties with the remaining shareholders.
The flip side however, is that if the right person comes on board then they can add an injection of new ideas and fresh life into the business propelling it forwards.
A long term strategy is to train an existing employee with a view to taking over the reins.
This offers the prospect of instilling your existing values into the next generation of your company and goes some way to ensuring a legacy; however the obvious pitfall is the realisation of capital.
Unless your protege has substantial personal wealth or you are a very generous employer, will they have the funds necessary to step in and buy you out when the time comes?
If all shareholders are in agreement then selling up to another firm is a common choice, but how will working under a new regime impact upon those that stay on?
Can those members of the board that stay adapt to less business-critical roles so easily?
Without the full backing of all the shareholders a successful deal cannot be agreed so negotiations need to reflect the needs of those who will remain as much as those who are looking to leave.
The final option is to face up to facts that liquidation may bring in more revenue than selling the company as a going concern.
If the business is turning over just enough to stay afloat but retention rates are not sufficient enough to attract a reasonable offer, it may be that the equity tied up in assets such as cars or property may be more profitable sold on their own. Again the decision to wind the company down is one not to be taken lightly as the welfare of your staff also enters the equation once again.
Ultimately you need to think carefully about the exit strategy that fits with your own thinking and how you wish to see the business develop once your gone.
The most desirable strategy may not be available to you and of course market conditions and levels of third party interest is always going to feature highly in how you leave your business and the value you are able to realise for it.
For any seller, it is essential to find a suitor that you are comfortable with so you can be confident that the new corporate culture will sit well with the way business has been run traditionally. It may be the last deal you make, but be prepared to do some serious work on this one as quite simply; it is the most important deal of your life.
Insurance Aquisition and Mergers specialists Insuretec agree........
LARGE DEMAND FOR INSURANCE BROKERAGES IN THE SOUTH EASTIf you’re a insurance broker or agent in the City, Home Counties, Sussex, South East or South West England........
Then now is the time to sell.The demand for brokerages and books of business has never been so good.
Whether it be the cash rich regionals who are looking to grow or extend their regional capabilities or brokers looking to extend their strategic position or simply to purchase quality accounts and schemes to bolster their ever growing books of business, the demand is enormous.
The huge demand for brokers in these regions leave the price of selling at a stable position.
Yes, there are always people looking for a bargain and using the present credit crunch to squeeze the price down, but the demand for quality accounts has never been so good.
A good quality book of commercial insurance business or high net personal lines in the required sector is always worth selling.At the end of last year we saw a slow down in businesses for sale.
Why? The buyers were still there?
Just not the very few larger organisations who decided to close their doors to acquiring.
Regional brokers and UK brokers who had structured their businesses well were still trading and still looking to acquire and still are.
We have also seen more businesses looking for schemes and blocks of specific business eg property owners, marine, credit,hauliers.
We have also seen the increase of more overseas companies looking for uk brokerages to place their uk clients and to extend their insurance market relationships.
These work very well for brokers who need to take the business to the next stage but do not have the investment to do that.
Their everyday job can remain stable, although on a wider basis and normally part of something larger.
At the end of the day if you have decided that you do not want to be in the industry anymore, then selling is your best option.
There is no price for the freedom of doing something that you want to do.
For a free service if you are considering selling visit
Insurance Broker Sellers or speak directly with Chris Coates on 07801 329242
Labels: acquisitions, books of business, Insurance, Insurance Agents, Insurance Brokers, Insurance companies, mergers, selling
“One event away from a hard market” says Willis CEO
“One event away from a hard market” says Willis CEOBy Insurance blogger Kris OldlandIt appears that somebody else has spotted some of those fabled green shoots as Tony Ursano CEO of Willis capital markets and advisory, a unit of Willis Group Holdings made bold predictions that their will be significant increase in Mergers & Acquisitions (M&A) activity within the insurance industry as we move into 2010.
With the soft market creating a greater need for growth, diversification and specialization as insurers fiercely fight for every competitive edge,
Insurance Mergers and Acquisitions deals may soon prove to be a much more valid alternative than perhaps they have been, throughout what has been a year of consolidation at best for most of the industry.
Citing key factors such as the increasing importance of the size and scale of companies for ratings agencies, investors and clients alike, Ursano sees the level of M&A activity increasing as financing capacity and terms begin to improve, more positive valuations increase confidence and markets begin to stabilize once again.
A bold statement indeed, especially when we consider that throughout the current year we have seen the average price of M&A deals fall to just 1.09 times the book value. It seems a lot longer than a year ago that M&A activity was a frequent occurrence and the average price in a deal was a whopping 2.46 times book value doesn’t it? The big question is can we really expect the market to come good again just as quickly as it fell apart?
