June 2010
To develop a broader understanding within the re/insurance industry of the impact of climate change on catastrophic windstorm events in Europe, and to explore the applicability of certain aspects of the current state-of-the-art climate modeling to insurance-oriented loss simulations, EQECAT is collaborating with the Free University of Berlin (FUB) to investigate the behavior of the current and future activity of extra-tropical cyclones, as simulated by Atmosphere Ocean General Circulation Models (AOGCM). This white paper presents the results from the first phase of this study. MoreMay 2010
As discussed in previous editions, merger and acquisition transaction activity was down significantly in late 2008 and 2009. However, over the last several months we have seen buyer and seller activity increase dramatically. This increase in activity, forces dealmakers who had been sitting on the sidelines to confront and understand the new accounting rules regarding accounting for acquisitions and the costs associated with doing a deal.MoreApril 2010
As cash became a scarce commodity that no one seemed willing to part with in 2009, total merger and acquisition deal flow in the insurance brokerage space decreased by almost half of the number of transactions finalized in 2008.MoreMarch 2010
The Insurance Insider's annual survey takes the temperature of a legacy sector that has not seen the bumper crop of new business it hoped the financial crisis would yield at a time when the run-off market faces Solvency II opportunities and challenges. For more information about The Insurance Insider click here.March 2010
The Insurance Insider's annual review focuses on a sector at the core of the modern productive economy, examining the key issues that affect dynamics for underwriters and insurance buyers across the upstream, midstream and downstream markets. For more information about The Insurance Insider click here.March 2010
Despite a significant downturn in the economy and a decline in deal activity, the average total potential transaction value as a multiple of Earnings Before Interest, Taxes, Depreciation and Amortization expense ("EBITDA") has not changed dramatically over the last several years. What has changed is the portion of the transaction price that is paid on a guaranteed basis and the transaction price that realistically can be expected to be paid based on reasonable projections of future performance.MoreFebruary 2010
In more than 80% of the C corporation deals that have closed, the seller received a discounted valuation and the buyer lost significant tax savings either way, dollars evaporated. It is a shame that more aspiring dealmakers don't understand personal goodwill. MoreJanuary 2010
The Insurance Insider's sister publication Trading Risk offers the definitive guide to the year that has just happened, and to what lies ahead, with exclusive analysis and commentary complemented by the insightful thoughts and profiles of leading companies and industry figures. For more information about Trading Risk click here.December 2009
We recently compared the results of a comprehensive agency study on employee satisfaction with the Performance Indicator Numbers (PIN) of the participating agencies and found that the two are directly related. The PIN measures the profit, operational and equity perspectives of a given agency through the weighting of several ratios on a scale of 1-10. Our Employee Satisfaction study measures how satisfied employees are in terms of their Job, Agency Leadership, Work Environment and Agency Polices & Practices, also on a scale of 1-10. The Composite Score is the average of the four. MoreNovember 2009
As agents and brokers continue to refine 2010 strategies and budgets, new business sales remains the coveted prize. When dissecting budgeted revenue growth, agents and brokers can not directly control contingents, investment income or miscellaneous income. Additionally, agents and brokers cannot control the premium rates associated with commission and fee retention. High-growth agents and brokers focus acutely on that which they can control: New business sales and PIF retention.MoreOctober 2009
A year on from Lehman, the near collapse of AIG, and the Aon Benfield merger, The Insurance Insider brought together a panel of industry leaders at Monte Carlo to discuss recovering (re)insurer balance sheets, the subscription market, broker choice and soft market fears. For more information about The Insurance Insider click here.October 2009
In the September issue of For The Record, we showed that high-growth agencies have positioned themselves to be viable well into the future, by investing in and training young producer talent today. This is critical to establish the next generation of agency leadership as well as facilitate agency perpetuation, drive organic growth, and maintain key agency relationships. MoreSeptember 2009
