2012 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

53.7%

45.7%

46.6%

Bonds

1.7%

0.9%

1.5%

Personal Lines

21.8%

32.9%

19.3%

Value Added Services Contingent/Bonus

1.5% 8.2% 8.4% 1.4% 2.1% 0.3% 0.6% 0.2%

0.3% 8.8% 5.4% 0.9% 3.5% 0.5% 0.7% 0.4%

0.3% 9.6%

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

10.0%

0.9% 1.9% 0.7% 0.9% 0.5%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.1%

0.4%

0.0%

Net Revenues

98.9%

99.6%

100.0%

Expenses (as % of Net Revenues) Compensation

62.2%

58.9%

60.7%

Selling

3.8%

2.7%

4.3%

Operating

14.6%

11.3%

12.6%

Administrative

2.3%

0.6%

1.8%

Total Expenses

82.9%

73.4%

79.3%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

17.6% 21.7%

27.5% 34.5% 18.1% 28.5% 35.4%

21.9% 27.8% 11.6% 23.2% 29.2%

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

9.0%

EBITDA 3

20.3% 24.4%

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

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