2007 Best Practices Study

Agencies with Revenues Between $10,000,000 and $25,000,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Expenses (as % of Net Revenue)

70%

60%

50%

40%

30%

20%

10%

0%

Selling

Operating

Administrative

Compensation

Average

+25% Profit 5 Profit

+25% Growth rowth

Revenue/Expense/Profit Summary

Average

+25% Profit

+25% Growth

Revenues (% by Source) Commercial Lines

54.9%

53.2%

63.9%

1 Pre-tax Profits if discretionary expenses are eliminated and all owners compensated as employees 2 Pre-tax Profits excluding income from contingents, bonus and investment income 3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization

Bonds

1.8%

1.5%

2.2%

Personal Lines

13.1%

17.5%

10.3%

VAS - P&C

0.8% 8.9%

0.5%

1.3% 9.6% 7.9% 1.4% 0.0% 0.1% 1.6% 1.7%

Contingent/Bonus Group Life & Health Individual Life & Health

10.5%

14.7%

8.3% 1.1% 2.7% 0.5% 1.6% 2.4%

1.6% 0.9% 0.8% 1.6% 0.9%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

Total Revenues

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.3%

1.4%

2.7%

Net Revenues

98.7%

98.6%

97.3%

Expenses (as % of Net Revenues) Compensation

63.5%

56.4%

58.0%

Selling

2.8%

2.0%

3.0%

Operating

13.0%

11.0%

12.0%

Administrative

2.3%

0.4%

2.5%

Total Expenses

81.7%

69.8%

75.5%

Pre-Tax Profit

18.3% 23.8%

30.2% 37.9% 17.4% 31.2% 39.0%

24.5% 29.8% 13.0% 27.1% 32.4%

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

6.6%

EBITDA 3

21.6% 27.1%

Pro Forma EBITDA

129 2007 Best Practices Study | Agencies with Revenues Between $10,000,000 and $25,000,000 | Revenues/Expenses