2024 Best Practices Study

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A comprehensive annual study of top performing insurance agents and brokers

BEST PRACTICES STUDY UPDATE STEP UP STEP AHEAD

2024

©2024 Copyright ©2024 by the Independent Insurance Agents & Brokers of America and Reagan Consulting, Inc. All rights reserved. No portion of this document may be reproduced in any manner without the prior written consent of IIABA or Reagan Consulting. In addition, this document may not be posted as a link on any public or private website without the prior written consent of IIABA or Reagan Consulting.

We wish to thank the following companies for their sponsorship. The funding provided makes possible the development of the 2024 Best Practices Study and the Best Practices Gateway website.

2 2024 Study Sponsors

3 2024 Study Sponsors

Introduction & Overview ................................................................................................................. 6

Study Highlights .............................................................................................................................. 10

Executive Summary ........................................................................................................................ 18

Agencies under $1.25 Million in Revenue ....................................................................... 18

Agencies between $1.25 Million and $2.5 Million in Revenue ...................................... 22

Agencies between $2.5 Million and $5.0 Million in Revenue ........................................ 26

Agencies between $5.0 Million and $10.0 Million in Revenue ...................................... 30

Agencies between $10.0 Million and $25.0 Million in Revenue .................................... 34

Agencies over $25.0 Million in Revenue .......................................................................... 38

Cross Category Comparison ......................................................................................................... 42

Glossary ........................................................................................................................................... 72

4 2024 Table of Contents

Introduction & Overview

2024

Best Practices Study

Intro & Overview

About the Study: The History

nominating your agency to participate in the 2025 Best Practices Study , please contact Reagan Consulting at 404-233-5545.

Since 1993, Reagan Consulting and the Big “I” have partnered to produce the Best Practices Study , a comprehensive examination of the top performing agencies across the country. The study compiles benchmarking data on the key metrics of agency performance and value including revenue growth and profitability, financial stability, expense management, and sales and operations productivity. Every three years, the Big "I" and Reagan Consulting ask insurance companies, state association affiliates, and other industry organizations to nominate agencies they consider to be among the best in the industry for each of the BPS ' s revenue categories. Nominated agencies are then invited to participate in the study by completing an in-depth survey detailing their financial and operational year-end results. These results are then scored and ranked objectively to determine which agencies earn the Best Practices agency designation. In 2022, the beginning of the current three-year study cycle (2022-2024), over 2,600 independent agencies throughout the U.S. were nominated to participate in the annual Best Practices Study . Although participation took extensive time and effort, 286 of the nominated agencies qualified and were designated as Best Practices agencies. These top-performing agencies' results serve as the foundation for the 2022 Best Practices Study. The 2024 study continues to examine the agencies who participated in 2022 and 2023. Inclusion in the Best Practices Study is a prestigious recognition of superior performance. 2025 will mark the beginning of a new study cycle in which the nomination and qualification process will be repeated. Agencies who believe they have the qualities of a Best Practices agency and wish to be nominated to participate in the 2025-2027 study cycle should contact their state association or an insurance carrier and ask that their name be submitted. To learn more about The Process Future Participation

The 2024 Best Practices Study

The 2024 Best Practices Study is composed of three primary sections:

1) Study Highlights – an overview of the Study results and the latest industry trends

2) Executive Summaries — Key benchmarks and perspectives summarized for each of the six revenue categories. 3) Cross Category Comparison — The complete array of Best Practices benchmarks for all six revenue categories, arranged in a side-by-side format that allows for quick metric comparisons.

For More Information

If you have questions about the information published in the 2024 Best Practices Study or to learn more about nominating your agency to participate in the 2025 Best Practices Study , please contact Reagan Consulting at 404-233-5545. Visit the Best Practices Gateway for access to the annual Best Practices Study at: www.reaganconsulting.com/best-practices. Other resources and tools to help agencies improve their performance and enhance the value of their business are also available via the Big "I" website: www.independentagent.com. If you would like to purchase the Study , contact the Big "I" Education Department by calling 800-221-7917 or online at www.independentagent.com/best-practices.

Intro & Overview

Study Highlights

2024

Best Practices Study

Introduction

When last year’s Best Practices results were published (which were excellent – across the board), the $64,000 question was: could the industry go anywhere but down? Rising interest rates, the inevitable tapering of P&C rates, and a looming recession had the industry on edge. Most brokers braced themselves for softer rates and a declining economic environment. It was largely assumed that growth and profitability levels would decline – the only question was how steep the decline would be. The industry has its answer, and the news is not just good - it's historically good. This past year will be remembered as a high watermark for our industry. In the Best Practices Study's thirty-plus-year history, we have never seen operating and financial results across all revenue categories that matched those achieved in this year’s Study . This is a testament to our industry's resilience, adaptability, and commitment to a Best Practices mindset.

