2003 Best Practices Study

Glossary Average Annual Pay per CSR:

Average Compensation appearing on the CSR’s W-2 forms. This does not include other employee benefits expense. Pay per CSR is computed separately for Commercial P&C, Personal P&C, Life & Health and Multi-Line CSR’s. Average Annual Pay per Producer: Average Compensation appearing on the validated producer’s W-2 that resulted from the producer’s production responsibilities only . This does not include other employee benefits expense or payroll compensation earned for management duties, profit distributions to owners, etc. Brokerage Commission Expense: Commissions paid to other agencies or brokers. Excludes in-house producers compensated on a 1099 who are included in Total Payroll Expense. Comparison Group: The Best Practices firms in the same revenue category or the firms in the same affinity group against which your agency’s results are being compared. Comparison Group, +25% Growth: The average results achieved by the 25% fastest growing firms in your Best Practices revenue category or affinity group for that factor. (The firms comprising this group are the same for every factor or line item.) Comparison Group, +25% Profit: The average results achieved by the 25% most profitable firms in your Best Practices revenue category or affinity group for that factor. (The firms comprising this group are the same for every factor or line item.) Comparison Group, Top 25%: The average results achieved by the Top 25% of the firms in the group for that particular factor or line item. (The firms comprising this group will be different for each factor or line item.) Compensation Per Employee: Total compensation expense (total payroll and total benefits expense) divided by total number of “full-time equivalent” employees. Current Ratio: Current assets divided by current liabilities. When the current ratio is greater than1:1, it indicates that cash and assets with short-term maturities are greater than the firm’s short-term obligations. However, the timing of collections from customers and payments to companies can still impact the ability of an agency to meet obligations. Operating Pre-Tax Profit: Pre-tax profit minus contingents, bonus, and investment income.

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