2005 Best Practices Study

AGENCIES WITH REVENUES BETWEEN $10,000,000 AND $25,000,000

Revenue/Expense/Profit Summary

2005

+25% Profit

+25% Growth

Average

Revenues (% by Source) Commercial Lines

57.3% 63.8% 53.0%

11.8%

9.4% 16.3%

Personal Line

2.2%

2.0%

3.3% 8.4%

P&C Service Fees Contingent/Bonus Group Life & Health Individual Life & Health

PROFILE

9.8% 10.3%

15.5% 11.6% 14.3%

1.8% 1.0% 0.6%

2.0% 0.8% 0.2%

2.6% 1.4% 0.6%

Investments Miscellaneous

REVENUES/ EXPENSES

100.0% 100.0% 100.0%

Total Revenues

3.2%

4.6%

4.2%

Brokerage Commission Expense

96.8% 95.4% 95.8%

Net Revenues

Expenses (as % of Net Revenues) Compensation

66.4%

61.3%

64.7%

FINANCIAL STABILITY

Selling

3.4%

2.9%

3.5%

Operating

12.9%

10.1%

12.3%

Administrative

3.3%

2.6%

4.3%

Total Expenses

86.0%

76.8%

84.7%

EMPLOYEE OVERVIEW

Pre-Tax Profit

14.0% 18.3%

23.2% 28.9% 11.8%

15.3% 18.3%

Pro Forma Profit 1

Operating Pre-Tax Profit 2

3.0%

5.2%

Pro Forma EBITDA 3

21.6%

31.5%

22.6%

PRODUCER INFO

1 Pre-tax profit when discretionary expenses (bonuses, compensation, and perks) made for the benefit of the owners, based solely on ownership, are removed (i.e., removing expenses that would not be incurred if a third party owned the agency). 2 Pre-tax profit minus contingents, bonus and investment income. 3 EBITDA = Earnings before Interest, Taxes, Depreciation and Amortization

SERVICE STAFF INFO

60%

Average

50%

+25% Profit

TECHNOLOGY

40%

+25% Growth

30%

20%

INSURANCE CARRIERS

% Net Revenue

10%

Pre-Tax Profit

Operating Pre-Tax Profit

Pro Forma Pre-Tax Profit

87