Brooke franchisees get market access,
financing help and built-in perpetuation
By Dennis Pillsbury
From left: Robert Orr, chairman and chief executive officer of Brooke Corp., and Shawn Lowry, national sales manager.
"I did it because we were a small agency and were having great difficulty finding new markets and even keeping the markets we had," says Tom Arensberg, owner of Brooke Insurance & Financial Services in Lawrence and Overland Park, Kansas. That's how he describes his decision to become a Brooke agency in April of 1998. Yes, that's 1998! Smaller agencies were having trouble keeping markets even then.
Tom continues: "I'm definitely glad I made the decision when I did. Even in today's hard market, I'm not faced with the problem of having no place to go with a piece of business. Depending on the risk, I can go to five or six companies. Having markets is the difference between having a business and not having a business. Overall, the experience has been positive."
Brooke Corp., Overland Park, Kansas, was established during the hard market of the mid '80s by a group of executives led by Robert Orr, who has served as chairman and CEO of the company since its founding in May of 1986. "I was involved in a small Kansas bank that had an insurance agency," he says. "We watched the value of that agency severely deteriorate during the hard market because we couldn't keep our companies.'"
Rob continues, "I watched this happening and said to myself: 'There's got to be a better way.'" And out of that belief grew an idea that eventually emerged as reality in the form of Brooke Corp., a company set up to offer franchises to independent property/casualty insurance agencies. Brooke provides Master Agent services to agents that include commissions accounting, document management and supplier access.
"The lending activities have really driven a lot of the growth," says Shawn Lowry, national sales manager for Brooke Corp. "Perpetuation really is a problem for many independent agents. There has to be ready access to capital in order for an agent to realize his or her agency's value. We provide that access."
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| "I watched the value of our agency severely deteriorate during the hard market because we couldn't keep our companies ... and said to myself: 'There's got to be a better way.'"
--Robert Orr |
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Rob continues by pointing out that "most banks don't understand the insurance agency business and won't loan money based on intangible assets. On the other hand, we understand the business and are able to help independent agents stay in business or implement a perpetuation plan that passes the agency on to the next generation or help fund a merger or acquisition. We currently have loaned out more than $40 million and are working with S&P to get a rating on this book of loans so we can sell it off to investors. That will make even more capital available."
Jennifer and Doug Dittman of Tarpon Springs, Florida, went to Brooke when the agency for which they worked became available for purchase. "They offered us a chance to buy into the Brooke franchise," Jennifer says. "If we bought a small agency, we knew we wouldn't have the clout with the companies. The franchise brought us access to companies we didn't even have. There really is strength in numbers. It's definitely a help in this marketplace. They also provided financial assistance for the purchase." Today, Doug and Jennifer are owners of Brooke Insurance & Financial Services in Tarpon Springs. "The Brooke name recognition is growing," Jennifer continues, "and that's helped us as well."
"Most agency groups are focused on marketing," Rob points out. "Perpetuation really is the driver for us and helps to make us unique. We also allow for ownership of the accounts. All our agents own the customer relationships 100%. We provide the agents with the tools and stability of markets."
Jennifer Dittman agrees, noting that the Brooke "resources and knowledge are the most important assets on which we draw." She also notes that Brooke has a "legal department that I'm glad they have and also glad that we haven't had to use."
Brooke's servicing arm includes a processing center that performs accounting, imaging, file storage, human resources and individual licensing activities; an investment sales/investor relations unit that coordinates investor-related activities from Brooke's national office; and a legal/compliance unit that is responsible for corporate activities, including subsidiary licensing.
In addition to helping with financing, Brooke also helps agents sell their agencies through its American Heritage subsidiary. It is available to all agents, not just Brooke franchisees. American Heritage, after entering into a non-exclusive listing agreement with the agency, will complete a sales price analysis, tabulate commissions from third-party statements, prepare an agency inspection report, and provide "seasoned" purchase agreements for the seller's attorney to review.
Dennie Blevins came to Brooke after 21 years of experience with a captive agency company. "I decided that I wanted to start my own business and figured if I could manage 26 captive agencies, I ought to be able to manage one of my own," Dennie says. "I bumped into an old friend, Warren Dale, and talked about my plans. He had the first Brooke franchise in Colorado and told me how they had helped him out. We decided to become partners and buy an agency in Grand Island, Nebraska. Today, we have two other franchises in addition to Warren's original one in Woodland Park and the Grand Island agency."
Brooke helped with the financing for each of the acquisitions. In addition, "they've worked with us as far as establishing cash flow lines of credit for the agencies," Dennie points out. "I've been with them a little over two years and they brought everything they promised to the table. It's been a very professional relationship. I've always found Brooke to have a high level of integrity."
He echoes the other Brooke agents concerning the advantage of having Brooke's access to carriers in today's hard market. "It's not just access to companies, but it's access to the right kinds of companies. It's allowed us to start immediately writing the kind of business we want to write. We don't have to settle for writing only substandard auto or some of the other lines that are about the only ones available to new agents.
"Another real value is that all the accounting with the carriers goes through the Brooke system and is managed by Brooke. We have several different offices and they're all interconnected through the Brooke system. That's been real convenient. The time that we would be spending on financing, data entry, accounting and so on, is spent on selling and meeting with clients."
Dennie concludes: "Brooke provides all the ingredients for success. It's a great opportunity for someone who wants to get into the business. It's also great when you want to get out. When I'm ready to retire, I'll just sell to another Brooke franchise. This built-in perpetuation actually increases the value of my agency.
"We currently own four agencies and plan on buying a couple more over the years," Dennie continues. "There are agencies out there that have been hurt by the current market conditions and are ready to sell. We have markets and can turn a situation like that around pretty quickly. A lot of agents today feel trapped by the market situation. Brooke brings options that can untrap you." *
For more information
Web site: www.brookecorp.com