Riskinfo readers were very interested this week in our story reporting the greater value associated with younger books of risk clients, and where overall price multiples on risk businesses are expected to increase…
Demand has exceeded supply, with many buyers asking about risk insurance client registers and businesses, according to Radar Results, a buyer agent for financial services.
CEO John Birt says in a statement that some of Radar Results’ buyers are also now asking for much higher levels of annual fees.
He explains that the price multiple on risk insurance clients is traditionally 2.2 times annualised renewable commission, and as high as 2.7 times depending on the average client age of each client.
Birt says that the age range that is most favoured “…is between 35-55 years old, and the size of the business’s annual recurring revenue is $500K-$750K.”
“The younger the risk clients, the higher the multiple paid by our clients (the buyers).”
This, he notes, represents a purchase price “…between $1.35 million to $1.5 million based on the current price multiples of three times and on the annual recurring revenue of $500,000.”
However, he adds that some of Radar Results’ buyers are now asking for much higher levels of annual fees, “…as much as $3 million per year.”
…these risk books are harder to get but not impossible…
“These risk books are harder to get but not impossible, as smaller companies are merging with larger ones.”
Birt says that price multiples on risk-insurance books “…are expected to increase from here, insulated from stock market falls.”
The company says it is looking for “…any financial planner or life insurance agent looking to sell; and looking at doing so right now.”
