Quarter 3 Grammar Focus PERRY HIGH SCHOOL 2014 Authors: Lindsey Tillman & Lindsay Hartgraves.
Case Studies in Agency Financing - InsurBanc · From her desk at Hartgraves Insurance Agency, Stacy...
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Summary: Managing an insurance agency in the oil patch of eastern New Mexico, Stacy Reid knew how gas and oil prices challenge clients. She saw the agency she managed as a source of stability and financial strength. But how could she get the deal done to purchase the agency? From her desk at Hartgraves Insurance Agency, Stacy Reid has seen the ups and downs of the oil business. From its office in downtown Lovington, New Mexico — about 20 miles west of the Texas border — Hartgraves Insurance serves the region’s oil and gas producers and service companies. Managing the agency for five years, Reid has seen premiums spike in tandem with oil prices — and then make a breathtaking ride down. Today, Reid watches over the same agency — but now she’s the enthusiastic owner, having purchased it in September 2008 from the man who hired her, Mike Hartgraves, so that he could retire. “When oil prices go down, my business goes down,” Reid stated. “With 70-80 percent of our business coming from companies based in the oil and gas industry, and our premiums based on their gross receipts, the price of oil directly impacts our business.” The commercial client base of the six-person Hartgraves agency is largely drilling and service companies throughout West Texas and eastern New Mexico. It’s a strong niche, as the nearest competitor is 20 miles distant. Farmers, ranchers, municipalities and the service industries make up the balance of the commercial lines for this property/casualty agency. Hartgraves also offers personal lines and financial services products. The agency’s 35-year history in the region with these industries gives it a competitive foothold, even during declines in oil prices. When InsurBanc business development officer Patricia Smith brought the loan request to Robert Pettinicchi, executive vice president and chief lending officer, they saw the agency’s strengths. “When there are potential borrowers with strong expertise and knowledge of the insurance needs of their client industries, that’s something we value. We also look for the strengths of the agency’s marketplace, and how their infrastructure can support growth,” said Pettinicchi. The experience of an agency leader is also vital, he added. “Someone with strong ties to the local community who thoroughly knows the agency operations is a strong competitive advantage. That helps not just in the marketplace. It’s an edge when someone wants to borrow money to buy an agency.” Case Studies in Agency Financing Case #1: Stacy Reid Rises Up At Hartgraves Insurance InsurBanc 10 Executive Drive • Farmington, CT 06032 Toll Free 1-866-InsBanc (1-866-467-2262) www.InsurBanc.com Reid knows more than ever that the agency’s fortunes are closely tied to the economy and, more directly, the oil market.
Transcript of Case Studies in Agency Financing - InsurBanc · From her desk at Hartgraves Insurance Agency, Stacy...
Summary: Managing an insurance agency in the oilpatch of eastern New Mexico, Stacy Reid knew howgas and oil prices challenge clients. She saw theagency she managed as a source of stability andfinancial strength. But how could she get the dealdone to purchase the agency?
From her desk at Hartgraves Insurance Agency,Stacy Reid has seen the ups and downs of theoil business. From its office in downtownLovington, New Mexico — about 20 miles westof the Texas border — Hartgraves Insurance serves the region’s oil and gas producers andservice companies.
Managing the agency for five years, Reid hasseen premiums spike in tandem with oil prices —and then make a breathtaking ride down. Today,Reid watches over the same agency — but nowshe’s the enthusiastic owner, having purchased itin September 2008 from the man who hiredher, Mike Hartgraves, so that he could retire.
“When oil prices go down, my business goesdown,” Reid stated. “With 70-80 percent of ourbusiness coming from companies based in the oiland gas industry, and our premiums based ontheir gross receipts, the price of oil directlyimpacts our business.”
The commercial client base of the six-personHartgraves agency is largely drilling and servicecompanies throughout West Texas and easternNew Mexico. It’s a strong niche, as the nearestcompetitor is 20 miles distant. Farmers, ranchers,municipalities and the service industries make upthe balance of the commercial lines for this property/casualty agency. Hartgraves also offerspersonal lines and financial services products.
The agency’s 35-year history in the region withthese industries gives it a competitive foothold,even during declines in oil prices. WhenInsurBanc business development officer PatriciaSmith brought the loan request to RobertPettinicchi, executive vice president and chieflending officer, they saw the agency’s strengths.“When there are potential borrowers with strong expertise and knowledge of the insuranceneeds of their client industries, that’s somethingwe value. We also look for the strengths of the agency’s marketplace, and how their infrastructure can support growth,” saidPettinicchi.
The experience of an agency leader is also vital,he added. “Someone with strong ties to thelocal community who thoroughly knows theagency operations is a strong competitive advantage. That helps not just in the marketplace. It’s an edge when someone wants to borrow money to buy an agency.”
Case Studies in Agency Financing
Case #1: SSttaaccyy RReeiidd RRiisseess UUpp AAtt HHaarrttggrraavveess IInnssuurraannccee
InsurBanc 10 Executive Drive • Farmington, CT 06032
Toll Free 1-866-InsBanc (1-866-467-2262)www.InsurBanc.com
Reid knows more than ever that the agency’s fortunes are closely tied to the economy and,more directly, the oil market.
“The biggest obstacle I faced inpurchasing the agency was findingfinancing options,” Reid recalled. “I triedgoing to my local bankers with whom I have anestablished relationship, but soon found outthat financing insurance agencies was difficultbecause of the intangible assets of the [agency]business.
“None of the banks wanted to finance the loan.I considered looking for investors, but I really wanted to maintain 100% ownership and control of the business,” said Reid.
“My local bank had known about InsurBancthrough another local insurance agency thathad used them. My banker got me the information and I contacted InsurBanc.”
Reid said InsurBanc’s Smith “was so informativeand helpful. She gave me information on various valuation companies, and we choseMystic Capital to produce our agency
evaluation. After the valuation was done, Istarted the loan application process, whichInsurBanc helped me with every step of theway. They were so knowledgeable about thebusiness of the independent insurance agents.It made it very easy.”
The end result: “I was financed and was ableto purchase the agency outright from the retiring owner.”
“The benefits of working with InsurBanc arenumerous,” Reid said. “They are so helpfuland friendly. They understand the insurancebusiness and that helps to get the fundingtogether. They helped me through every stepof the loan process from application to closing. They are still there for any questionsthat arise. I am using InsurBanc for mydeposit accounts, and it couldn’t be any easier. They are still just a phone call or e-mail away if I have any banking questions.”
Hartgraves Insurance Inc.423 S Main Avenue • Lovington, NM 88260
575-396-3645 (phone) • [email protected]
Who: SSttaaccyy RReeiidd,, PPrreessiiddeenntt
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Owner’s Profile
