2010 Best Practices Study

Analysis of Agencies with Revenues Between $10,000,000 and $25,000,000

Profit/Loss Summary

Mgmt. Perspectives

Average

+25% Profit

+25% Growth

Profile

Revenues (as % of Gross Revenue) Commercial Lines

50.3%

50.6%

43.9%

Revenues

Bonds

2.2%

2.1%

1.4%

Expenses

Personal Lines

13.9%

14.6%

19.1%

VAS - P&C

1.0% 8.7%

1.3% 9.9%

2.1% 9.1%

Profitability

Contingent/Bonus Group Life & Health Individual Life & Health

Employee Overview

14.7%

11.1%

14.2%

4.6% 1.5% 1.7% 0.6% 0.9%

4.7% 2.9% 1.0% 0.7% 1.0%

5.4% 2.3% 1.1% 0.3% 1.0%

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%

3.1%

2.4%

Net Revenues

98.4%

96.9%

97.6%

Appendix

Expenses (as % of Net Revenues) Compensation

67.3%

59.6%

64.2%

Selling

3.0%

2.8%

3.5%

Operating

13.7%

11.4%

12.1%

Administrative

3.6%

2.0%

5.7%

Total Expenses

87.7%

75.7%

85.6%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

12.3% 15.6%

24.3% 27.7%

14.4% 17.6%

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

0.2%

9.8%

3.6%

EBITDA 3

16.3% 19.6%

27.0% 30.4%

19.7% 22.9%

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 $10,000,000 and $25,000,000

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