Allstate Agency Value Index- 2022 Q4

Download PDF

Mergers Dominate 2022

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 .192 .213 .228 .210 .130 .293 $3,331,831 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 2022 3rd QTR 0.182 0.208 0.236 0.212 0.138 0.284 $3,874,428 2022 4th QTR .181 .208 .229 .203 .132 .276 $3,956,488

Use the arrows to see agency values over time.

prev next

2021 vs 2022

Now that 2022 has come to a close, it is a good time to compare trends in the mergers and acquisitions market year over year.  As outlined below, merger activity exploded in 2022 compared to 2021

With merger activity in 2022 expanding 15 times from the prior year, the average agency size (as measured by Earned Premium) was bound to fall in 2022.  In fact, the average agency size transitioned in 2022 was nearly $1million smaller in comparison to 2021.  This is highly driven by the fact that Allstate allowed Elite agents to purchase and merge up to $3million in earned premium starting in 2022.

The merger activity in 2022 was the driving factor for a higher sales multiple for smaller sized agencies.  As listed in the chart below, agencies with less than $2million in earned premium saw their average sales factor increase from just .145 in 2021 to .192 in 2022.

Unfortunately, with the unknowns surrounding a new compensation plan, Allstate experiencing an uncharacteristically high combined ratio,and dramatic changes in customer premium/product competitiveness, those larger sized agencies that were not part of a merger transition suffered when it came to value/sales price.

Both of the larger sized groups saw their values decrease in 2022 compared to 2021.  Agencies with $4million in premium or greater sold for an average of .236 in 2021, while dropping to .228 in 2022.  The chart below shows the decline in average value a seller of an average sized agency in each size group would have realized in 2022 versus 2021:

The drop in average sales price year-over-year is $40,000 and $21,000, respectively.

Although no agency sells for exactly the average sales factor (all sell for either more or less than the average), it is worth noting that there is a high level of comfort the reader can take in the accuracy of these numbers due to the large sampling size from a year’s worth of transitions.  At the bare minimum, we are able to confidently state that agency values trended down in 2022 for those agencies with greater than $2million in earned premium.