2014 Best Practices Study

Analysis of Agencies with Revenues Between $2,500,000 and $5,000,000

Key Benchmarks

Profit/Loss Summary

Profile

Revenues

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Expenses Profitability

53.3%

47.6%

54.7%

Bonds

1.9%

0.7%

1.2%

Employee Overview

Personal Lines

26.5%

35.4%

27.1%

VAS - P&C

0.2% 8.5% 5.7% 1.3% 1.4% 0.2% 0.7% 0.4%

0.1%

0.0% 8.9% 3.5% 1.6% 0.9% 0.0% 1.6% 0.4%

Producer Info

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

10.9%

Service Staff Info

2.8% 0.6% 0.5% 0.3% 0.6% 0.4%

Technology

Insurance Carriers

Appendix

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.4%

2.4%

1.2%

Net Revenues

98.6%

97.6%

98.8%

Expenses (as % of Net Revenues) Compensation

58.8%

49.4%

61.3%

Selling

3.9%

2.1%

4.0%

Operating

14.1%

11.6%

14.8%

Administrative Total Expenses

2.7%

1.7%

2.2%

79.5%

64.8%

82.4%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

20.5% 24.8% 12.8% 23.6% 27.9%

35.2% 41.2% 26.3% 37.1% 43.1%

17.6% 19.8%

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

9.3%

EBITDA 3

20.2% 22.4%

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 $2,500,000 and $5,000,000

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