Let’s look at the 2024 Best Practices results for a handful of the most critical benchmarks.

Organic Growth Organic Growth is total growth, net of any acquisition activity. It is a function of four factors: new business, account attrition, rate, and exposure. Organic growth is the typical agency's most important operating metric and best indicator of overall health. Without consistent and positive organic growth, agencies will struggle to remain viable over time and to achieve adequate investment returns.

P&C Rate Changes

11.3% 10.3%

9.2%

8.0%

6.1%

4.0%

2.1%

0.2%

-1.5%

-3.3% -4.0%

2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023

Overall, the 2024 Study’s organic growth results were excellent. Although many factors contributed to these results, P&C rate played a considerable role. The P&C market is now in a seventh straight hard year and shows no signs of cooling anytime soon. It would be challenging not to grow in this rate environment. The US economy, which had been red hot after the worst of the COVID-19 pandemic, settled into a more regular rhythm, with GDP increasing by 2.5% versus 2022. New business results were solid. Overall, the industry scored an A- for organic growth in 2023. Mid-Sized Accounts Source: CIAB

All but two Best Practices revenue categories showed improved growth results compared to last year. Only the smallest revenue category delivered modest growth results (5.4%). The advantages of scaled (large) brokers are well known. In most cases, larger brokers enjoy a significant competitive advantage in the marketplace, given the tools and resources they wield. 2023’s modest growth results from smaller agencies in the study should remind all independent brokers, especially smaller

Organic Growth

11.7%

11.3%

11.4%

10.4%

10.8%

10.3%

10.0%

9.8%

8.7%

6.4%

5.4%

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M >$25M

2023

2024

Study Highlights

firms, of the need to make significant and ongoing investments in their growth engines (producer hiring and development, training, specialization, technology, etc.). Publicly traded and PE-fueled mega-brokers will continue to gobble up independent brokers who fail to do so.

Sales Velocity New business is typically the growth contributor that agencies can most directly influence. As such, new business is the lifeblood of any insurance agency. The old saying goes, “Nothing good happens until someone sells something.” Sales Velocity is used to gauge a firm’s new business results. Expressed as a percentage, Sales Velocity is new commission & fee (C&F) income written in the current year divided by the prior year's C&F. Sales Velocity cuts to the chase when answering the fundamental question: “Does an agency have a sales culture?”

Sales Velocity = Current period written new business divided by prior period recorded commissions and fees

EXAMPLE: 2023 Written New Business 2022 Commissions & Fees

$250,000 $2,000,000

SALES VELOCITY

12.5%

Sales Velocity

An agency generating a 12-13% Sales Velocity can rightly claim the sales culture moniker. Sales Velocity results for each Best Practices revenue category exceeded this critical 12 13% new business baseline.

15.9%

15.8%

15.7%

15.1%

15.0%

14.6%

14.1%

14.0%

13.7%

13.4%

13.1%

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M >$25M

2023

2024

NUPP As crucial as Organic Growth and Sales Velocity are, an agency playing the long game must also focus on investments in future growth. Although these investments take many forms (sales training and development, technology, support staff hiring, strategic planning, etc.), perhaps none rivals an agency's investment in next-gen sales talent.

NUPP

Reagan Consulting developed the NUPP metric (Net investment in Unvalidated Producer Payroll) to capture an agency's investment in future sales talent. Expressed as a percentage of net revenue, NUPP is the difference between what an agency pays its unvalidated producers (producers-in training) and what the unvalidated producers would earn under the agency's regular commission schedule.

3.9%

3.1%

2.8%

2.3%

2.0%

1.8%

1.7%

1.6%

1.4%

1.3%

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M >$25M

2023

2024

Study Highlights

Effective Investments in Growth: Calculating the NUPP

Step 1: Find the total compensation of all unvalidated producers Number of Unvalidated Producers

Actual Payroll of Unvalidated Producers $174,000 Step 2: What would the unvalidated producers earn under the agency’s normal producer commission schedule? Unvalidated producer's total book of business $125,000 Agency blended commission rate 32% Implied (“earned”) compensation $40,000 Step 3: Calculate the NUPP as a percentage of revenues Actual payroll of unvalidated producers $174,000 Implied (“earned”) compensation ($40,000) NUPP $134,000 Agency Net Revenues $7,500,000 NUPP - Net Unvalidated Producer Pay (as % of revenues) 1.8%

In other words, NUPP measures what an agency's unvalidated producers were paid versus what they earned. It is a fundamental measure of an agency's investment in producer development, critical to its long-term growth capacity.

