Property and Casualty rates are down and Insurance Agency Buyers see that as an opportunity. Buyers believe that if they can acquire a $250,000 commercial insurance book and keep 80-90% of it intact, when rates go back up that same book should generate closer to $300,000. Even if that takes 2-3 years to happen, there aren’t many investment opportunities today where a Buyer could get a 20% return in just two years. Although the Seller might be cashing out of his or her insurance agency at a time when rates are down, that Seller is also releasing to the Buyer all of the risk and responsibility associated with servicing and holding onto those accounts during a volatile economy. It’s a good trade for both parties.
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