P R A D

Performance Results

• Top 25% — the calculated average of the results submitted by the best 25% of all respondents that hired three or more producers in the respective line of business • Bottom 25% — the calculated average of the results submitted by the worst 25% of all respondents that hired three or more producers in the respective line of business • Top Quartile — the data point at which 75% of the results lie below and 25% of the results above • Bottom Quartile — the data point at which 75% of the results lie above and 25% of the results below • Most Successful Firms  Commercial lines — hired six or more commercial lines producers in the past five years and have a 66% or better success rate in commercial lines.  Employee benefits — hired three or more employee benefits producers in the past five years and have a 66% or better success rate in employee benefits. Organic Growth and Profitability Study (OGP) — a real-time, quarterly survey of approximately 150 agents and brokers across North America. Conducted by Reagan Consulting since 2008 to track these two key operating and performance metrics. OGP firms have median net revenues of approximately $15 million but range from the largest brokers to local insurance agents. Reagan Value Index (RVI) — a proprietary database containing operating and valuation statistics from a group of 30+ privately-held independent insurance agents for whom Reagan Consulting performs an annual appraisal of fair market value. Although RVI firms have average net revenues of approximately $30 million, they represent a cross section of agencies as respects performance, operating results and characteristics. Under-Hiring Rates (Baseline Survey) — Responses from the 562 agents and brokers participants revealed the following results regarding the level of new producer hiring necessary to meet current and future production needs: • 41% reported they were behind • 8% reported they were ahead • 51% reported they were on track An analysis of these firms’ past hiring levels, producer success rates, organic growth rates and current number of producers indicates that 55%-60% of the firms are materially behind in the hiring needed to perpetuate their operations and achieve the growth rates targeted.

Validated Producer — a producer whose production (i.e., book of business) is sufficient to cover his or her compensation under the firm’s regular commission schedule.

64 Producer Recruiting & Development Study