Generally speaking, a NUPP of 1.5% - 2.0% is considered healthy. In the 2024 Study , each revenue category exceeded this 1.5% NUPP minimum threshold, indicating that Best Practices agencies are appropriately reinvesting in their future growth engines.

Profitability

EBITDA = Earnings Before Interest, Taxes, Depreciation and Amortization.

Profitability is another of the most critical Best Practices Benchmarks. Without adequate levels of profitability, shareholder returns will suffer, and agencies will struggle to have the capital necessary to reinvest in the future.

Think of EBITDA as pre-tax cash flow.

When measuring profitability, the Best Practices Study focuses on pro forma profitability. Pro forma is Latin for “as if,” indicating that we are adjusting an agency's reported financials. To arrive at pro forma profitability, normalizing adjustments are made to an agency's reported financials to restate them after accounting for non recurring and non-operating events. In other words, pro forma profit reflects an agency's true and sustainable profitability after the numbers are cleaned up to remove any static.

Pro Forma EBITDA

30.9%

30.0%

28.8%

27.5%

27.2%

26.6%

25.8%

25.2%

24.8%

21.9%

21.4%

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M >$25M

2023

2024

Study Highlights

ABC Insurance Agency Pro Forma Income Statement for the year ended December 31, 2023

Pro Forma Adjustments

Actual

Pro Forma

Notes

Revenues P&C Commission and Fees

2,851,207

P&C Contingents

299,505

45,995

345,500

Adjust to trailing three-year average

L&H Commission and Fees

1,505,662

L&H Overrides

122,000

Total Operating Revenue

4,778,374

4,824,369

Investment Income

14,505 125,000

14,505 75,000

Miscellaneous Income

(50,000) (4,005)

Eliminate non-recurring life insurance proceeds

Total Revenue

4,917,879

4,913,874

Expenses Compensation Expense

3,196,621

(255,000) (17,500) (55,000)

2,941,621

Eliminate non-recurring bonuses

Selling Expense

245,894 688,503 73,768

228,394 633,503 73,768

Eliminate 25th anniversary party expense Eliminate non-recurring legal expense

Operating Expense

Administrative Expense

Total Expense

4,204,787

(327,500)

3,877,287 1,036,587

Profit $ Profit %

713,092

14.5%

21.1%

When referring to pro forma profitability, the Best Practices Study generally cites EBITDA, or Earnings Before Interest, Taxes, Depreciation, and Amortization. In this year’s Study, the industry’s profitability levels remained historically high.

Rule of 20 The Rule of 20, partially a financial metric and partially a growth metric, is the best indication of an agency's likely investment return to its shareholders. It is calculated by adding organic growth to 50% of pro forma EBITDA. Agencies attempting to grow their values face a dilemma: Should they focus on growth at the expense of profitability or profitability at the expense of growth? The Rule of 20 is a helpful metric to ensure that an agency's balance of growth and profitability is healthy.

Rule of 20

26.9

26.8

26.4

25.5

25.3

24.8

24.5

24.3

23.4

22.4

22.3

21.7

<$1.25M $1.25-2.5M $2.5-5M $5-10M $10-25M >$25M

2023

2024

The Rule of 20 is a simple tool for determining whether an agency creates value for its shareholders. Generally speaking, an outcome of 20 or more, regardless of the different combinations of growth and profitability, indicates that an agency's shareholders can expect to generate a healthy investment return. The Rule of 20 is the most critical benchmark in the Best Practices Study for assessing an agency’s overall health. For the third consecutive year, driven by exceptional growth and profitability, each revenue category scored a 20 or higher on the Rule of 20 metric.

The industry is very healthy, indeed.

Study Highlights

Productivity Revenue Per Employee is perhaps the simplest Best Practices metric to calculate. However, don’t allow its simplicity to detract from its importance in assessing an agency's overall health. Revenue per employee is simply an agency's revenue divided by its full-time equivalent employees. An agency operating at a below-average revenue per employee is likely to generate a lower level of profitability than its potential. A low revenue per employee result may indicate that an agency is overstaffed, poorly structured, or in need of improved technology and/or systems and procedures, among other things.

In all but two revenue categories, revenue per employee improved over the prior year's results.

