2015 Best Practices Study

Analysis of Agencies with Revenues Under $1,250,000

Key Benchmarks Profile

Profit/Loss Summary

Revenues Expenses Profitability Employee Overview Producer Info Service Staff Info Technology Insurance Carriers Appendix

Average

Top 25% Profit Top 25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

38.7%

34.9%

45.0%

Bonds

0.5%

0.1%

0.5%

Personal Lines

47.3%

52.7%

34.2%

VAS - P&C

0.6% 5.3% 3.6% 0.2% 3.2% 0.1% 0.1% 0.3%

0.0% 6.6% 0.8% 0.1% 4.8% 0.0% 0.1% 0.0%

0.0% 2.9% 8.2% 0.1% 7.7% 0.3% 0.2% 0.8%

Contingent/Bonus Group Medical All Other Group Bonus/Overrides Investments Miscellaneous Total Revenues Individual Life & Health

100.0%

100.0%

100.0%

Brokerage Commission Expense

0.3%

0.0%

0.0%

NET REVENUES

99.7%

100.0%

100.0%

Expenses (as % of Net Revenues) Compensation

51.1%

34.1%

50.9%

Selling

4.5%

4.5% 9.4% 0.1%

3.8%

Operating

15.7%

19.0%

Administrative

2.0%

0.9%

TOTAL EXPENSES

73.3%

48.2%

74.6%

Profit/Loss (as % of Net Revenues)

Average

Top 25% Profit Top 25% Growth

Pre-Tax Profit

26.7% 30.7% 22.2% 28.8% 32.8%

51.8% 54.9% 48.3% 51.8% 54.9%

25.4% 28.8% 22.9% 26.3% 29.7%

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

EBITDA 3

2015 Best Practices Study

Pro Forma EBITDA 4

1 Pre-tax Profit if discretionary expenses are eliminated and all owners compensated as employees

2 Pre-tax Profit excluding contingents, bonus and investment income

3 EBITDA—Earnings Before Interest, Taxes, Depreciation and Amortization

4 EBITDA if discretionary expenses are eliminated and all owners compensated as employees

Agencies with Revenues Under $1,250,000

14

Note: See page 163 for an explanation of column headings