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

Expenses (as % of Net Revenue)

60%

50%

40%

30%

20%

10%

0%

Selling

Operating

Administrative

Compensation

Average

+25% Profit 5 Profit

+25% Growth rowth

Revenue/Expense/Profit Summary

Average

+25% Profit

+25% Growth

Revenues (% by Source) Commercial Lines

49.8%

43.7%

56.6%

1 Pre-tax Profits if discretionary expenses are eliminated and all owners compensated as employees 2 Pre-tax Profits excluding income from contingents, bonus and investment income 3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization

Bonds

2.5%

2.6%

5.5%

Personal Lines

25.7%

38.0%

21.8%

VAS - P&C

0.2%

0.0% 9.1% 3.0% 1.4% 0.0% 0.0% 0.9% 1.1%

0.2%

Contingent/Bonus Group Life & Health Individual Life & Health

10.4%

11.1%

7.6% 1.3% 0.0% 0.0% 1.1% 1.0%

2.6% 0.2% 0.0% 0.0% 1.0% 1.0%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

100.0%

Total Revenues

Brokerage Commission Expense

0.9%

1.4%

0.2%

99.1%

98.6%

99.8%

Net Revenues

Expenses (as % of Net Revenues) Compensation

56.4%

50.4%

51.4%

Selling

4.1%

5.4%

4.4%

Operating

13.9%

13.2%

13.4%

Administrative

4.8%

7.5%

3.8%

Total Expenses

79.2%

76.5%

73.0%

Pre-Tax Profit

20.8% 31.2%

23.5% 42.6% 13.2% 25.7% 44.8%

27.0% 30.6% 14.9% 29.3% 32.9%

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

8.9%

EBITDA 3

23.2% 33.5%

Pro Forma EBITDA

73 2007 Best Practices Study | Agencies with Revenues Between $2,500,000 and $5,000,000 | Revenues/Expenses