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2015 Best

Practices Study

Agencies

with

Revenues

Under

$1,250,000

14

Analysis of Agencies with Revenues Under $1,250,000

Key Benchmarks

Profile

Revenues

Expenses

Profitability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Note: See page 163 for an explanation of column headings

Average

Top 25% Profit Top 25% Growth

Revenues (as % of Gross Revenue)

Commercial Lines

38.7%

34.9%

45.0%

Bonds

0.5%

0.1%

0.5%

Personal Lines

47.3%

52.7%

34.2%

VAS - P&C

0.6%

0.0%

0.0%

Contingent/Bonus

5.3%

6.6%

2.9%

Group Medical

3.6%

0.8%

8.2%

All Other Group

0.2%

0.1%

0.1%

Individual Life & Health

3.2%

4.8%

7.7%

Bonus/Overrides

0.1%

0.0%

0.3%

Investments

0.1%

0.1%

0.2%

Miscellaneous

0.3%

0.0%

0.8%

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

0.3%

0.0%

0.0%

NET REVENUES

99.7%

100.0%

100.0%

Expenses (as % of Net Revenues)

Compensation

51.1%

34.1%

50.9%

Selling

4.5%

4.5%

3.8%

Operating

15.7%

9.4%

19.0%

Administrative

2.0%

0.1%

0.9%

TOTAL EXPENSES

73.3%

48.2%

74.6%

Average

Top 25% Profit Top 25% Growth

Pre-Tax Profit

26.7%

51.8%

25.4%

Pro Forma Pre-Tax Profit

1

30.7%

54.9%

28.8%

Operating Pre-Tax Profit

2

22.2%

48.3%

22.9%

EBITDA

3

28.8%

51.8%

26.3%

Pro Forma EBITDA

4

32.8%

54.9%

29.7%

Profit/Loss Summary

Profit/Loss

(as % of Net Revenues)

1 Pre-tax Profit if discretionary

expenses are eliminated and

all owners compensated as

employees

2 Pre-tax Profit excluding

contingents, bonus and

investment income

3 EBITDA—Earnings Before

Interest, Taxes, Depreciation and

Amortization

4 EBITDA if discretionary expenses

are eliminated and all owners

compensated as employees