2012 Best Practices Study

Analysis of Agencies with Revenues Between $5,000,000 and $10,000,000

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

46.3%

40.6%

47.4%

Bonds

2.0%

0.8%

1.9%

Personal Lines

21.4%

23.2%

17.5%

Value Added Services Contingent/Bonus

0.7% 6.9%

1.8% 7.6%

0.1% 7.6%

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

11.6%

13.2%

17.8%

3.1% 2.8% 0.9% 0.4% 1.3%

4.2% 2.1% 0.5% 0.4% 0.4%

3.2% 0.6% 1.2% 0.6% 2.3%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.1%

0.2%

0.2%

Net Revenues

98.9%

99.8%

99.8%

Expenses (as % of Net Revenues) Compensation

66.6%

60.2%

66.5%

Selling

3.1%

2.9%

3.5%

Operating

14.0%

13.0%

12.6%

Administrative

2.9%

2.6%

0.6%

Total Expenses

86.7%

78.8%

83.2%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

13.3% 18.7%

21.2% 32.8% 13.2% 23.2% 34.8%

16.8% 23.4%

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

5.5%

8.0%

EBITDA 3

16.6% 21.9%

18.0% 24.7%

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

2012 Best Practices Study

Agencies with Revenues Between $5,000,000 and $10,000,000

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