2011 Best Practices Study

Analysis of Agencies with Revenues Under $1,250,000

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

43.8%

38.4%

37.8%

Bonds

0.9%

0.6%

0.4%

Personal Lines

39.7%

45.1%

50.1%

Value Added Services Contingent/Bonus

0.7% 6.2% 5.5% 0.2% 2.6% 0.1% 0.1% 0.1%

0.0% 6.1% 5.2% 0.2% 4.3% 0.1% 0.0% 0.0%

2.3% 5.4% 1.3% 0.1% 2.2% 0.0% 0.0% 0.3%

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

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

0.1%

0.1%

0.0%

Net Revenues

99.9%

99.9%

100.0%

Expenses (as % of Net Revenues) Compensation

55.6%

43.9%

49.3%

Selling

4.7%

4.0%

5.0%

Operating

17.5%

14.6%

16.5%

Administrative

1.9%

0.6%

0.1%

Total Expenses

79.6%

63.1%

70.9%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

20.4% 26.0% 10.8% 22.8% 28.5%

36.9% 44.6% 22.4% 37.5% 45.2%

29.1% 27.6% 12.3% 29.6% 28.2%

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

EBITDA 3

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 Under $1,250,000

12