2015 Best Practices Study

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

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

51.9%

45.9%

54.4%

Bonds

1.4%

1.1%

0.9%

Personal Lines

28.7%

34.3%

24.0%

VAS - P&C

0.1% 8.8% 5.6% 1.2% 1.1% 0.2% 0.5% 0.4%

0.1%

0.1% 9.5% 6.7% 2.2% 0.8% 0.1% 0.6% 0.6%

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

11.9%

3.5% 0.7% 0.9% 0.5% 0.6% 0.5%

100.0%

100.0%

100.0%

Brokerage Commission Expense

2.1%

0.0%

1.6%

NET REVENUES

97.9%

100.0%

98.4%

Expenses (as % of Net Revenues) Compensation

56.9%

47.9%

57.9%

Selling

4.0%

4.1%

4.0%

Operating

14.0%

11.4%

13.3%

Administrative

2.9%

3.6%

2.3%

TOTAL EXPENSES

77.8%

66.9%

77.4%

Profit/Loss (as % of Net Revenues)

Average

Top 25% Profit Top 25% Growth

Pre-Tax Profit

22.2% 26.7% 14.1% 25.2% 29.8%

33.1% 42.9% 23.3% 36.4% 46.3%

22.6% 26.6% 13.8% 24.4% 28.5%

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 Between $2,500,000 and $5,000,000

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Note: See page 163 for an explanation of column headings