2007 Best Practices Study

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

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Revenue Growth by Source (continued)

Average +25% Profit +25% Growth

**Organic growth rates for the most recently completed fiscal year varied widely by region due in part to the effect of Hurricane Katrina on coastal exposure pricing. As a result, the AVERAGE organic growth rates achieved by the Best Practices Agencies were skewed upward. As such, readers of this study might prefer to benchmark off of the MEDIAN organic growth rate, which is the mid- point of the data when the results are ranked in descending order. MEDIAN Organic Growth Rate: 14.2%

Value Added Services - L&H Renewals

* * * * *

* * * * *

* * * * *

New Busines

Acquired Revenues

Organic Growth

Total Growth

Total Commissions & Fees Renewals

93.8% 97.2% 98.8% 18.0% 15.9% 25.3%

New Business

Acquired Revenues

0.6%

2.1%

0.0%

Organic Growth

11.8% 13.1% 24.1% 12.4% 15.3% 24.1%

Total Growth

P&C Contingent Income Growth L&H Bonus Income Growth Investment Income Growth

8.2% -8.3% 7.1%

4.8%

32.4%

*

*

13.4% 16.2%

Total Revenue Growth

16.1% 15.9% 31.0%

Brokerage Commission Expense Growth Net Revenue Growth (Organic)**

-6.1%

*

*

15.7% 14.1% 31.3% 16.2% 15.9% 31.3%

Net Revenue Growth (Total)

*Insufficient Data

Future Revenue Growth Strategies

% of Total Responses

Study participants were asked to indicate their three most important strategies for enhancing or achieving future revenue growth.

1

2

3

Access to Better Carriers

3.3% 0.0% 10.0%

Advertising/Promotions

0.0% 6.7% 6.7% 3.3% 13.3% 6.7% 13.3% 13.3% 20.0% 43.3% 23.3% 13.3%

Agency/Book of Business Acquisitions

Cross-Selling/Total Account Development

Producer Recruitment/Development

With: 1 —Critically Important 2 —Very Important 3 —Important

New Business Initiatives—Prog Dev/Niche Marketing 6.7% 16.7% 26.7% New Business Initiatives—Referrals/Centers of Influence 30.0% 23.3% 10.0% New Business Initiatives—Strategic Alliances 0.0% 3.3% 0.0% Other 0.0% 0.0% 6.7%

*Includes website marketing/sales, expanded geographic footprint, higher retention, creating a captive, better support/CSR training & recruiting, value added services

69 2007 Best Practices Study | Agencies with Revenues Between $2,500,000 and $5,000,000 | Revenues/Expenses