Moat Associates

Using DCM’s  Free Website Business Valuation Estimator

Moat Associates has created a business valuation tool  that can be used to estimate the value an independent insurance agency, whether large or small.

• Do you need a valuation estimate for legal or perpetuation planning?
• Are you curious about the value of your insurance agency in today’s market?
• Are you wondering about how to possibly value and price your insurance agency for sale?
• Or are you thinking about buying another agency and want to get an idea of its value before planning an offer?

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This is the second part of a two part series. Don’t miss part 1:Business Loans for the Independent Insurance Agent

Spotting Trouble on the Horizon

When Lending Implement a Regular, Knowledgeable Follow Up

Inherent in the establishment of appropriate covenants and conditions should be acceptance of regular financial and operational reviews. These might be as frequent as quarterly in marginal loan situations or when trouble has been spotted. Such reviews should include not just the agency’s financial results but at least annually the owner’s personal financials whether or not personal assets have been pledged against the loan. (more…)

An Introduction to Business Lending Opportunities and Observations on Workout Strategies (if needed)

The independent insurance agency business has been, is, and should continue to be, an excellent source of loans for commercial banks, insurance companies and other lending institutions. Blessed by an increasing base of prospects, an economy that demands insurance, social and economic inflation that increases premiums the insurance industry has seen a half a century of uninterrupted growth in premiums.

Compensated by commissions based on these premiums the independent agent has enjoyed a unique opportunity for growth in both his/her agency’s income and its value. While the last twenty years have seen marked shrinkage in the number of independent insurance agencies, the primary cause has been a continuing pattern of mergers resulting in fewer but, overall, larger average sized agencies. Among insurance companies and industry experts this trend is expected to continue. It is this merger activity and the resulting larger agency that provides lenders with the opportunity to build a portfolio of highly profitable, mid-size ($500,000 to multi-million dollar) loans and insurance companies with the opportunity to access sources of larger premium sales. (more…)

Defining Perpetuation and Business Succession – Best Practices for Insurance Agencies

STOP, just for a moment, and answer a serious question: 

If you had been hit by a bus last night, what would have happened to the business of your insurance agency?

• If you aren’t sure, you need to do some Perpetuation Planning
• If you imagined uncertainty, even chaos, for your family and your employees, you need to do some Business Succession Planning.
• If you realized that there would be an immediate and possibly substantial loss in the insurance agency’s value, you need to do some planning.
• If you have planned for such a contingency (or you just don’t care) you need to read no further.

Insurance Agency Perpetuation Plans

Advisors, consultants and your peers call your response to this question “Perpetuation Planning.”   In its simplicity, this is misleading.  What you need to plan is how and for whom to preserve your insurance agency’s value when a “triggering event” happens.  And one will happen to you. (more…)

Business Valuation Methods; Insights on Insurance Agency Valuation

The business valuation of an insurance agency or insurance brokerage requires an in-depth knowledge of the internal workings of an agency and a wide-ranging understanding of the insurance agency environment. Most insurance agency valuation reports are vulnerable because the “expert,” lacking close experience with the insurance agency business, has relied extensively on general information and standard text book valuation methodologies.

Issues Affecting a Defensible Insurance Agency Valuation (more…)

Do You Really Have An Insurance Valuation Expert?

Planning Your Cross-Examination of an Expert on Insurance Agency Valuation

Whether one is presenting or cross-examining an expert’s valuation report there are several issues that are important to success.  Typically, these fall into the following categories.

1. The expert’s knowledge of the insurance industry and specific type of business in which the subject company is engaged.
2. The valuation process.
3. The breadth and quality of information relied upon.
4. The choice and weighting of valuation methodologies.
5. The opinion – reasoned, credible and legal.
6. The “readability” of the report. (more…)

Insurance arbitration represents a legitimate alternative to the procedures of formal litigation. Effectively conducted and controlled it can prove to be faster, less costly, more convenient, more private and offer reliance on the judgment of a panel with specific insurance expertise. However, lawyers, party principals and even panels regularly break with many of the insurance arbitration “principles“ and therby minimize the inherent benefits of the arbitration process.

Suggestions for Achieving the Intended Benefits of Arbitration

Simply by following these simple guidelines for a successful insurance arbitration, one can increase the benefits of insurance arbitration for all the parties involved in a dispute.

Consider the Details of Your Arbitration Agreement (more…)

The Foundation for Every Insurance Agency Valuation

Overview of Revenue Ruling 59-60

Revenue Ruling 59-60 although now over 40 years old is, as of this writing, still the definitive outline of the approach, methods and factors to be considered in valuing shares of the capital stock of closely-held corporations. Although initially presented for use in estate and gift tax calculations it is regularly referenced and used in the valuation of closely held businesses for other litigation purposes and its principles are applicable in the valuation of most closely-held business valuations.

Basic Principles of the Regulation

The Regulation specifically emphasized the following basic principles, each of which finds continuing support in all jurisdictions. (more…)