Demand for life insurance books of business has not declined in the lead-up to the start of the Life Insurance Framework, according to financial advice business broker, Radar Results.
Releasing figures tracking prices changes over the past six months to 31 March 2017, Radar Results Principal, John Birt found demand from buyers and the multiples of recurring revenue being sought by sellers has remained stable during that time.
“There is still a huge demand for risk clients, a demand which has not been dampened by the proposed new Life Insurance Legislation,” Birt said, adding that “Most demand has been for book sizes of $150,000 to $500,000 in annual renewal commissions.”
“The age of the clients is important, and the younger the clients, the higher the price multiple. Whether the premiums have been written as stepped or level doesn’t appear to make a price difference,” he said.
“There is still a huge demand for risk clients…”
Radar Results found that prices asked for books with clients aged over 55 ranged from 2.5 to 2.8 times recurring revenue and at 3.0 to 3.5 times recurring revenue for books with clients aged under 55.
This compared very favourably with investment and superannuation books which were valued lower at 2.5 to 3.0 times recurring revenue for clients aged up to 64 and 1.8 times to 2.5 times recurring revenue for those aged 65-79.
