Medium Sized Agencies Hit Lowest Value Ever
Allstate Agency Price to 12MM Earned Premium Ratio (National Average)
$0 to $2,000,000
$2,000,001 to $4,000,000
$4,000,001 and up
Simple Average
Low
High
Average Earned Premium
2000
0.199
0.236
0.235
0.202
0.117
0.262
$1,127,399
2001
0.213
0.199
0.208
0.209
0.133
0.311
$1,410,751
2002
0.196
0.199
0.209
0.197
0.119
0.255
$1,715,574
2003
0.189
0.219
0.24
0.199
0.147
0.254
$1,801,519
2004
0.238
0.231
0.236
0.236
0.157
0.393
$1,507,155
2005
0.266
0.228
0.34
0.259
0.175
0.398
$2,305,537
2006
0.289
0.284
0.317
0.298
0.188
0.402
$2,518,924
2007
0.278
0.287
0.339
0.292
0.121
0.456
$2,564,973
2008
0.248
0.289
0.326
0.271
0.145
0.406
$2,249,764
2009
0.231
0.26
0.285
0.247
0.082
0.397
$2,127,297
2010
0.224
0.255
0.289
0.24
0.106
0.353
$2,167,574
2011
0.222
0.243
0.237
0.231
0.12
0.366
$2,206,584
2012
0.213
0.244
0.24
0.229
0.127
0.336
$2,342,175
2013
0.226
0.246
0.288
0.247
0.107
0.349
$2,781,745
2014
0.244
0.263
0.273
0.264
0.107
0.352
$3,263,288
2015
0.208
0.26
0.298
0.251
0.126
0.431
$2,798,118
2016
0.224
0.259
0.288
0.258
0.081
0.378
$3,247,073
2017
0.232
0.25
0.278
0.253
0.118
0.362
$3,099,030
2018
0.226
0.256
0.299
0.261
0.135
0.365
$3,202,644
2019
0.216
0.252
0.274
0.253
0.140
0.358
$3,638,959
2020
0.168
0.226
0.249
0.233
0.100
0.322
$4,102,072
2020 1st QTR
0.224
0.234
0.233
0.233
0.145
0.297
$3,486,112
2020 2nd QTR
0.140
0.241
0.254
0.234
0.100
0.322
$3,590,303
2020 3rd QTR
N/A
0.191
0.264
0.223
0.122
0.296
$5,481,622
Use the arrows to see agency values over time.
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MEDIUM SIZED AGENCY ANALYSIS $2,000,001 to $4,000,000:
Agencies with Earned Premium ranging from $2million to $4million saw their average value drop to a factor of .191 in the third quarter of 2020. This is the first time agencies of this size dropped below .200 since 2002, when the average factor was .199.
In fact, this is the lowest valuation realized by these sized agencies since PPC LOAN began tracking agency values back in 2000. It appears that three events are driving this significant drop:
The takeaway: If you are not terminated, have a fully vested TPP and have patience to sell your business, you can still receive a good value.
LARGE SIZED AGENCY ANALYSIS $4,000,001 and up:
Large Agencies Have a Great Quarter
After a massive drop in the first quarter of 2020 to a factor of .233 (from a 2019 average factor of .274 for large agencies), agencies in this size group are seeing a rebound in values. The factor for this quarter is up to .264. Very impressive, although not back to the level of value experienced prior to Integrated Services and the new comp plan, which reduced renewal compensation.
Quality Agents Leaving Allstate?
Sometimes good news has a hint of bad news buried in it and I think large sized values increasing hints at an underlying issue that may be brewing at Allstate.
Are values up because some of the most accomplished agents are leaving Allstate Insurance?
Certainly, some of the most accomplished agents based on size are leaving. This quarter, the average large sized agency financed was a whopping $8,551,745 in earned premium, which marks an all-time record).
So, why would these top agents sell? They have great businesses andare able to sell for values at the top end of the market. This is good for values in the short run, but is it good for Allstate? Is it good for the customer experience?
SMALL SIZED AGENCY ANALYSIS $0 to $2,000,000:
No small sized agencies were financed by PPC LOAN in the third quarter of 2020, as these agencies have been deemed too risky to add to our quality loan portfolio at this time. PPC LOAN will pursue loan approval for smaller sized agency in instances where the buyer already owns an existing Allstate agency.
WHEN SELLING YOUR ALLSTATE AGENCY – BE A BETTER SALESMAN:
Often, I get a call from an angry Seller who tells me the AAVI is costing them money! They might say their book is worth .270, but the AAVI says .250.
If you are picking up the phone to complain about the Allstate Agency Value Index numbers, then you need to be a better salesman. Let me tell you why: