2008 Best Practices Study

Agencies with Revenues Over $25,000,000

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Expenses (as % of Net Revenue)

Revenue/Expense/Profit Summary

Average

+25% Profit

+25% Growth

Revenues (% by Source) Commercial Lines

56.0%

47.7%

63.7% 4.6% 6.7% 1.5% 6.2% 0.9% 0.2% 0.5% 3.2% 0.6% 11.9%

1 Pre-tax Profits if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded 2 Pre-tax Profits excluding income from contingents, bonus and investment income 3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization 4 EBITDA if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded

Bonds

3.4%

2.0%

Personal Lines

10.9%

23.5%

VAS - P&C

1.4% 7.1%

0.1% 8.6%

Contingent/Bonus Group Life & Health Individual Life & Health

15.8%

13.4%

0.8% 0.5% 0.5% 2.5% 1.0%

0.8% 0.0% 0.4% 2.7% 0.9%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

Total Revenues

100.0%

100.0%

100.0%

Less Brokerage Commission Expense

3.8%

2.3%

4.8%

Net Revenues

96.2%

97.7%

95.2%

Expenses (as % of Net Revenues) Compensation

63.3%

56.4%

62.5%

Selling

4.3%

3.6%

4.2%

Operating

14.3%

13.2%

12.5%

Administrative

2.7%

1.0%

1.7%

Total Expenses

84.7%

74.2%

80.9%

Pre-Tax Profit

15.3% 17.5%

25.8% 27.3% 13.9% 28.0% 29.5%

19.1% 20.9%

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

4.9%

8.8%

EBITDA 3

19.3% 21.5%

22.1% 23.8%

Pro Forma EBITDA 4

109 2008 Best Practices Study | Agencies with Revenues Over $25,000,000 | Revenues/Expenses