Can You Keep Your Reinsurance Company After Selling the Dealership?
A dealer who spent twenty years building reinsurance value should not casually give it away when selling the dealership.
Potentially, yes.
Selling a dealership does not automatically mean the dealer must dispose of the reinsurance company. But the answer depends on the structure and governing agreements.
Think About Runoff
Even after the dealership is sold, contracts written before the sale may remain active.
- Premium continues earning.
- Claims continue occurring.
- Reserves remain necessary.
- Investments continue existing.
The insurance business therefore may continue in runoff for years.
What Changes?
The former dealer generally loses the source of new dealership-generated business after the sale unless another eligible source of production exists.
So the company may transition from:
Questions to Ask Before Selling
- Can I retain ownership?
- What happens to existing premium?
- How long will runoff take?
- Who will administer claims?
- Can investments remain in place?
- What fees continue during runoff?
- When can surplus potentially be distributed?
- Do carrier or administrator agreements change?
- Are there tax consequences?
The Bottom Line
A dealer who spent twenty years building reinsurance value should not casually give it away when selling the dealership.
When was the last time someone independently reviewed your reinsurance program?
Confidential. No obligation. There is no charge for the initial assessment. You may discover an opportunity, a problem, or that your program is exactly where it should be. But you’ll know.