2014 Best Practices Study

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

Key Benchmarks

Profit/Loss Summary

Profile

Revenues

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Expenses Profitability

45.6%

47.8%

46.2%

Bonds

3.3%

6.3%

1.5%

Employee Overview

Personal Lines

30.5%

20.4%

27.5%

VAS - P&C

0.1%

0.2%

0.2%

Producer Info

Contingent/Bonus Group Medical All Other Group Bonus/Overrides Investments Miscellaneous Total Revenues Individual Life & Health

10.1%

10.8%

10.2% 11.3%

Service Staff Info

5.8% 0.7% 2.6% 0.5% 0.2% 0.5%

6.9% 0.1% 6.4% 0.4% 0.5% 0.1%

0.4% 1.7% 0.3% 0.3% 0.4%

Technology

Insurance Carriers

Appendix

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.5%

0.0%

4.7%

Net Revenues

98.5%

100.0%

95.3%

Expenses (as % of Net Revenues) Compensation

55.3%

41.7%

47.8%

Selling

4.2%

4.7%

3.7%

Operating

16.1%

16.1%

17.8%

Administrative Total Expenses

1.4%

0.5%

3.2%

77.0%

63.0%

72.5%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

23.0% 28.5% 13.3% 25.1% 30.6%

37.0% 41.9% 28.4% 37.7% 42.6%

27.5% 33.1% 18.0% 32.1% 37.7%

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

EBITDA 3

2014 Best Practices Study

Pro Forma EBITDA 4

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

4 EBITDA if discretionary expenses are eliminated and all owners compensated as employees

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

40