2008 Best Practices Study

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

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

52.5%

53.4%

53.9%

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

2.0%

2.4%

1.4%

Personal Lines

12.6%

18.2%

11.8%

VAS - P&C

0.5% 9.8%

0.2%

0.5% 9.6%

Contingent/Bonus Group Life & Health Individual Life & Health

12.5%

16.4%

8.4% 1.1% 0.0% 0.4% 2.2% 1.3%

17.3%

1.4% 1.0% 1.3% 1.8% 0.6%

1.5% 0.5% 1.8% 1.3% 0.4%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

Total Revenues

100.0%

100.0%

100.0%

Less Brokerage Commission Expense

1.3%

1.0%

2.2%

Net Revenues

98.7%

99.0%

97.8%

Expenses (as % of Net Revenues) Compensation

65.4%

58.3%

62.0%

Selling

3.0%

2.4%

2.9%

Operating

13.3%

11.1%

12.7%

Administrative

2.2%

0.8%

4.0%

Total Expenses

83.8%

72.7%

81.6%

Pre-Tax Profit

16.2% 22.7%

27.3% 38.0% 12.1% 28.8% 38.4%

18.4% 23.4%

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

3.2%

5.5%

EBITDA 3

19.2% 25.0%

23.1% 25.7%

Pro Forma EBITDA 4

89 2008 Best Practices Study | Agencies with Revenues Between $10,000,000 and $25,000,000 | Revenues/Expenses