2008 Best Practices Study

Agencies with Revenues Under $1,250,000

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

46.5%

46.2%

50.5%

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

2.1%

0.5%

6.3%

Personal Lines

35.7%

40.0%

29.1%

VAS - P&C

0.4% 8.1% 4.2% 1.2% 0.7% 0.0% 0.8% 0.1%

0.0% 7.7% 3.8% 1.0% 0.0% 0.0% 0.8% 0.0%

1.3% 8.9% 0.7% 1.7% 0.0% 0.0% 1.3% 0.4%

Contingent/Bonus Group Life & Health Individual Life & Health

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

100.0%

Total Revenues

Less Brokerage Commission Expense

0.1%

0.0%

0.0%

99.9%

100.0%

100.0%

Net Revenues

Expenses (as % of Net Revenues) Compensation

56.9%

47.3%

51.3%

Selling

6.3%

5.4%

5.7%

Operating

16.2%

13.2%

16.2%

Administrative

1.4%

0.3%

0.5%

Total Expenses

80.7%

66.3%

73.7%

Pre-Tax Profit

19.3% 23.8%

33.7% 39.4% 12.5% 34.1% 39.9%

26.3% 25.1%

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

6.6%

5.3%

EBITDA 3

21.4% 26.0%

28.1% 27.2%

Pro Forma EBITDA 4

9 2008 Best Practices Study | Agencies with Revenues Under $1,250,000 | Revenues/Expenses