Revenue per Employee

$249,538

$240,379

$245,503

$233,451

$225,793

$207,698

$195,217

$188,362

$186,019

$183,050

$182,593

$170,674

<$1.25M

$1.25-2.5M

$2.5-5M

$5-10M

$10-25M

>$25M

2023

2024

Conclusion

This year’s Study results confirm what we have known for decades – the independent insurance industry is the world's finest and most resilient industry. Think back to the make-or-break and transformational events that our industry has powered through over the decades since the inception of the Best Practices Study in 1993:

1993 1996 1998 2004 2009 2014 2020 2022

AI comes to the masses (ChatGPT)

The Great Recession

Hillarycare (a push for nationalized healthcare)

Banks-in Insurance

Eliot Spitzer’s Attack on Contingents

The Affordable Care Act (Obamacare)

The COVID-19 Pandemic

The fear of Internet disinter mediation

Study Highlights

Our industry not only survived these events and threats—it thrived! We believe the Best Practices Study played a significant role in helping the industry to power through these challenging decades. Although the operating and financial benchmarks today are light years ahead of those in the first years of the Study , the process remains the same for agents and brokers who intend to be the best of the best. By committing to a culture of continual improvement using the Best Practices Process Improvement Cycle, Best Practices agencies ensure that they will not only survive in a future characterized by change but flourish.

Best Practices Process:

Benchmark your Agency

• The beginning of improvement is knowing where you are – benchmark your agency • Compare your agency to its Best Practices peers to see where you stand versus the best of the best • Identify the performance gaps, if any, that exist between your agency and its high performing peers • Once you’ve identified the causes of any performance gaps that do exist, implement strategies to eliminate them

Elevate Performance and Agency Value

Compare to Best Practices

Process Improvement Cycle with Best Practices

Implement Strategies to Close Gaps

Identify Performance Gaps

The results of this year’s Study are nothing short of remarkable. It will be amazing to see where this generation of Best Practices agencies can take the industry in the coming decades with their continued commitment to excellence.

Study Highlights

Executive Summary

Key Metrics by Agency Revenue Category

18 <$1.25M Agencies under $1.25 million in revenue

Executive Summary

Weighted Average Shareholder Age (WASA) 57.6

Average Revenues $775,280

Regional Distribution

 Northeast  Midwest

10.5% 31.6% 15.8% 42.1%

 West

 Southeast  Southwest

Corporate Structure

0.0%

Average Number of Shareholders 1.4 Average Number of Agency Locations 1.2

Profile

Sole Prop. 5.3%

C Corp 21.1%

LLC 15.8%

S Corp 57.9%

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Revenue Distribution (as a % of Gross Revenue)

Contingent/ Bonus/ Overrides 6.3%

Other 0.8%

22.6%

16.5%

Group L/H/F 4.0%

Commercial P&C 40.3%

13.6%

12.1%

11.2%

7.6%

5.4%

2.6%

Personal P&C 48.6%

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

Median

Top Quartile

Note : Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F .

Revenue and Growth

Account Stratification

Notes

• Agencies under $1.25M in revenue posted a 5.4% organic growth rate, the lowest organic growth rate of all Best Practices revenue groups for the third year in a row. • Commercial P&C growth rate slowed to 2.6%, down from 6.4% in 2023, contributing to the lower overall organic growth rate.

Commercial P&C

Group L/H/F

 < $5K

65.7% 13.1% 10.5%

 Under 50 lives

97.3%

 $5K to $10K  $10K to $25K  $25K to $50K

 From 50-100 lives

0.6% 2.1%

 Over 100 lives

3.8% 6.8%

 > $50K

<$1.25M

Executive Summary

Book of Business per Producer (commissions and fees)

Book of Business by Age

Up to age 35 7.4%

New Business $19,966

Average Book

Over age 55 26.9%

Commercial P&C

$253,257

Age 36-45 28.1%

Personal P&C

$33,644

$216,212

Multi-Line Production Sales Velocity 15.1%

Life/Health/Financial

$27,892

$126,799

Age 46-55 37.5%

$38,073

$192,872

Effective NUPP

Producer Success Rate 21.0%

NUPP 1.8%

Effective NUPP 0.4%

• Effective NUPP, which is the product of an agency's investment in unvalidated producers (NUPP) and success rate in hiring producers (Producer Success Rate), is expressed as a percentage of net revenue. It is the best overall measure of an agency's effectiveness in recruiting and developing sales talent. • Firms in this revenue group took a significant step forward in lowering their Weighted Average Producer Age (WAPA) to 49.4 down from 51.1 in 2023. Additionally, Agencies Book of Business from producers aged 36-45 increased by 5% year over year to 28.1%. • This revenue group posted the lowest Effective NUPP of any revenue group after posting the highest NUPP and Effective NUPP in 2023.

