2015 Best Practices Study

Analysis of Agencies with Revenues Over $25,000,000

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

53.6% 4.3% 6.1% 1.7% 6.1% 5.0% 1.2% 1.7% 0.5% 1.2% 18.6%

56.1% 4.8% 5.8% 1.0% 6.7% 5.2% 1.6% 1.9% 0.3% 0.7% 15.8%

55.9% 6.4% 2.1% 3.1% 5.5% 3.8% 0.6% 1.1% 0.4% 0.6% 20.5%

Bonds

Personal Lines

VAS - P&C

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

2.5%

1.9%

2.7%

NET REVENUES

97.5%

98.1%

97.3%

Expenses (as % of Net Revenues) Compensation

65.5%

59.0%

68.5%

Selling

4.2%

3.6%

4.7%

Operating

13.4%

10.9%

12.0%

Administrative

3.2%

1.9%

1.8%

TOTAL EXPENSES

86.4%

75.5%

86.9%

Profit/Loss (as % of Net Revenues)

Average

Top 25% Profit Top 25% Growth

Pre-Tax Profit

13.6% 14.3%

24.5% 23.9% 16.9% 26.4% 25.9%

13.1% 15.8%

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

6.2%

6.6%

EBITDA 3

16.9% 17.6%

15.8% 18.5%

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 Over $25,000,000

144

Note: See page 163 for an explanation of column headings