An insurance agent is the representative of the insurer and must, therefore, accept premium payment from an insured.
An insurance broker should accept an insureds premium payment where it is in the insureds best interests to do so. Law § 2121(a) (McKinney 2000), a premium payment made to an insurance broker is deemed to be payment made to the insurer. Re: Payment of Premium to Insurance Agent or Broker Questions Presented:ġ) Is an insurance agent or broker obliged to accept a premium payment from an insured, even if the insured agreed, as a condition of policy issuance, to pay its premium directly to the insurer?Ģ) May an insurance agent or broker charge a fee to an insured for forwarding a premium payment on to the insurer?ģ) May an insurance agent or broker that accepts a premium payment from an insured, in effect, "forward" the premium payment to the insurer by credit card, where such credit card is used solely for the purpose of paying insureds premiums?Ĥ) May the insurance agent or broker make a withdrawal from its premium account to pay the credit card bill?ĥ) Where the use of the credit card to forward insurance premiums to insurers results in the insurance agent or broker qualifying for certain benefits provided by the credit card issuer, such as free air mileage, may the insurance agent or broker take advantage of such benefits? Conclusions:ġ) Pursuant to N.Y.
Risk Assessment The second major component in business valuation and pricing is the determination of an appropriate rate of return (expressed either as a discount rate or a capitalization rate) to apply against the prospective discretionary cash flows anticipated from an acquisition.The Office of General Counsel issued the following informal opinion on January 4, 2002, representing the position of the New York State Insurance Department. Alternatively, if such synergies are possible, they may be difficult to realize, and hence should be discounted accordingly. However, buyers must be cautioned against assuming that just because their own operations appear to be more efficient than those of the target company does not necessarily mean that synergies are available. For example, where the acquirer has lower working capital requirements than the target, it may indicate that savings are possible through more stringent accounts receivable collection policies or more efficient inventory management. The identification of ‘hidden’ synergies generally involves an analysis of the target company’s historical financial statements, and a comparison of relevant operating ratios to those of the acquirer (where the two are comparable). In some cases, it may be possible to find meaningful industry data to assist in the analysis. 12 - whether the target company’s operations can be rationalized to the extent anticipated. Where the operations of the target company and the acquirer are similar, their respective financial ratios sometimes can be compared to determine Assessing the reasonableness of anticipated synergies generally is done through an evaluation of forecast data. Financial statement analysis can assist corporate acquirers in assessing the plausibility of its synergy assumptions, and in identifying synergies that may not be readily evident. In most cases, an acquirer has a reasonably good idea about the synergies that are expected to arise following a transaction based on its knowledge of its own operations and those of the target company. The probabilized synergies are then added to the anticipated discretionary cash flows of the company on a stand-alone basis to derive the buyer’s expectation of discretionary cash flows to be generated following the transaction. In most cases, anticipated synergies that can readily be quantified (such as headcount reductions) are assigned a probability factor based on the likelihood that they will be realized. In open market transactions, anticipated synergies generally should be assessed separately from the estimated discretionary cash flows that a target company is expected to generate on a stand-alone basis. 11 - Post-acquisition synergies In most open market transactions involving corporate acquirers, the acquirer anticipates that it will realize some synergies or strategic advantages by combining the acquired company with its existing operations.
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