2013 Best Practices Study

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

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

46.5%

44.8%

42.5%

Bonds

2.9%

0.8%

5.6%

Personal Lines

33.4%

32.8%

31.6%

VAS - P&C

0.1% 8.4%

0.1%

0.0%

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

10.5%

10.6%

4.7% 0.5% 2.4% 0.4% 0.2% 0.5%

4.8% 0.2% 5.3% 0.1% 0.2% 0.2%

6.9% 0.2% 1.8% 0.0% 0.1% 0.6%

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.2%

0.0%

3.4%

Net Revenues

98.8%

100.0%

96.6%

Expenses (as % of Net Revenues) Compensation

56.6%

43.2%

56.3%

Selling

3.8%

4.0%

4.3%

Operating

15.7%

11.7%

16.3%

Administrative Total Expenses

2.2%

0.9%

2.6%

78.2%

59.7%

79.5%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

21.8% 28.3% 12.8% 24.6% 31.1%

40.3% 45.4% 29.6% 41.4% 46.5%

20.5% 30.6%

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

9.5%

EBITDA 3

24.3% 34.3%

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 Between $1,250,000 and $2,500,000

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