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Revenue/Expense/Profit Summary

Profitability

AGENCIES WITH REVENUES BETWEEN $1,250,000 AND $2,500,000

EXECUTIVE

PERSPECTIVES

PROFILE

REVENUES/

EXPENSES

FINANCIAL

STABILITY

EMPLOYEE

OVERVIEW

PRODUCER

INFO

SERVICE

STAFF

INFO

TECHNOLOGY

INSURANCE

CARRIERS

APPENDIX

65

Average

+25%

Profit

+25%

Growth

Revenues (% by Source)

Commercial Lines

51.5%

50.8%

58.3%

Personal Line

24.7%

24.6%

19.0%

P&C Service Fees

0.6%

0.5%

0.1%

Contingent/Bonus

8.9%

8.8%

9.2%

Group Life & Health

8.2%

9.8%

5.4%

Individual Life & Health

3.4%

3.9%

5.2%

Investments

0.8%

1.1%

1.2%

Miscellaneous

1.9%

0.6%

1.6%

Total Revenues

100.0% 100.0% 100.0%

Brokerage Commission Expense

3.1%

7.2%

1.7%

Net Revenues

96.9%

92.8%

98.3%

Expenses (as % of Net Revenues)

Compensation

57.5%

44.1%

56.6%

Selling

4.0%

3.8%

4.1%

Operating

15.6%

12.8%

14.4%

Administrative

4.5%

6.6%

5.3%

Total Expenses

81.6%

67.3%

80.4%

Pre-Tax Profit

18.4%

32.7%

19.6%

Pro Forma Profit

1

25.6%

43.6%

22.9%

Operating Pre-Tax Profit

2

8.3%

22.0%

9.0%

Pro Forma EBITDA

3

30.1%

50.2%

28.2%

% Total Net Revenue

Average

+25% Profit

+25% Growth

40%

30%

20%

10%

Pre-Tax

Profit

Pro Forma

Pre-Tax Profit

Operating

Pre-Tax Profit

1

Pre-tax profit when discretionary expenses (bonuses, compensation, and perks) made for the benefit of

the owners, based solely on ownership, are removed (i.e., removing expenses that would not be

incurred if a third party owned the agency).

2

Pre-tax profit minus contingents, bonus and investment income.

3

EBITDA = Earnings before Interest, Taxes, Depreciation and Amortization

50%