Sales Velocity

Age Banding of Sales Velocity

Notes & Definitions

• Sales Velocity is a critical metric in determining organic growth. It is defined as this year's written new business divided by last year's commissions and fees. • Age Banding of Sales Velocity can help a firm assess where new business and growth are coming from and prepare for perpetuation.

16.7%

4.6%

Over age 55

Age 46-55

5.6%

Age 36-45

3.4%

Up to age 35

1.5%

Comparison Group Average

Average

Top Quartile

<$1.25M

Executive Summary

Profitability

Employee Productivity

Top Quartile

Pro Forma Metrics:

Average

33.6%

32.5%

Number of Employees

6.0

27.5%

25.5%

Revenue per Employee

$183,050

$226,020

Compensation per Employee

$62,386

$47,637

Pro Forma Pre-Tax Profit

Pro Forma EBITDA

Spread per Employee

$120,664

$114,411

Comparison Group Average Top Quartile

Rule of 20 Score

• The Rule of 20 measures an agency's shareholder returns. It is calculated by adding 50% of an agency's Pro Forma EBITDA margin to its organic commission & fee growth rate. An outcome of 20 or higher means an agency is likely generating, through profit distributions and/or share price appreciation, a shareholder return of approximately 15% - 17%, a typical agency/brokerage return under normal market conditions. • The graph below provides a look at the Rule of 20 results for agencies in this revenue category. The solid black line represents all combinations of organic growth and EBITDA margin that result in a Rule of 20 score of 20.

Profitability/Productivity

31.5

23.4

Average

Top Quartile

Organic Growth & Profitability Scatter Plot

50%

45%

40%

35%

30%

25%

20%

15%

10%

Profitability (EBITDA Margin)

-10%

-5%

10%

15%

20%

25%

30%

Organic Growth

Note: Firms identified as outliers have been set to have a maximum growth of 30% or a maximum profitability of 50%. They appear on the graph line bordering the chart instead of plotting their actual results.

<$1.25M

Executive Summary

Key Metrics by Agency Revenue Category

$1.25-2.5M Agencies between $1.25 and $2.5 million in revenue

Executive Summary

Weighted Average Shareholder Age (WASA) 53.8

Average Revenues $1,828,110

Regional Distribution

 Northeast  Midwest

20.7% 27.6%

 West

3.4%

 Southeast  Southwest

37.9% 10.3%

Corporate Structure

Average Number of Shareholders 1.8 Average Number of Agency Locations 1.4

Profile

C Corp 13.8%

LLC 20.7%

S Corp 65.5%

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Revenue Distribution (as a % of Gross Revenue)

Contingent/ Bonus/ Overrides 7.5%

20.3%

Other 1.0%

18.1%

16.6%

16.1%

Group L/H/F 3.0%

11.4%

10.1%

7.4%

Commercial P&C 50.7%

Personal P&C 37.8%

1.5%

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

Median

Top Quartile

Note : Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F .

Revenue and Growth

Account Stratification

Notes

• The $1.25M to $2.5M revenue group posted the second highest organic growth rate, 11.4%, and the highest top quartile organic growth rate of 16.1%. • Group L/H/F revenue shrunk by 1.4% year over year to 3%. This is the smallest percentage of Group L/H/F business for all revenue groups and 4% less than the $2.5 5M revenue group.

Commercial P&C

Group L/H/F

 < $5K

55.3% 12.8% 14.6%

 Under 50 lives

76.3%

 $5K to $10K  $10K to $25K  $25K to $50K

 From 50-100 lives 10.4%

 Over 100 lives

13.3%

6.4%

 > $50K

11.0%

$1.25-2.5M

Executive Summary

Book of Business per Producer (commissions and fees)

Book of Business by Age

Up to age 35 9.5%

New Business $62,823

Average Book

Over age 55 40.6%

Commercial P&C

$370,456

Age 36-45 22.6%

Personal P&C

$46,845

$262,345

Multi-Line Production Sales Velocity 15.9%

Life/Health/Financial

$96,682

$190,987

Age 46-55 27.3%

$40,859

$306,801

Effective NUPP

Producer Success Rate 38.6%

NUPP 3.9%

Effective NUPP 1.5%

• Effective NUPP, which is the product of an agency's investment in unvalidated producers (NUPP) and success rate in hiring producers (Producer Success Rate), is expressed as a percentage of net revenue. It is the best overall measure of an agency's effectiveness in recruiting and developing sales talent. • This revenue category posted the highest NUPP and Effective NUPP of all revenue categories and made significant improvements year over year. • For the third year in a row, this revenue category had the highest average Sales Velocity of 15.9%, 2.5% higher than the $2.5-5M revenue category.

