2011 Best Practices Study

Analysis of Agencies with Revenues Between $1,250,000 and $2,500,000

Profit/Loss Summary

Key Benchmarks Profile

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Revenues Expenses Profitability Employee Overview Producer Info Staff Service Info Technology Insurance Carriers Appendix

44.0%

50.5%

39.4%

Bonds

2.0%

5.5%

4.7%

Personal Lines

35.3%

24.4%

38.2%

Value Added Services Contingent/Bonus

0.3% 9.0% 5.2% 0.9% 1.7% 0.2% 0.5% 0.6%

0.0%

0.8%

12.5%

11.7%

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

4.5% 0.0% 1.3% 0.0% 0.6% 0.1%

2.5% 0.0% 1.8% 0.0% 0.1% 0.0%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.6%

0.0%

0.0%

Net Revenues

98.4%

100.0%

100.0%

Expenses (as % of Net Revenues) Compensation

58.5%

44.8%

59.8%

Selling

3.4%

3.2%

3.8%

Operating

15.5%

14.5%

14.4%

Administrative

2.5%

0.4%

1.8%

Total Expenses

79.9%

62.9%

79.8%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

20.1% 24.0%

37.1% 43.0% 21.7% 37.9% 43.8%

20.2% 28.2%

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

9.2%

7.6%

EBITDA 3

23.0% 27.0%

22.3% 30.3%

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

2011 Best Practices Study

Agencies with Revenues Between $1,250,000 and $2,500,000

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