2013 Best Practices Study

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

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

42.0%

35.7%

38.9%

Bonds

0.7%

0.4%

0.7%

Personal Lines

46.0%

54.2%

46.3%

VAS - P&C

0.4% 5.5%

0.0% 5.5%

0.0% 6.4%

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

2.3% 0.4% 2.0% 0.1% 0.1% 0.4%

0.8% 0.1% 2.8% 0.0% 0.0% 0.4%

3.0% 0.1% 3.2% 0.0% 0.0% 1.3%

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

52.2%

43.2%

47.1%

Selling

5.5%

5.6%

5.7%

Operating

17.4%

13.6% -1.0% 61.4%

19.5%

Administrative Total Expenses

1.7%

1.9%

76.9%

74.1%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

23.1% 27.6% 17.4% 25.8% 30.3%

38.6% 43.7% 33.2% 38.9% 43.9%

25.9% 30.9% 19.5% 28.9% 33.9%

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

EBITDA 3

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 Under $1,250,000

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