Sales Velocity

Notes & Definitions

Age Banding of Sales Velocity

21.4%

Over age 55

6.5%

Age 46-55

3.5%

Age 36-45

3.3%

Up to age 35

2.6%

Comparison Group Average

Average

Top Quartile

$1.25-2.5M

Executive Summary

Profitability

Employee Productivity

Top Quartile

Pro Forma Metrics:

Average

34.4%

33.6%

28.8%

Number of Employees

11.3

24.4%

Revenue per Employee

$182,593

$215,163

Compensation per Employee

$86,917

$77,657

Pro Forma Pre-Tax Profit

Pro Forma EBITDA

Spread per Employee

$95,676

$117,679

Comparison Group Average Top Quartile

Rule of 20 Score

36.0 Profitability/Productivity

26.8

Average

Top Quartile

Organic Growth & Profitability Scatter Plot

50%

45%

40%

35%

30%

25%

20%

15%

10%

Profitability (EBITDA Margin)

-10%

-5%

10%

15%

20%

25%

30%

Organic Growth

$1.25-2.5M

Executive Summary

Key Metrics by Agency Revenue Category

26 $2.5-5M Agencies between $2.5 and $5 million in revenue

Executive Summary

Weighted Average Shareholder Age (WASA) 55.8

Average Revenues $3,795,352

Regional Distribution

 Northeast  Midwest

13.9% 30.6% 11.1% 27.8% 16.7%

 West

 Southeast  Southwest

Corporate Structure

Average Number of Shareholders 2.3 Average Number of Agency Locations 2.6

Profile

C Corp 22.2%

LLC 11.1%

S Corp 66.7%

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Revenue Distribution (as a % of Gross Revenue)

Contingent/ Bonus/ Overrides 8.7%

18.4%

Other 2.3%

14.9%

14.7%

14.1%

11.7%

10.7%

Group L/H/F 6.9%

9.8%

Commercial P&C 51.3%

Personal P&C 30.8%

0.8%

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

Median

Top Quartile

Note : Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F .

Revenue and Growth

Account Stratification

Notes

• BPS Firms in this revenue category posted the highest organic growth in Commercial P&C of all revenue categories (14.1%). • Firms in the $2.5-5M revenue category generate over 80% of their revenues from Commercial and Personal Property and Casualty business.

Commercial P&C

Group L/H/F

 < $5K

39.9% 13.2% 16.9% 15.1% 14.9%

 Under 50 lives

67.5%

 $5K to $10K  $10K to $25K  $25K to $50K

 From 50-100 lives 17.1%

 Over 100 lives

15.4%

 > $50K

$2.5-5M

Executive Summary

Book of Business per Producer (commissions and fees)

Book of Business by Age

Up to age 35 8.6%

New Business $67,488

Average Book

Commercial P&C

$631,878

Over age 55 43.2%

Age 36-45 29.5%

Personal P&C

$49,353

$252,211

Multi-Line Production Sales Velocity 13.4%

Life/Health/Financial

$35,581

$169,036

Age 46-55 18.8%

$93,859

$733,164

Effective NUPP

Producer Success Rate 48.7%

NUPP 2.3%

Effective NUPP 1.1%

• Effective NUPP, which is the product of an agency's investment in unvalidated producers (NUPP) and success rate in hiring producers (Producer Success Rate), is expressed as a percentage of net revenue. It is the best overall measure of an agency's effectiveness in recruiting and developing sales talent. • This revenue category had the second highest Effective NUPP (1.1%) of all revenue categories. • The $2.5-$5M category continued to increase its investment in unvalidated producers with NUPP rising to 2.3% this year.

Age Banding of Sales Velocity

Sales Velocity

Notes & Definitions

17.3%

Over age 55

4.2%

Age 46-55

2.6%

Age 36-45

4.8%

Up to age 35

1.8%

Comparison Group Average

Average

Top Quartile

$2.5-5M

Executive Summary

Profitability

Employee Productivity

Top Quartile

Pro Forma Metrics:

Average

Number of Employees

20.9

38.2%

36.2%

30.0%

26.5%

Revenue per Employee

$188,362

$215,777

Compensation per Employee

$100,730

$79,565

Pro Forma Pre-Tax Profit

Pro Forma EBITDA

Spread per Employee

$87,632

$110,298

Comparison Group Average Top Quartile

Rule of 20 Score

Profitability/Productivity

32.4

25.5

Average

Top Quartile

Organic Growth & Profitability Scatter Plot

50%

45%

40%

35%

30%

25%

20%

15%

10%

Profitability (EBITDA Margin)

