2009 Best Practices Study

Agencies with Revenues Between $1,250,000 and $2,500,000

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Expenses (as % of Net Revenue)

Revenue/Expense/Profit Summary

Average

+25% Profit

+25% Growth

Revenues (% by Source) Commercial Lines

51.9%

54.5%

59.5%

1 Pre-tax Profits if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded 2 Pre-tax Profits excluding income from contingents, bonus and investment income 3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization 4 EBITDA if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded

Bonds

2.2%

5.1%

2.3%

Personal Lines

24.8%

21.3%

17.6%

VAS - P&C

0.1%

0.1%

0.0%

Contingent/Bonus Group Life & Health Individual Life & Health

11.3%

10.5%

10.0% 6.3% 1.7% 0.5% 0.3% 1.9% -0.2% 100.0%

5.6% 2.5% 0.4% 0.1% 0.9% 0.1%

4.2% 1.5% 1.2% 0.0% 1.7% 0.0%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

Total Revenues

Less Brokerage Commission Expense

0.4%

0.0%

0.0%

Net Revenues

99.6%

100.0%

100.0%

Expenses (as % of Net Revenues) Compensation

55.1%

39.9%

53.2%

Selling

3.7%

3.7%

3.2%

Operating

14.2%

11.7%

12.1%

Administrative

1.8%

0.4%

0.5%

Total Expenses

74.7%

55.6%

68.9%

Pre-Tax Profit

25.3% 31.4%

44.4% 53.5% 15.3% 45.5% 54.8%

31.1% 35.6%

Pro Forma Pre-Tax Profit 1 Operating Pre-Tax Profit 2

7.4%

5.2%

EBITDA 3

27.7% 34.0%

32.4% 37.2%

Pro Forma EBITDA 4

*Insufficient Data

29 2009 Best Practices Study | Agencies with Revenues Between $1,250,000 and $2,500,000 | Revenues/Expenses