2012 Best Practices Study

Analysis of Agencies with Revenues Under $1,250,000

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

43.6%

29.2%

37.7%

Bonds

1.0%

0.5%

0.8%

Personal Lines

33.6%

37.3%

31.2%

Value Added Services Contingent/Bonus

0.9% 6.0% 5.0% 0.2% 3.3% 0.1% 0.1% 0.1%

0.0% 4.8% 6.8% 0.1% 8.4% 0.1% 0.0% 0.0%

0.0% 7.7% 6.2% 0.1% 8.6% 0.1% 0.0% 0.1%

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

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

0.2%

0.2%

0.0%

Net Revenues

99.8%

99.8%

100.0%

Expenses (as % of Net Revenues) Compensation

54.5%

40.8%

48.6%

Selling

5.1%

5.7%

7.4%

Operating

18.0%

16.3%

19.4%

Administrative

2.1%

1.0%

2.0%

Total Expenses

79.7%

63.7%

77.4%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

20.3% 23.6% 11.0% 22.8% 26.2%

36.3% 40.9% 23.3% 37.2% 42.0%

22.6% 28.6% 11.3% 25.0% 30.9%

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

EBITDA 3

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 Under $1,250,000

12