2011 Best Practices Study

Analysis of Agencies with Revenues Over $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

49.2%

46.6%

44.8%

Bonds

3.2%

2.6%

1.9%

Personal Lines

10.3%

19.4%

20.7%

Value Added Services Contingent/Bonus

2.7% 6.2%

0.0% 4.2%

0.5% 5.7%

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

18.9%

14.6%

19.4%

4.2% 2.3% 1.1% 0.8% 1.0%

2.9% 5.5% 0.9% 1.1% 2.2%

2.6% 0.9% 1.0% 1.0% 1.6%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

2.8%

2.6%

1.2%

Net Revenues

97.2%

97.4%

98.8%

Expenses (as % of Net Revenues) Compensation

64.8%

59.2%

66.3%

Selling

3.5%

3.7%

4.4%

Operating

14.5%

14.4%

16.5%

Administrative

4.2%

0.5%

0.8%

Total Expenses

86.9%

77.7%

87.9%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

13.1% 14.9%

22.3% 25.3% 15.9% 24.5% 27.6%

12.1% 13.8%

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

4.7%

4.4%

EBITDA 3

17.6% 19.4%

13.9% 15.7%

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 Over $25,000,000

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