2011 Best Practices Study

Analysis of Agencies with Revenues Between $2,500,000 and $5,000,000

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

51.9%

49.3%

53.6%

Bonds

3.0%

5.6%

3.0%

Personal Lines

22.2%

22.1%

18.3%

Value Added Services Contingent/Bonus

1.2% 8.5% 8.5% 1.7% 1.7% 0.3% 0.5% 0.2%

4.4% 9.2% 5.0% 1.0% 2.5% 0.4% 0.3% 0.1%

0.5% 7.1%

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

10.5%

1.5% 2.9% 0.7% 0.5% 0.3%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.1%

0.3%

0.0%

Net Revenues

98.9%

99.7%

100.0%

Expenses (as % of Net Revenues) Compensation

62.6%

57.8%

59.0%

Selling

4.1%

3.1%

3.7%

Operating

15.3%

13.9%

13.8%

Administrative

2.4%

0.7%

3.9%

Total Expenses

84.4%

75.5%

80.3%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

15.6% 20.0%

24.5% 32.5% 14.5% 25.6% 33.6%

19.7% 20.3% 10.3% 24.6% 25.2%

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

6.0%

EBITDA 3

18.6% 23.0%

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 $2,500,000 and $5,000,000

60