During an April get-together of Virginia insurance agents, the owner of one firm stood up and implored his peers to stand firm against banks and other acquirers.
"He was preaching that we've got to remain independent," recalled Richard L. Meador, president and CEO of Barger Insurance Network, Waynesboro, Va., who attended the meeting.
"Two months later he sold to a bank."
Agents have long railed publicly against banks while quietly seeking deals, observers and agents say. But there is evidence that the appetite for negotiating deals with banks is growing.
Acquisition prices, as a multiple of revenues, have nudged upward as banks vie for the limited number of successful and growing agencies, according to anecdotal evidence.
Agencies are fetching around 1.3 times revenues on average, up from around one times revenues less than a year ago.
That's sweetening the thought of deal-making for even the most entrenched agency opponent of banks in insurance.
"If a bank came in here that would like to do a deal with us, we would listen," said Alex Soto, a longtime opponent of banks in insurance. Mr. Soto is president of InSource Inc., a Miami-based agency with $5 million of annual revenue.
Unlike Mr. Soto, Norman C. Kayser, chairman and CEO of R.C. Knox and Co. of Hartford, Conn., has stayed on the sidelines of the debate over banks' selling insurance.
Yet Mr. Kayser approached People's Bank, Bridgeport, Conn., late last year about striking a deal. Though Knox didn't need a deal to survive, it was pleased to sell to People's, which had decided to buy an agency before his overture, Mr. Kayser said.
Surveying the changing field is Barger Insurance Network, an independent agency founded by Mr. Meador's grandfather in 1911.
"We would prefer to remain independent," Mr. Meador said. "We think if we stay sharp there'll always be a place for a good entrepreneurial outfit."
But he said he'd be negligent if he ignored the possible financial boon for his workers, who own 47% of the company through an employee stock ownership plan.
"There's been kind of a rush here in the last year or so with at least a half dozen agencies selling to banks," he said. "We have been approached by a bank that's pretty big."
Though agencies are reportedly fetching higher prices, the topic of agency valuation is shrouded in mystery.
Paul A. Buse, a consultant at Risk Management Services, said many insurance agencies are closely held and do not file standardized financial reports as banks do. That makes it difficult to make generalizations about agency prices, he said.
"I've seen prices all over the map," Mr. Buse said. When banks overpay, he said, it is usually to preempt a competitor.
A survey he did for the Independent Insurance Agents of America and the American Bankers Association last year said that bankers and agents view the prices being paid quite differently: Banks tended to say they paid less.
Independent agents are generally not trying to position themselves for acquisition, Mr. Buse said. Rather, banks get to know the insurers in their area through relationships that include trust accounts for money held to pay insurance underwriters, he said. And many banks have agency owners on the board of directors, he said.
Some agencies, like Knox, provide insurance coverage for the bank itself.
Since the mid-1980s, agents have had to contend with falling prices for their products, Mr. Buse said. "If you survived you probably didn't just fall off the turnip truck-you're probably a good agent," he said.
So the quality agents remaining are battle-tested survivors.
Until banks entering the business prove their mettle by fully integrating insurance into their organizations, independent agents aren't worried about banks as main competitors, said Doug Kerr, CEO of American Direct Business Insurance, Windsor, Conn.
Mr. Kerr said all the agents he knows are "more worried about what's going to happen 10 or 15 years down the road."
"I don't see that agents feel at all that they are dead meat when a bank decides to get into the business," said Todd Muller, associate vice president of technical affairs at the Independent Insurance Agents of America. To most agents, banks are just one more competitor, he said. But their impact has been heightened because of the Barnett Supreme Court decision, which allowed an en masse entrance of banks into insurance marketing.
Mr. Muller said he fields about four calls a week from agents quizzing him on purchase prices and the type of deals they can strike with banks.