2015 Best Practices Study

Analysis of Agencies with Revenues Between $5,000,000 and $10,000,000

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

49.2%

41.9%

57.5%

Bonds

1.5%

0.7%

1.2%

Personal Lines

23.9%

28.4%

14.1%

VAS - P&C

1.8% 9.1% 9.0% 2.7% 1.2% 0.6% 0.3% 0.8%

6.5% 7.0% 8.8% 3.8% 1.4% 1.0% 0.2% 0.4%

0.7%

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

10.7%

9.6% 4.0% 1.4% 0.6% 0.2% 0.0%

100.0%

100.0%

100.0%

Brokerage Commission Expense

0.8%

0.0%

0.3%

NET REVENUES

99.2%

100.0%

99.7%

Expenses (as % of Net Revenues) Compensation

62.1%

57.9%

59.7%

Selling

3.3%

3.0%

3.0%

Operating

14.3%

13.6%

13.0%

Administrative

2.0%

2.3%

1.3%

TOTAL EXPENSES

81.7%

76.8%

77.0%

Profit/Loss (as % of Net Revenues)

Average

Top 25% Profit Top 25% Growth

Pre-Tax Profit

18.3% 22.7%

23.2% 35.6% 16.6% 25.6% 37.9%

23.0% 25.3% 13.1% 24.2% 26.5%

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

9.3%

EBITDA 3

20.8% 25.2%

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 $5,000,000 and $10,000,000

92

Note: See page 163 for an explanation of column headings