2008 Best Practices Study

Agencies with Revenues Between $1,250,000 and $2,500,000

Profile

Revenues/ Expenses

Financial Stability

Employee Overview

Producer Info

Service Staff Info

Technology

Insurance Carriers

Appendix

Expenses (as % of Net Revenue)

Revenue/Expense/Profit Summary

Average

+25% Profit

+25% Growth

Revenues (% by Source) Commercial Lines

47.8%

47.4%

56.1%

1 Pre-tax Profits if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded 2 Pre-tax Profits excluding income from contingents, bonus and investment income 3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization 4 EBITDA if discretionary expenses are eliminated (e.g. certain owner’s perks/benefits), and one- time or extraordinary revenues are excluded

Bonds

1.7%

4.0%

4.7%

Personal Lines

28.0%

27.7%

22.0%

VAS - P&C

0.2%

0.0%

0.0%

Contingent/Bonus Group Life & Health Individual Life & Health

10.6%

12.0%

10.7%

6.3% 2.8% 0.5% 0.4% 1.3% 0.4%

4.5% 1.2% 1.4% 0.0% 1.6% 0.1%

2.7% 1.0% 0.0% 0.0% 1.8% 0.9%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

Total Revenues

100.0%

100.0%

100.0%

Less Brokerage Commission Expense

1.2%

0.0%

1.1%

Net Revenues

98.8%

100.0%

98.9%

Expenses (as % of Net Revenues) Compensation

57.9%

45.9%

53.1%

Selling

3.9%

3.8%

3.7%

Operating

15.6%

13.2%

12.2%

Administrative

1.7%

1.0%

2.2%

Total Expenses

79.1%

63.9%

71.2%

Pre-Tax Profit

20.9% 24.8%

36.1% 45.6% 17.4% 38.1% 46.9%

28.8% 27.3% 12.8% 32.1% 26.8%

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

6.4%

EBITDA 3

23.5% 26.7%

Pro Forma EBITDA 4

29 2008 Best Practices Study | Agencies with Revenues Between $1,250,000 and $2,500,000 | Revenues/Expenses