-10%

-5%

10%

15%

20%

25%

30%

Organic Growth

$2.5-5M

Executive Summary

Key Metrics by Agency Revenue Category

30 $5-10M Agencies between $5 and $10 million in revenue

Executive Summary

Weighted Average Shareholder Age (WASA) 52.4

Average Revenues $7,343,435

Regional Distribution

 Northeast  Midwest

17.6% 17.6% 11.8% 35.3% 17.6%

 West

 Southeast  Southwest

Corporate Structure

Average Number of Shareholders 3.5 Average Number of Agency Locations 2.6

Profile

C Corp 15.7%

LLC 27.5%

Partner ship 2.0%

S Corp 54.9%

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Revenue Distribution (as a % of Gross Revenue)

18.5%

18.0%

Contingent/ Bonus/ Overrides 7.5%

Other 1.9%

16.1%

14.1%

12.4%

11.3%

Group L/H/F 9.9%

9.4%

9.0%

Commercial P&C 56.3%

Personal P&C 24.4%

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

Median

Top Quartile

Note : Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F .

Revenue and Growth

Account Stratification

Notes

• Agencies with $5-10M in revenue posted the second highest median Commercial P&C (12.4%) and Group L/H/F (9.4%) organic growth rates. • This revenue category generated the highest percentage of revenue from Bonds/Surety business (3.7%) of all revenue categories.

Commercial P&C

Group L/H/F

 < $5K

36.2% 11.4% 16.5% 13.3% 22.7%

 Under 50 lives

58.2%

 $5K to $10K  $10K to $25K  $25K to $50K

 From 50-100 lives 16.6%

 Over 100 lives

25.2%

 > $50K

$5-10M

Executive Summary

Book of Business per Producer (commissions and fees)

Book of Business by Age

Up to age 35 17.4%

New Business $96,250

Average Book

Over age 55 32.0%

Commercial P&C

$733,832

Personal P&C

$79,835

$427,365

Multi-Line Production Sales Velocity 14.1%

Age 36-45 30.1%

Life/Health/Financial

$77,023

$657,067

Age 46-55 20.5%

$71,669

$626,733

Effective NUPP

Producer Success Rate 54.0%

NUPP 1.7%

Effective NUPP 0.9%

• Effective NUPP, which is the product of an agency's investment in unvalidated producers (NUPP) and success rate in hiring producers (Producer Success Rate), is expressed as a percentage of net revenue. It is the best overall measure of an agency's effectiveness in recruiting and developing sales talent. • This revenue category had the highest producer success rate (54.0%) of all revenue categories. • $5–10M revenue firms posted the highest Sales Velocity for producers up to Age 35 (3.6%) for the second year in a row.

Notes & Definitions

Sales Velocity

Age Banding of Sales Velocity

16.7%

2.8%

Over age 55

3.1%

Age 46-55

4.6%

Age 36-45

Up to age 35

3.6%

Comparison Group Average

Average

Top Quartile

$5-10M

Executive Summary

Profitability

Employee Productivity

Top Quartile

Pro Forma Metrics:

Average

31.1%

30.8%

Number of Employees

34.8

24.8%

22.5%

Revenue per Employee

$225,793

$258,286

Compensation per Employee

$127,086

$103,945

Pro Forma Pre-Tax Profit

Pro Forma EBITDA

Spread per Employee

$98,707

$111,913

Comparison Group Average Top Quartile

Rule of 20 Score

Profitability/Productivity

34.0

26.4

Average

Top Quartile

Organic Growth & Profitability Scatter Plot

50%

45%

40%

35%

30%

25%

20%

15%

10%

Profitability (EBITDA Margin)

-10%

-5%

10%

15%

20%

25%

30%

Organic Growth

$5-10M

Executive Summary

Key Metrics by Agency Revenue Category

34 $10-25M Agencies between $10 and $25 million in revenue

Executive Summary

Weighted Average Shareholder Age (WASA) 52.2

Average Revenues $16,125,957

Regional Distribution

 Northeast  Midwest

16.7% 12.5% 18.8% 37.5% 14.6%

 West

 Southeast  Southwest

Corporate Structure

Average Number of Shareholders 6.2 Average Number of Agency Locations 3.9

Profile

C Corp 22.9%

LLC 25.0%

Partner ship 4.2%

S Corp 47.9%

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Revenue Distribution (as a % of Gross Revenue)

18.9%

Contingent/ Bonus/ Overrides 7.9%

Other 2.3%

15.6%

14.5%

12.2%

11.8%

10.4%

Group L/H/F 16.6%

7.3%

Commercial P&C 57.0%

Personal P&C 16.2%

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

Median

Top Quartile

Note : Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F .

