2013 Best Practices Study

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

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

55.1%

45.7%

56.0%

Bonds

2.4%

0.9%

3.2%

Personal Lines

24.3%

34.5%

22.1%

VAS - P&C

0.2% 8.0%

0.1%

0.2% 9.8%

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

10.0%

6.4% 1.1% 1.5% 0.2% 0.4% 0.4%

4.1% 0.6% 2.7% 0.4% 0.7% 0.3%

6.3% 0.6% 0.8% 0.2% 0.5% 0.3%

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.6%

3.3%

3.8%

Net Revenues

98.4%

96.7%

96.2%

Expenses (as % of Net Revenues) Compensation

59.6%

50.6%

63.4%

Selling

3.7%

2.3%

2.6%

Operating

15.1%

11.2%

12.9%

Administrative Total Expenses

2.7%

1.1%

1.4%

81.1%

65.2%

80.3%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

18.9% 23.5% 10.4% 22.4% 27.1%

34.8% 39.4% 23.9% 36.2% 40.8%

19.7% 27.3%

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

8.9%

EBITDA 3

21.1% 28.7%

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

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