2009 Best Practices Study

Agencies with Revenues Between $5,000,000 and $10,000,000

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

47.1%

47.0%

42.3%

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

1.2%

0.2%

0.3%

Personal Lines

25.2%

31.2%

15.2%

VAS - P&C

0.2% 8.0%

0.2% 8.3% 9.9% 1.0% 0.0% 0.5% 1.5% 0.0%

0.2% 8.0%

Contingent/Bonus Group Life & Health Individual Life & Health

12.7%

23.7%

3.7% 0.1% 0.4% 1.1% 0.3%

8.0% 0.2% 1.1% 1.0% 0.0%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

100.0%

Total Revenues

Less Brokerage Commission Expense

1.1%

0.1%

3.1%

Net Revenues

98.9%

99.9%

96.9%

Expenses (as % of Net Revenues) Compensation

65.0%

62.0%

70.8%

Selling

3.1%

2.5%

3.5%

Operating

13.5%

11.7%

12.8%

Administrative

3.2%

1.3%

2.6%

Total Expenses

84.8%

77.4%

89.7%

Pre-Tax Profit

15.2% 20.5%

22.6% 32.7% 12.3% 23.5% 33.7%

10.3% 19.6% -0.1% 13.1% 22.4%

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

5.6%

EBITDA 3

17.6% 22.9%

Pro Forma EBITDA 4

69 2009 Best Practices Study | Agencies with Revenues Between $5,000,000 and $10,000,000 | Revenues/Expenses