2007 Best Practices Study

Agencies with Revenues Under $1,250,000

Executive Perspectives

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Expenses (as % of Net Revenue)

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

48.5%

48.1%

54.9%

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

0.6%

0.3%

0.2%

Personal Lines

35.9%

40.0%

30.7%

VAS - P&C

0.1% 7.2% 4.2% 1.7% 0.6% 0.0% 0.6% 0.6%

0.0% 3.7% 3.8% 2.4% 0.0% 0.0% 0.3% 1.4%

0.0% 7.3% 3.0% 2.9% 0.0% 0.0% 0.4% 0.6%

Contingent/Bonus Group Life & Health Individual Life & Health

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

100.0%

Total Revenues

Brokerage Commission Expense

0.5%

0.0%

0.1%

99.5%

100.0%

99.9%

Net Revenues

Expenses (as % of Net Revenues) Compensation

52.7%

38.7%

48.1%

Selling

5.7%

5.0%

6.2%

Operating

15.9%

11.2%

12.6%

Administrative

1.4%

0.3%

2.0%

Total Expenses

75.6%

55.1%

69.0%

Pre-Tax Profit

24.4% 29.4% 16.5% 26.2% 33.0%

44.9% 52.7% 41.0% 43.5% 55.7%

31.0% 32.1% 23.3% 33.8% 35.0%

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

EBITDA 3

Pro Forma EBITDA

15 2007 Best Practices Study | Agencies with Revenues Under $1,250,000 | Revenues/Expenses