2022 Q2

Allstate Agency Value Index- 2022 Q2

Download PDF

Merger Activity Explodes!

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
2022 1st QTR
0.212
0.218
0.221
0.218
0.147
0.256
$3,168,816
2022 2nd QTR
0.176
0.212
0.230
0.208
0.130
0.293
$2,997,243
Use the arrows to see agency values over time.

Let’s Talk Merger Statistics

In the last quarterly edition of the AAVI (Q1 2022), we mentioned that mergers represented 36% of transactions financed by PPC LOAN. This was up significantly from full year 2021, where just 3% of agency sales were a merger transaction.

Amazingly, 66% of the M&A transactions PPC LOAN financed in the Allstate space this quarter were part of a merger transaction. Due to this abundant sampling size of mergers, PPC LOAN is releasing the following statistics for mergers occurring in the 2nd quarter of 2022:

Smallest Agency Merged (Earned Premium) $ 1,018,780
Largest Agency Merged (Earned Premium) $ 4,902,813
Average Size Agency Merged (Earned Premium) $ 2,485,790
Average sales factor of a merged agency 0.179
Sales Factor < $3million earned Premium merged 0.197
Sales Factor > $3million earned Premium merged 0.198

What are the big takeaways?

1. Existing agents are paying the same sales factor for a merger regardless of size:
This is a very interesting revelation, as historically speaking, the larger the agency the higher the sales multiple or factor. A $5 million earned premium agency always demanded a higher multiple than a $1.5 million agency.

The longstanding historical trend appears to have no relevance when the agency being purchased is being merged instead of being purchased by an outside buyer or maintained as a satellite.

2. Allstate Insurance Company is driving this trend:
It’s been a great plan for Allstate Insurance Company: Identify your best-performing agents based on various performance measurements. Label them Elite agents and give them a no strings attached right to purchase and merge within their geographic area.

From the agent’s perspective, they know what they need to do to achieve the desired status of Elite so they can grow their business through acquisition. From Allstate’s perspective, under performing agents have a viable window to get out, and top performing agents get bigger and more efficient.

What about the remaining 34% of acquisitions that were not a merger?

The remaining 34% of agency acquisitions financed by PPC LOAN were purchased by outside buyers. On average, these outside buyers purchased $3,977,529 in earned premium and purchased for an average sales factor of 0.231.