Whilst maintaining such a positive outlook Ursano is no fool and he also remains cautiously realistic, as you would expect from a man in his position, as he reminds us that over 50% of insurance deals have “failed to create shareholder value”. Ursano again cited a number of factors including difficulties assessing the profitability of the target, the volatile nature of financing markets and of course the cyclical nature of the insurance markets as being responsible for the unsuccessful ventures.
However such caution is more to do with the nature of the M&A process rather than the external current external economic factors. If well thought out, thoroughly researched and expertly executed, an M&A deal can of course succeed on a shareholder level. The odds are further improved by a deal which has not only financial but also strategic benefits.
Companies looking to develop their position within the sector through acquisition need to ensure that the deal is positioned correctly and not just a reactionary move. Net earnings, return on equity and book value per share all need to be showing to justify the expense, but also there should be strong reasoned thought behind the strategic benefits to the acquisition. It is also imperative that there is total transparency of loss reserves available and committed financing placed upfront.
Of course one position that is often criminally neglected is ensuring that there is enough incentive to maintain appropriate staffing levels after acquisition – particularly the key management personnel that have made the target company such an interesting and compelling prospect in the first place.
Mr. Ursano certainly seems to think that the next chapter for the industry is not too far away. “We are one event away from a hard market” he said adding that the fantastic strains that are currently being placed on profitability and returns, alongside the reduced investment income now available in the sector and valuations being at an all-time low are creating a buyers market. With over 50 insurance and re-insurance companies trading at below their stated book value Ursano believes it could only take one major investment to “catapult the industry into a hard market.” We can but hope that he is right.
Whatever the next year holds however we can be certain of one thing in 2010 – the rules have changed this time round and it’s going to be one heck of an interesting year.
......................
Thanks for that very useful insight Kris! You can find out more about what businesses are for sale in the Insurance world and register your interest by visiting
Insurance Broker Buyers and
Insurance Broker SellersLabels: acquisitions, Insurance, Insurance Mergers and Acquisitions, mergers, Re-insurance, Willis
Norwich Union is Dead! Arriva Aviva!
The grand old lady from carrot crunching country just couldn't cut the mustard with the bosses of the Iberian sounding Aviva and will officially be given the fatal injection at midnight tonight.
As an ex-employee of GA bonus (New Zealand Insurance) do I care?
At the time of the merger / takeover Insuranceblogger had already moved on to pastures new in the city, but I had left them over thirty commercial products on their brand new AS/400 and at the time it was annoying to see the Misers from Perth (GA) and the Wastrels from Whyteleafe (CU) surrender to the much weaker brand.
What a waste of money rebranding is - shareholders must be outraged, mind you they are all at it! The necessary systems centralisation cost which has already happened obviously needs a centralised culture under the same banner - A banner for job and branch streamlining.
I thought Santander was a port in the basque country!
Labels: AVIVA, Economy, Insurance, Insurance companies, insurance marketing, insurance news, mergers, norwich union, unemployment
Time is Not on your side - Age as insurance rating factor
Time is on my side, yes it is! - not!
Even their satanic majesties have grown old and wrinkly.
It doesn't matter whether you are young or old - your age is going to to affect what type of cover you are offered for particular insurance products cand more importantly - how much you pay!
Well the young man, ain't got nothing in the world these days!
So what insurance products favour you or go against you if you are fortunate enough, to be young!
Well if you are young the things that favour you are going to be reflected in risk price for the particular insurance product you are purchasing. If you are young! That's It!
That's about all you have got going in your favour - the fact that you are young! - so the costs of products where the risk is to your person tend to be much cheaper the younger you are.
Some examples are:
Health InsuranceMortgage Payment Protection InsuranceLife InsuranceCritical Illness cover
ASU ( exception of unemployment insurance)
Income Protection InsuranceTravel Insurance
Lifestyle Insurance
All the cheaper products for younger people are concerned with risks to you as a person.
When it comes to Property insurance and Liability insurance - Woah! you are going to have to pay through the nose!
Fact of the matter is that when it comes to young people owning property or using property of others, the risks to themselves and others is far far greater than for older people and people with more life experience.
So young people in general, are going to have to pay a lot more for the following types of insurance:
Car Insurance
Home Insurance
Boat Insurance
Trademans Insurance
Commercial Insurance
Professional Indemnity Insurance
Not surprisingly if you are older the reverse applies
Time and Insurance wait for no man!
