2012 Best Practices Study

Analysis of Agencies with Revenues Over $25,000,000

Profit/Loss Summary

Key Benchmarks Profile

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Revenues Expenses Profitability Employee Overview Producer Info Staff Service Info Technology Insurance Carriers Appendix

49.7% 3.2% 7.0% 1.9% 5.4% 6.3% 1.2% 1.3% 0.6% 1.0% 18.1%

45.0% 0.9% 6.1% 0.1% 3.0% 6.2% 1.2% 1.4% 0.5% 3.1% 11.8%

39.2% 1.8% 3.1% 0.7% 5.4% 8.3% 1.5% 2.2% 0.3% 1.4% 14.5%

Bonds

Personal Lines

Value Added Services Contingent/Bonus

Group Medical All Other Group Individual L&H Bonus/Overrides Investments Miscellaneous

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

3.5%

2.7%

2.4%

Net Revenues

96.5%

97.3%

97.6%

Expenses (as % of Net Revenues) Compensation

65.3%

57.4%

64.9%

Selling

4.1%

4.2%

3.9%

Operating

14.3%

14.6%

15.0%

Administrative

3.6%

0.8%

0.9%

Total Expenses

87.3%

77.1%

84.6%

Profit/Loss (as % of Net Revenues)

Pre-Tax Profit

12.7% 14.6%

22.9% 22.9% 18.3% 24.8% 24.8%

15.4% 17.6%

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

5.9%

7.6%

EBITDA 3

16.5% 18.4%

17.0% 19.2%

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

Profitability

2012 Best Practices Study

Agencies with Revenues Over $25,000,000

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