Revenue and Growth

Notes

Account Stratification

• Agencies in this revenue category posted double-digit organic growth (10.4%) for the third year in a row. • As a % of Net Revenue, brokers with $10 25M generate more revenue from

Commercial P&C

Group L/H/F

Commercial P&C (incl. Bonds) than any other Best Practices revenue group.

 < $5K

25.2% 12.1% 18.5% 14.3% 30.0%

 Under 50 lives

40.1%

 $5K to $10K  $10K to $25K  $25K to $50K

 From 50-100 lives 17.1%

 Over 100 lives

42.8%

 > $50K

$10-25M

Executive Summary

Book of Business per Producer (commissions and fees)

Book of Business by Age

Up to age 35 10.6%

New Business $131,624

Average Book

Over age 55 33.6%

Commercial P&C

$1,049,816

Personal P&C

$71,811

$470,631

Age 36-45 31.2%

Multi-Line Production Sales Velocity 14.0%

Life/Health/Financial

$146,433

$1,063,875

Age 46-55 24.6%

$91,581

$1,200,197

Effective NUPP

Producer Success Rate 50.4%

NUPP 1.7%

Effective NUPP 0.8%

• Effective NUPP, which is the product of an agency's investment in unvalidated producers (NUPP) and success rate in hiring producers (Producer Success Rate), is expressed as a percentage of net revenue. It is the best overall measure of an agency's effectiveness in recruiting and developing sales talent. • This category size had the second lowest sales velocity of any size category at 14.0% but improved from 13.1% in 2023. • The firms in this category have the second highest Book of Business percentage of producers under the age of 35 (10.6%) and the second lowest Weighted Average Producer Age (49.1).

Notes & Definitions

Sales Velocity

Age Banding of Sales Velocity

17.7%

3.4%

Over age 55

3.1%

Age 46-55

Age 36-45

4.8%

Up to age 35

2.6%

Comparison Group Average

Average

Top Quartile

$10-25M

Executive Summary

Profitability

Employee Productivity

Top Quartile

Pro Forma Metrics:

Average

33.0%

Number of Employees

71.7

28.0%

25.8%

21.3%

Revenue per Employee

$240,379

$249,538

Compensation per Employee

$138,669

$159,010

Pro Forma Pre-Tax Profit

Pro Forma EBITDA

Spread per Employee

$101,710

$90,528

Comparison Group Average Top Quartile

Rule of 20 Score

Profitability/Productivity

32.4

24.8

Average

Top Quartile

Organic Growth & Profitability Scatter Plot

50%

45%

40%

35%

30%

25%

20%

15%

10%

Profitability (EBITDA Margin)

-10%

-5%

10%

15%

20%

25%

30%

Organic Growth

$10-25M

Executive Summary

Key Metrics by Agency Revenue Category

38 >$25M Agencies over $25 million in revenue

Executive Summary

Weighted Average Shareholder Age (WASA) 54.3

Average Revenues $83,940,913

Regional Distribution

 Northeast  Midwest

16.7% 29.2% 18.8% 20.8% 14.6%

 West

 Southeast  Southwest

Corporate Structure

Average Number of Shareholders 42.5 Average Number of Agency Locations 16.8

Profile

Other 4.2%

C Corp 27.1%

LLC 25.0%

Partner ship 2.1%

S Corp 41.7%

Organic Growth in Net Commissions & Fees (excluding contingents, bonuses & overrides)

Revenue Distribution (as a % of Gross Revenue)

18.2%

Contingent/ Bonus/ Overrides 7.8%

16.3%

Other 1.4%

14.4%

13.4%

12.4%

12.2%

9.8%

Commercial P&C 54.9%

Group L/H/F 25.0%

7.1%

Personal P&C 10.9%

Total Agency

Commercial P&C

Personal P&C

Group L/H/F

Median

Top Quartile

Note : Commercial P&C includes Bonds/Surety. Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F .

Revenue and Growth

Notes

Account Stratification

• Firms with over $25M in revenue have the largest percentage of revenue from Group L/H/F (25.0%) than any other revenue category and 8.4% higher than the next closest category ($10-25M). • This revenue category generates 47.6% of the Commercial P&C Business from large accounts (Revenues >$50k), the largest of any category.

Commercial P&C

Group L/H/F

 < $5K

16.1%

 Under 50 lives

29.4%

 $5K to $10K  $10K to $25K  $25K to $50K

7.6%

 From 50-100 lives 18.0%

14.6% 14.2% 47.6%

 Over 100 lives

52.5%

 > $50K

>$25M

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