2010 Best Practices Study

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

Profit/Loss Summary

Mgmt. Perspectives

Average

+25% Profit

+25% Growth

Profile

Revenues (as % of Gross Revenue) Commercial Lines

48.3%

43.4%

53.8%

Revenues

Bonds

2.7%

6.1%

2.7%

Expenses

Personal Lines

24.8%

33.3%

18.1%

Value Added Services Contingent/Bonus

1.3% 8.2% 9.2% 1.7% 2.0% 0.5% 0.5% 0.9%

0.0% 9.7% 3.4% 0.6% 2.7% 0.0% 0.6% 0.1%

0.2% 7.0%

Profitability

Employee Overview

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

10.1%

2.5% 1.6% 0.8% 0.9% 2.4%

Producer Info

Staff Service Info

Technology

Total Revenues

100.0%

100.0%

100.0%

Insurance Carriers

Brokerage Commission Expense

1.1%

0.3%

0.2%

Net Revenues

98.9%

99.7%

99.8%

Appendix

Expenses (as % of Net Revenues) Compensation

62.7%

56.3%

60.9%

Selling

4.1%

3.5%

3.4%

Operating

14.9%

13.2%

14.0%

Administrative

2.7%

0.7%

1.4%

Total Expenses

84.4%

73.8%

79.7%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

15.6% 19.9%

26.2% 32.7% 15.8% 27.3% 33.7%

20.3% 26.6% 11.6% 21.5% 27.8%

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

6.2%

EBITDA 3

18.9% 23.2%

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

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