2010 Best Practices Study

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

Profit/Loss Summary

Mgmt. Perspectives

Average

+25% Profit

+25% Growth

Profile

Revenues (as % of Gross Revenue) Commercial Lines

48.8%

51.3%

46.4% 4.3% 3.1% 0.4% 6.7% 2.9% 2.7% 2.3% 1.2% 0.2% 29.8%

Revenues

Bonds

3.2%

2.2%

Expenses

Personal Lines

10.2%

19.2%

Value Added Services Contingent/Bonus

3.4% 5.6%

0.1% 3.6%

Profitability

Employee Overview

Group Medical All Other Group Individual L&H Bonus/Overrides Investments Miscellaneous

20.2%

14.8%

4.2% 1.2% 1.3% 1.0% 0.9%

3.0% 1.0% 0.8% 1.8% 2.1%

Producer Info

Staff Service Info

Technology

Total Revenues

100.0%

100.0%

100.0%

Insurance Carriers

Brokerage Commission Expense

2.7%

2.2%

2.0%

Net Revenues

97.3%

97.8%

98.0%

Appendix

Expenses (as % of Net Revenues) Compensation

65.4%

60.3%

69.0%

Selling

3.5%

3.3%

4.2%

Operating

14.3%

14.6%

14.3%

Administrative

4.1%

1.0%

2.7%

Total Expenses

87.4%

79.2%

90.3%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

12.6% 15.5%

20.8% 24.9% 14.4% 23.2% 27.3%

9.7%

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

15.4% -0.7% 12.8% 18.4%

4.5%

EBITDA 3

16.9% 19.8%

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 Over $25,000,000

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