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Description

OFF-MARKET PRESENTLY

400 Policies Taxi Limos 200 Policies Personal Lines NYC Insurance Agcy
Jackson Heights, NY – (Queens County)
Zip Code: 11732

  • Asking Price: $599,000
  • Cash Flow: $193,400
  • Gross Revenue: $300,800
  • EBITDA: N/A
  • FF&E: N/A
  • Inventory: N/A
  • Established: N/A

Business Description

Revenue went up by 10% Y-O-Y from ’16 to ’17 so this is not an Uber Doomsday sale!

🙂

Ideal transaction for someone that wants a physical presence in NYC and has an appetite for private passenger auto. Buyer will have to take over the existing office space at a good rental rate to maximize ROI plus you’ll be more likely to keep the solid staff as part of the sale.

Top carriers by revenue are American Transit, NatGen, Countrywide, Maya, Polanco, Progressive among others. Broker Fees are about $5k per month, so commission is at $240k annual – i.e. 3x Book value on a Steady Eddie 80%-ish commercial agency. Significant runway exists to round out the book with other lines of coverages including life/health/etc….

NDA is required for first round due diligence package on file with ProNova Partners.

Detailed Information

  • Facilities: Plenty of space, good retail insurance office layout. Required to take over space since a decent amount of agency bill customers.
  • Competition: Competition is always strong in insurance.
  • Growth & Expansion: Possible to round out the book with additional coverages for a more diversified Agency.
  • Support & Training: As needed.
  • Reason for Selling: Retirement

Here’s our preliminary package on this opportunity.

1) % Home/Auto/Commercial/Health etc.?
80% Commercial. 20% Personal.

2) % of your book that is Hispanic?
Mix of ethnicities. Hispanic, Chinese, Indian.

3) What % of the clients come in to make payments? What % are direct bill? What % of your book is agency bill?
Only personal lines accounts are direct bill. Most of agency bill policies are online or over the phone. We provide our clients electronic checks over the phone so we make it as easy as possible for them to pay us.

4) What type of agency management system do you employ?
Local management system called ADS.

5) Books and records on file?
The agency has commission statements and 12 months trust account deposit activity to backstop claims on gross revenues in ad copy.

Industry Landscape:

The Property, Casualty and Direct Insurance industry operates with a low level of market share concentration. The top four companies are estimated to account for 29.0% of total industry revenue in 2017, representing a slight increase from 26.9% in 2012. Despite some merger and acquisition activity during the five-year period, concentration among the top four players has not changed dramatically.

This characteristic can be partly attributed to the fact that some players specialize in certain products and do not lead in all markets, which detracts from their overall share. Moving forward, market concentration is expected to increase as large players look to acquire companies that provide exposure to specific markets and lines of insurance they previous did not offer. Larger players will be able to do this as their balance sheets have been bolstered from a hardening price cycle and improvements in investment income over the five years to 2017.

Business Opportunity

The Property, Casualty and Direct Insurance industry has high barriers to entry. A new entrant must conform to stringent state and federal regulations to establish property and casualty (P&C) and title insurance operations. The P&C market is highly competitive. Both markets are highly saturated and contain a large number of well-established brands.

The industry is also highly complex, as some of the nation’s largest state markets are also the riskiest with regards to losses (e.g. Florida and California). Furthermore, perhaps the highest barrier to overcome, a prospective entrant must raise an enormous amount of capital to start operations. In addition, a new entrant must apply for a Certificate of Authority to supply insurance products as a property, casualty and direct insurance carrier.

Moreover, this certificate must be obtained not only for the state of domicile but also for every other state where the insurer wishes to conduct business. The insurer must also submit regular reports and comply with set standards for minimum capital and solvency requirements.

All of the market’s product lines are highly competitive and, in some locations, over-capacity exists. As a result, new entrants must have significant capital to be able to price premiums at, or near, market rates. Insurers have the ability to reduce premiums as their policies increase because their overall portfolio risk is negatively correlated with scale. New entrants understandably do not have this scale and, therefore, will find it challenging to compete with established players.

(Sourced: Property, Casualty and Direct Insurance in the US June 2017).

 

Contact info

Pronova Partners

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