2013 Best Practices Study

Analysis of Agencies with Revenues Between $10,000,000 and $25,000,000

Key Benchmarks Mgmt. Perspectives Profile Revenues Expenses Profitability Employee Overview Producer Info Service Staff Info Technology Insurance Carriers Appendix

Profit/Loss Summary

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

50.2%

55.9%

48.5%

Bonds

1.6%

1.0%

4.0%

Personal Lines

15.1%

11.3%

20.0%

VAS - P&C

1.0% 5.9%

0.4% 6.8%

1.4% 7.6%

Contingent/Bonus Group Medical All Other Group Individual L&H Bonus/Overrides Investments Miscellaneous Total Revenues

16.1%

15.9%

13.1%

4.9% 2.9% 1.1% 0.6% 0.6%

3.2% 3.7% 0.8% 0.7% 0.2%

2.8% 0.7% 0.5% 0.1% 1.2%

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.6%

2.7%

0.3%

Net Revenues

98.4%

97.3%

99.7%

Expenses (as % of Net Revenues) Compensation

66.7%

63.1%

65.7%

Selling

3.4%

3.4%

3.9%

Operating

13.7%

12.7%

14.1%

Administrative Total Expenses

3.2%

2.2%

3.3%

87.0%

81.5%

87.0%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

13.0% 17.3%

18.5% 26.5% 10.6% 21.2% 29.2%

13.0% 15.4%

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

5.9%

4.8%

EBITDA 3

15.8% 20.1%

16.3% 18.7%

2013 Best Practices Study

Pro Forma EBITDA

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

Agencies with Revenues Between $10,000,000 and $25,000,000

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