2008 Best Practices Study

Agencies with Revenues Between $5,000,000 and $10,000,000

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

49.7%

42.7%

40.6%

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

1.2%

0.2%

0.2%

Personal Lines

22.1%

31.1%

31.1%

VAS - P&C

1.6% 8.3%

5.9% 8.7% 8.7% 0.9% 0.0% 0.2% 1.5% 0.1%

0.0% 8.1% 9.7% 7.6% 0.3% 0.2% 1.8% 0.4%

Contingent/Bonus Group Life & Health Individual Life & Health

11.5%

3.2% 0.1% 0.2% 1.7% 0.5%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

Total Revenues

100.0%

100.0%

100.0%

Less Brokerage Commission Expense

1.4%

0.0%

0.5%

Net Revenues

98.6%

100.0%

99.5%

Expenses (as % of Net Revenues) Compensation

63.2%

60.2%

63.2%

Selling

3.2%

2.5%

3.3%

Operating

12.6%

10.9%

13.2%

Administrative

2.9%

0.9%

4.0%

Total Expenses

82.0%

74.5%

83.7%

Pre-Tax Profit

18.0% 22.0%

25.5% 32.1% 11.1% 26.7% 33.5%

16.3% 21.4%

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

6.5%

6.2%

EBITDA 3

20.7% 24.7%

18.1% 23.1%

Pro Forma EBITDA 4

69 2008 Best Practices Study | Agencies with Revenues Between $5,000,000 and $10,000,000 | Revenues/Expenses