Successor Wanted: Potential Millionaire Through Portfolio Acquisitions | Insurance | 06/21/2022

When the editors investigated at the end of 2015, about 40 percent of insurance brokers in Austria were over 50 years old. Today it is over 60 percent. This development translates into growth opportunities for younger colleagues or other market participants, as evidenced by an article that appeared in full in the new print edition of FONDS profi.

“The industry has understood that the purchase of broker portfolios is a relevant market opportunity. Insurance companies and large broker associations are specifically examining the market for portfolios that may be of interest to them,” says the partner at KPMG and insurance expert Lorenz Lang. As part of a study of brokers, he and his colleagues calculated that an exemplary insurance company with a 20 percent market share could generate an additional €57 million in new premiums from multi-broker and agent portfolios that are ready to be sold. delivered (no life insurance). In their calculation, the study authors assume that 35 percent of corridor volumes over the age of 50 are ready to be delivered and that 90 percent do not practice any active successor management.

Who is really buying?
Wolfgang Willim, CEO of Sewico consultancy, which specializes in insurance brokers, also reports that the dynamics of company transfers is increasing. The consultancy annually evaluates between 35 and 45 insurance companies and accompanies the transfer projects. However, Willim does not see insurance companies as the key players when it comes to buying broker portfolios. In most cases, when a broker retires, other large pairs or groups of brokers take over. From a purely legal point of view, an insurance company cannot take care of the clients of a broker (who is independent by law) one by one. With such deals, the insurance company would have to use an internal broker. But a transfer there is not very popular with customers, says Willim. “Consumers are becoming more aware that they really want independent advice. They don’t just switch to a broker affiliated with an insurance company,” says Willim.

The age structure issue is currently relatively high on the list of insurance brokers. A committee has just been created on the subject that has drawn up a succession guide, explains the head of the brokerage, Christoph Berghammer. He knows the problem that many colleagues don’t really have a successor in management. “I found an inventory because a hotelier asked me to take over. His agent just told the client to find a new agent,” says Berghammer.

At least five years delivery time
Of course, such an abrupt withdrawal is not reasonable. However, if you look at the enormous effort, it is understandable that some feel overwhelmed. “It should start at least five years before the planned withdrawal, but even earlier,” says Willim, CEO of Sewico. Because in addition to the search for a suitable successor, numerous organizational and strategic issues need to be resolved. In many cases, it is fiscally worthwhile to convert a sole proprietorship or a partnership (both subject to income tax) into a GmbH (KÖSt or KESt mandatory).

Another good reason to plan the transfer in time: the unanimous opinion of all experts is that succession works best when young and old brokers work hand in hand for two or three years. “You have to configure the transition intelligently. In the end, the client has to accept if he wants to change to the new agent,” emphasizes Lang, an expert at KPMG.

The transfer also creates a huge burden for the broker who takes over: “Integration is a huge effort and a time-consuming process. You have to write to new clients, go through them together. And clients sometimes have a lot of time.” . objection periods,” says broker Berghammer. This is why growth through portfolio acquisitions is interesting, but for many it can only be managed to a limited extent. (eml)


You can read the full article in the print edition of FONDS profi or in the electronic journal. In it, you can view charts and learn about pricing issues and how agent transfers differ from broker transfers.

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