2012 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

48.6%

50.0%

40.0%

Bonds

2.0%

2.8%

0.9%

Personal Lines

16.4%

21.5%

20.8%

Value Added Services Contingent/Bonus

0.6% 6.7%

0.9% 7.3% 9.6% 2.9% 2.2% 1.3% 0.5% 1.1%

1.0% 6.4%

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

14.2%

14.0%

5.7% 2.7% 1.6% 0.6% 0.9%

8.2% 6.6% 1.0% 0.5% 0.6%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

2.0%

0.8%

0.3%

Net Revenues

98.0%

99.2%

99.7%

Expenses (as % of Net Revenues) Compensation

67.8%

62.6%

67.1%

Selling

3.4%

3.2%

3.8%

Operating

13.5%

11.0%

13.9%

Administrative

3.4%

0.8%

3.5%

Total Expenses

88.1%

77.6%

88.3%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

11.9% 14.5%

22.4% 25.0% 13.7% 23.3% 25.9%

11.7% 15.3%

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

3.4%

4.3%

EBITDA 3

15.1% 17.7%

13.4% 17.0%

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

2012 Best Practices Study

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

108