2009 Best Practices Study

Agencies with Revenues Over $25,000,000

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Expenses (as % of Net Revenue)

Revenue/Expense/Profit Summary

Average

+25% Profit

+25% Growth

Revenues (% by Source) Commercial Lines

53.7% 3.8% 9.9% 1.3% 7.5% 0.6% 0.8% 0.9% 1.5% 0.8% 19.3%

51.1%

47.2% 5.3% 3.5% 0.4% 7.3% 0.4% 1.7% 2.0% 2.7% 0.4% 29.1% 100.0%

1 Pre-tax Profits if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded 2 Pre-tax Profits excluding income from contingents, bonus and investment income 3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization 4 EBITDA if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded

Bonds

4.0%

Personal Lines

15.6%

VAS - P&C

0.2% 6.6%

Contingent/Bonus Group Life & Health Individual Life & Health

15.2%

0.9% 0.0% 0.7% 4.0% 1.7%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

Total Revenues

Less Brokerage Commission Expense

2.8%

1.4%

1.7%

Net Revenues

97.2%

98.6%

98.3%

Expenses (as % of Net Revenues) Compensation

64.3%

56.0%

64.1%

Selling

4.2%

3.9%

4.8%

Operating

14.8%

15.2%

16.7%

Administrative

3.0%

1.4%

1.4%

Total Expenses

86.3%

76.6%

87.0%

Pre-Tax Profit

13.7% 16.4%

23.4% 26.6% 11.9% 26.3% 29.4%

13.0% 18.5%

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

3.5%

0.7%

EBITDA 3

17.9% 20.7%

15.8% 21.3%

Pro Forma EBITDA 4

109 2009 Best Practices Study | Agencies with Revenues Over $25,000,000 | Revenues/Expenses