2009 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

52.7%

48.0%

43.8%

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

1.9%

3.1%

1.4%

Personal Lines

12.4%

19.6%

19.9%

VAS - P&C

0.6%

0.8%

0.7%

Contingent/Bonus Group Life & Health Individual Life & Health

10.1% 17.0%

14.6%

12.3% 15.6%

9.4% 1.8% 0.0% 0.1% 1.4% 1.3%

1.6% 0.2% 1.2% 1.2% 1.3%

2.6% 0.4% 2.1% 1.0% 0.1%

VAS - L&H

Bonus/Overrides Investments Miscellaneous

100.0%

100.0%

100.0%

Total Revenues

Less Brokerage Commission Expense

1.2%

2.6%

2.2%

Net Revenues

98.8%

97.4%

97.8%

Expenses (as % of Net Revenues) Compensation

66.5%

58.2%

61.6%

Selling

2.9%

2.9%

3.4%

Operating

13.3%

11.6%

11.9%

Administrative

2.4%

1.0%

2.0%

Total Expenses

85.0%

73.7%

78.9%

Pre-Tax Profit

15.0% 18.8%

26.3% 33.9% 10.0% 27.9% 31.8%

21.1% 26.8%

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

2.3%

5.4%

EBITDA 3

18.2% 20.4%

23.4% 23.6%

Pro Forma EBITDA 4

89 2009 Best Practices Study | Agencies with Revenues Between $10,000,000 and $25,000,000 | Revenues/Expenses