2009 Best Practices Study

Agencies with Revenues Between $2,500,000 and $5,000,000

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

49.4%

50.8%

47.0%

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

2.5%

1.9%

1.6%

Personal Lines

23.4%

27.5%

22.8%

VAS - P&C

1.3%

0.2%

0.0%

Contingent/Bonus Group Life & Health Individual Life & Health

10.9%

13.6%

15.6%

8.8% 2.2% 0.0% 0.6% 0.6% 0.3%

2.7% 2.4% 0.0% 0.0% 0.7% 0.3%

7.9% 3.6% 0.0% 0.6% 0.5% 0.4%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

100.0%

Total Revenues

Less Brokerage Commission Expense

1.1%

0.3%

0.5%

Net Revenues

98.9%

99.7%

99.5%

Expenses (as % of Net Revenues) Compensation

61.2%

53.3%

57.5%

Selling

4.6%

5.9%

4.8%

Operating

16.1%

14.4%

16.9%

Administrative

2.4%

2.1%

2.0%

Total Expenses

84.4%

75.8%

81.2%

Pre-Tax Profit

15.6% 22.4%

24.2% 34.3%

18.8% 25.1%

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

2.2%

6.4%

2.0%

EBITDA 3

18.3% 25.3%

26.0% 36.4%

21.7% 28.4%

Pro Forma EBITDA 4

49 2009 Best Practices Study | Agencies with Revenues Between $2,500,000 and $5,000,000 | Revenues/Expenses