2011 Best Practices Study

Analysis of Agencies with Revenues Between $10,000,000 and $25,000,000

Profit/Loss Summary

Key Benchmarks Profile

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Revenues Expenses Profitability Employee Overview Producer Info Staff Service Info Technology Insurance Carriers Appendix

49.5%

41.4%

48.7%

Bonds

2.3%

1.9%

2.4%

Personal Lines

14.6%

23.3%

13.1%

Value Added Services Contingent/Bonus

0.7% 7.8%

1.0% 8.4%

1.6% 7.1%

Group Medical All Other Group Individual L&H Bonus/Overrides Investments Miscellaneous

14.5%

12.9%

13.6%

5.9% 1.7% 1.6% 0.8% 0.7%

4.3% 3.2% 2.5% 0.6% 0.4%

7.5% 2.5% 1.8% 1.0% 0.8%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

2.0%

0.5%

2.2%

Net Revenues

98.0%

99.5%

97.8%

Expenses (as % of Net Revenues) Compensation

67.0%

60.7%

62.7%

Selling

3.3%

3.4%

3.2%

Operating

13.5%

10.8%

12.6%

Administrative

3.1%

1.2%

5.7%

Total Expenses

86.8%

76.1%

84.1%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

13.2% 16.1%

23.9% 28.1%

15.9% 20.2%

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

1.8%

9.5%

2.1%

EBITDA 3

16.7% 19.7%

25.5% 29.6%

21.4% 25.8%

Pro Forma EBITDA

1 Pre-tax Profits if discretionary expenses are eliminated and all owners compensated as employees

2 Pre-tax Profits excluding contingents, bonus and investment income

3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization

Profitability

2011 Best Practices Study

Agencies with Revenues Between $10,000,000 and $25,000,000

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