OLDWICK, N.J. - (Business Wire) Best’s Review’s cover story informs life/health agents how to value their businesses to plan for retirement or acquisition. “What’s Your Agency Worth?” tells the story of how a life insurance agency owner in Woodland Hills, California, found an investor that allowed her business to grow and also provided her with a long-term exit strategy.

 

This kind of story is likely to play out in coming years as owners of life/health agencies look for a way to access capital, find a buyer so they can retire, or both. About 26% of all life/health and property/casualty agents are self-employed, according to the U.S. Bureau of Labor Statistics.

Many life/health don’t have succession plans in place or know what their agencies are worth, said Chris Greis, president and founder of Leaders Partners Inc. Some principals plan to work until they drop, he said, or look for a young producer to come in and take over. Both of these plans are fraught with risk, he said.

The California life agency, Time Financial, was sold to an insurance wholesaler, but at the time of the sale the buyer and seller didn’t know the value of the business, said Kate Kinkade, Time’s president.

Measuring a life/health agency’s worth isn’t as simple as applying EBITDA or (earnings before interest, taxes, depreciation and amortization) as you can in valuing a P/C agency. Life/health agencies require a holistic view — evaluating the quality of the firm’s contractual relationships, market conduct record, insurance carriers and the kinds of retailers and brokers with which it works.

“What’s Your Agency Worth?” also features a sidebar containing three experts’ advice on selling a life/health agency.

September’s Other Highlights:

• Read about how Native Americans are turning to captives to insure properties like Foxwoods Resort Casino in “Going Their Own Way.”

• Congress is back in session and “Committees with Insurance Interests” examines which senators and congressman exert the greatest influence on the insurance industry.

• Medical tourism brings to mind flying off to other countries to have medical procedures performed, but “Heading for Home” reports how some health plans are offering discounts for medical care performed at U.S. facilities.

• “Open Door Policies” reports how Brazil’s market reforms are attracting reinsurers’ business.

Best’s Review is published by the A.M. Best Co., for insurance professionals, including home office executives, agents, brokers and others who are affiliated with the industry, such as bankers, lawyers and educators.

To read these articles and more, subscribe to Best's Review by visiting our Web site at www.bestreview.com, calling the A.M. Best customer service department at (908) 439-2200, ext. 5742, or e-mailing your request to customer_service@ambest.com.