In last month's issue, we covered the hiring and retention rates of producers for average and high-growth agencies. The data showed that high-growth agencies hire at a higher rate and cut the cord quickly on unsuccessful hires. Why are these agencies so focused on implementing a regimented producer hiring, training and retention program?.MoreAugust 2009
Hiring and retaining producers who continually drive new business production remains a hallmark of high-growth agents and brokers. As annual leakage rates now exceed 15% of prior year's commissions and fees and will continue to climb in the short term, high-growth organizations focus on writing enough new business not only to offset the revenue leakage, but to far surpass it.MoreJuly 2009
Is your agency's future planned or is it just luck that it remains in business? Most organizations do not have a formal strategic business plan that addresses how the organization will run in the future. However, the highest performing agencies, many of which are in MarshBerry's APPEX organization, conduct formal annual and/or quarterly strategic business planning sessions. A formal written business plan unifies agency leader's ideas and helps control the agency's future. MoreJune 2009
We discussed the importance of maintaining a strong balance sheet in the May issue of For the Record. Data extracted from our proprietary database shows the dramatic decline of agency revenue and pre-tax profit (see charts below), suggesting that many agencies have had (or will have) to dip into their retained earnings. Those funds need to be replenished.MoreMay 2009
The importance of maintaining a strong balance sheet has never been greater than during these difficult economic times, which are filled with unforeseen challenges and hurdles. Agencies that have managed their balance sheets effectively are better prepared to weather this (and other) storms as well as to seize opportunities that may present themselves as a result of others not effectively managing their balance sheets. MarshBerry analyzed several key balance sheet ratios as of December 31, 2008 to determine how agencies are positioned for this economic downturn. MoreApril 2009
For peak performing insurance agencies and brokerages, new business production continues to provide the fuel to outpace the economy. Stagnant top-line growth for the masses has rapidly evolved from an internal organizational problem into an external market excuse. Contingent income is falling. Investment income has already disappeared. Reductions in risk exposure, returned premiums and soft rates all exacerbate past growth obstacles.MoreMarch 2009
The thread by which agency value was hanging has snapped for the masses. Declining revenue and earnings, a limited agency buyer pool and a drastic reduction in insurable risk caused by the current recession have placed many in a valuation free fall. The following chart illustrates the 2008 valuation and earn-out comparables for banks and public brokers MoreFebruary 2009
From 1999 through 2006, banks outpaced every segment in overall number of publicly announced acquisitions, but this slowed dramatically over the last three years. This deceleration will continue through 2009. In 2008, independent agencies and national brokerages expanded their acquisition programs, filling some of the void left by the banking segment.MoreJanuary 2009
The Working Capital Defensive Interval measures the number of days expenses that an agency has in net working capital. Many agencies report having the bare minimum, which may not be sufficient to weather the loss of a major account or take advantage of unforeseen opportunities. MoreJanuary 2009
Most of us are keenly aware that the current capital gains tax rate will automatically sunset at the end of 2010 reverting back to the pre-2003 level of 20%. Many believe it could be increased to as much as 35%. Few business owners have taken the time to determine how this will impact the return on their investment. Whether you are an active acquirer or an owner contemplating internal perpetuation or an external sale, it is important to understand the potential impact of such a change in the tax rate. MoreMarch 2008
For the majority, agency value is hanging by a thread. The string is about to break. For the minority that are willing and able to execute a plan to combat sustained soft market conditions through organic growth and strong core operating profitability, valuations will remain strong and in some cases increase.MoreOctober 2007
Whether public or private, agents, brokers or carriers, growth and consolidation are increasingly shaping strategic initiatives across the insurance distribution system for 2007 and beyond.MoreOctober 2006
"Cross selling is a pipe dream. Every bank has failed in insurance and it will never work." Conceding the fact that financial institutions have failed to capture initial cross-sell penetration goals to date, bank insurance distribution is still evolving. Leading banks will make it work.More