2010 Best Practices Study

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

Profit/Loss Summary

Mgmt. Perspectives

Average

+25% Profit

+25% Growth

Profile

Revenues (as % of Gross Revenue) Commercial Lines

48.4%

49.7%

38.6%

Revenues

Bonds

1.1%

0.8%

0.4%

Expenses

Personal Lines

21.6%

26.0%

26.7%

VAS - P&C

0.5% 8.5%

0.8%

0.4% 8.9%

Profitability

Contingent/Bonus Group Life & Health Individual Life & Health

10.0%

Employee Overview

12.4%

8.0% 1.7% 1.0% 0.4% 0.7% 0.6%

14.8%

2.2% 3.1% 0.6% 0.7% 0.8%

2.8% 5.5% 0.8% 0.2% 0.4%

Producer Info

VAS - L&H

Bonus/Overrides Investments Miscellaneous

Staff Service Info

Technology

Total Revenues

100.0%

100.0%

100.0%

Insurance Carriers

Brokerage Commission Expense

1.6%

0.4%

2.3%

Net Revenues

98.4%

99.6%

97.7%

Appendix

Expenses (as % of Net Revenues) Compensation

66.6%

58.1%

64.0%

Selling

3.1%

2.5%

3.6%

Operating

13.6%

12.4%

14.2%

Administrative

3.2%

1.9%

2.3%

Total Expenses

86.5%

75.0%

84.1%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

13.5% 19.6%

25.0% 31.6% 13.4% 27.1% 33.7%

15.9% 21.4%

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

3.4%

5.3%

EBITDA 3

16.8% 22.9%

18.3% 23.9%

Pro Forma EBITDA

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

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

3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization

Profitability

2010 Best Practices Study

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

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