Allstate Agency Value Index- 2021 Q4

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Terminations Continue to Take Toll on Agency Values

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 2021 0.145 0.220 0.236 0.223 0.100 0.322 $4,264,462 2021 1st QTR 0.155 0.197 0.228 0.209 0.15 0.276 $4,614,481 2021 2nd QTR 0.140 0.238 0.253 0.233 0.100 0.322 $3,673,382 2021 3rd QTR N/A 0.233 0.240 0.236 0.146 0.274 $4,766,772 2021 4th QTR N/A .222 .214 .219 .157 .275 $3,894,178

Use the arrows to see agency values over time.

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Quarter Highlights:

• Terminations continued to put downward pressure on agency values with 27% of sellers being forced to sell due to losing their contract.

• This quarter’s highest sales factor of .274 was a merger transaction by an existing agency owner. Unfortunately, there was only a single instance of PPC LOAN financing a merger transaction in Q4.

• 64% of agency purchase transactions were for outside buyers – the remaining 36% were purchased by existing agency owners.

Although terminations have proven to be a negative for agency values, the existence of mergers can often serve to offset the negative trend terminations drive. Unfortunately, this quarter had just a single instance of a merger transaction, while 36% of all purchasers were an existing agency owner.

Going forward, it will be interesting to see the level of existing agents approved to buy, along with merger volume. If both instances pick up, we can expect to see positive trends in agency values as we move into 2022.

LARGE SIZED AGENCY ANALYSIS $4,000,001 and up

This quarter, large sized agencies experienced the rare phenomenon of realizing a lower sales factor than those agencies with $2million to $4million in earned premium. The reason for this occurrence is simple – terminations. 40% of agency sellers who were financed by PPC LOAN in this size group were terminated.

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 .220. A possible factor contributing to this drop is the large number of agencies in this size group that were very close to the low end of the size group range, as the average sized earned premium was $2.7million.

SMALL SIZED AGENCY ANALYSIS $0 to $2,000,000:

PPC LOAN is no longer financing these sized agencies for outside buyers. We are however happy to finance the purchase of smaller sized agencies in two scenarios:
• If the agency is part of a merger transaction by an outside buyer.
• If an existing agent is purchasing to either merge or maintain the seller’s agency.