Labels: Insurance, premiums, rating
Aviva - Change Management out of control
I don't really care what happens to Aviva, in fact I find it an interesting experiment on brand destruction and it's subsequent consequences in cyberspace. I gave up caring about Aviva a long time ago when it got taken over by Norwich Union!
How did that happen eh?
Two massive GOOD performing companies General Accident and Commercial Union, bastions of British Insurance for a century, allow some little upstart with a bad reputation amongst
insurance brokers - Norwich Union, to come in take them both over, totally change direction, and destroy not just the brands but the ethos and systems of two great companies.
Commercial Union was a mess when GA took it over, in need of new systems and a people cull.
GA managed to absorb what was a good book of general business and the largest Life Insurance account int the UK, into its latest systems with little pain. The merger seem to work well as CGU until the motor bike people came along during the time of large takeovers and stock market profit grabbing.
Those were the days.... I remember the day I was at my city desk when a friend from GA phoned me up from Scotland to say they'd seen CU going into the boardroom at Perth. Oh if only they had Internet day trading facilities in those days......
So recently Insurance blogger has been watching closely and has noticed the following
1 A decision to destroy another brand and move to the megalith status of AVIVA
2. Rationalisation of all distribution outlets - It's well documented in the insurance newspapers, the souring relationships of the large conglommerates of Insurance Broking Networks, consolidators and the Internet aggregators and the withdrawal of NU from many of these product markets.
NU has also almost completely stopped it's external Internet distribution and has discharged the duties of affiliates in favour of centralised and PPC marketing.
3.The online affiliate marketing company OMG from Norwich whose account was founded on NU products, has seen all but the
LIFE INSURANCE products withdrawn. It's now beholden to RBS products to keep it alive in the online insurance arena.
At least there are some sensible people in the Life Dept - which rules the general insurance department anyway, as the Insurance side of the business is incidental in the scheme of things.
4. Rationalisation of labour
From an online marketing point of view, Insurance blogger thinks that NU whoever you are, have totally cocked up, and only time will tell just how badly - not that they care, its not their money, they are just playing with the shareholders money in exactly the same way as those bank employees did.
Still I don't care that they are wasting the shareholders money, they'll just turn around anyway and put it down to the cost of 'brand alignment'.
The sad thing is that they are heading in totally the wrong direction.
To be successful on the Internet today, you must have a strong brand.
All the search engine results are dominated by the big brands, including NorwichUnion.com.
The IT department has probably told the marketing people to say they've got it all under control by using what is known as a 301 redirect to the new Aviva site.
tee hee...
The really sad thinng though is that, they are brand destroyers, acquiring, consuming, and destroying famous british brands that they should be cherishing and maximising market coverage with.
They won't change, they've been doing it a long time - after all they destroyed GA Bonus which was voted for by the readers of
Insurance Times as the third most important Insurance invention ever after Lloyds and Direct Line.
Maybe it is the right time to shrink the book........
No....!
Good job I sold my shares years ago.
Hang on they've still got my pension fund........
Labels: AVIVA, Insurance, norwich union
Scottish Parliament to rescue Banks?
Its refreshing to see that the unloved Republicans have stuck to their guns and said no to intervention - even it it means a crash and the collapse of their economy and all its global fallout.
Why? Because in the UK the opposite situation exists where an underlying fundamental ideology of nationalisation to the rescue still exists!
Or does it?
I've just heard A Darling say 'we'll do whatever it takes to keep the economy stable'
Maybe, the Yanks are right - You cannot underwrite a House of Cards Institutional collapse - especially if your not getting the profit in the good times.
Obviously the UK Government thinks you can!
When the Japanese banking system collapsed in 1990 the only solution was the introduction of ZIRP - Zero Interest Rate lending from the State to the Banks in order to kick start the circular liquidity flows. It took ten years to recover.
Maybe there'll be a honeymoon periods in a month or so after Obama wins the US election handsdown.
It might even help Mr Browns UK image, after all the Conservatives here (the republican equivalents) are marching around their annual conference here like headless chickens, triumphing the rise of New Conservatism and already talking about power.
Why the glum faces then?
These same people are being shot by both sides. The collapse of their beautified banking system and the value of their shares free falling, their system falling into the hands of the enemy (the current Government) has rather taken the shine of the promised election victory to come!
Well whoever wins it has just won a bucket of ****
Rumours are abounding that Lloyds board are trying to renegotiate the takeover of Halifax Bank of Scotland - its sending waves around the industry.
Well Mr A Darling it looks like you may have your first bank to nationalise....
It will probably be closely followed by Royal Bank of Scotland!
Hang on! - Whose in Charge? - a certain Scot Mr G Brown
Maybe he's planning to hand the Scottish banks over to the Scottish Parliament to run
Now there's a thought - Alex Salmon in charge of 2 of the UK's largest financial and insurance comglomerates!
Labels: Banks, credit crunch, HBOS, Insurance, RBS bank, scotland
Hurricanes Claims rise daily for yacht insurers
The wave of hurricanes that has devasted many parts of the Caribbean and the Gulf Coast of America has hit Yacht Insurance companies hard. Many billions of pounds and dollars are invested in vessels large and small in this part of the world and the London Insurance market caters for the large part of coverage and underwrites most of the risks.
Yacht Insurance has been suffering over the past few months due to the credit crunch with
small boat insurers reporting a steady drop in business compared to this time last year. Despite Britains yachting and boating success at The Olympics, the boat is often the first thing to go when people start making cutbacks. Similarly orders for new sailing vessels are down.
With the damage costs of the wave of hurricanes mounting daily - Early reports suggest that Hurricane Katrina alone could cost more than £100m, according to the latest estimates from American risk assessors, however this could easily mount rapidly over the next few weeks as claims assessors have yet to asses the damage in the more remote areas. A re-insurance expert has said that reserves of $18 billion are being bandied around. Senior UK industry risks managers are also suggesting the total loss from the storms could be in excess of £10 billion when the winds finally settle.
A spokesperson for
Yachtline - one of the UK's largest online yacht insurers - and specialist
caribbean yacht and mega yacht underwriter, refused to comment on the amount of claims received but did say that the number of claims was up four times on this time last year.
It looks like it may be stormy waters ahead for
Yacht Insurance this year!
Labels: boat, Hurricanes, Insurance, yacht, yachts
UK Finance Giants withdraw Unemployment Mortgage Protection Insurance for own employees
Insurers may withdraw Mortgage Protection Insurance cover to their own employees
In the wake of the credit crunch, collapse of Lehman Bros. , the inevitable threat hanging over the future of Amercian insurance giant AIG, and the unprecedented collapse of UK Insurance giant HBOS shares by 40% in one day, you could argue that MPPI unemployment Insurers are right to worry and already some capital lenders are refusing to offer payment protection insurance to homeowners and employees who work for banks and building societies.
Some Underwriters have gone further becoming more risk averse and have included all financial services sector workers including insurance company employees, IFAS and insurance broker staff.
This adds to the growing list of trades and professions who are now finding it increasingly difficult to puchase unemployment insurance to protect their mortgages, income level or loans.
Construction workers, estate agents, conveyancing solicitors and services and more recently removal firm staff can no longer easily purchase mortgage payment protection insurance or the other products that could ease the pain of being unemployed.
The move could be indicative that the UK Insurance market is heading for recession. Insurance Staff have been made unemployed gradually over the the last six months, with a recent 6000 redundancies at Norwich Union flying under the general radar, with other insurance company giants creating redundancy hitlists.
A spokesperson for
Personal Accident - one of the UK's largest online independent mortgage protection insurance providers, who compare policies on price and cover - said, "It's true that we have received notices from some of our underwriters withdrawing certain particular income related unemployment cover for a list of trades within the financial services sector.
However we can still offer age-related policies for
income protection insurance and
mortgage protection insurance to all bank and building society staff, which generally offer better cover at lower prices as they are not lifestyle rated and available to anyone. As these are monthly policies they are simple to change midstream - you could save yourself a fortune in premiums if you switch your policy from a bank or building society and a lot of worry if you are unfortunate and join the ranks of the mass unemployed, or your building society or bank collapses leaving your policy worthless.
Could you meet your mortgage repayments or pay bills without a job? These are very worrying times...."
Simon Burgess head of independent provider
Burgesses agreed. "Age-related unemploment insurance offers the best solution to financial services workers who may be threatened with unemployment. We offer policies to cover your mortgage, wages or debts whilst you are unemployed. I would however advise anyone thinking of protecting themselves from financial harm if they lose their job, to act fast as there is a ninety day exclusion no claims period from the start of the policy." He added, "Although our mortgage protection insurance has seen a downturn with the number of new mortgages being taken out virtually non-existant due to the credit crunch, we have recently seen a sharp rise in the number of
unemployment insurance applications, particularly from workers in financial services."
So it appears that if you want to be able to pay your mortgage in three months time or still have an income you should take out
payment protection insurance cover today. This is particularly prudent for financial services sector workers whose jobs appear to be most at risk.
Labels: income, income insurance, Insurance, mortgage payment protection, mortgage payment protection insurance, mortgage protection insurance, mppi, unemployment, unemployment insurance
