2009 Best Practices Study

Agencies with Revenues Less than $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

45.1%

39.4%

44.8%

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

0.7%

0.8%

0.8%

Personal Lines

38.5%

47.8%

34.0%

VAS - P&C

0.2% 7.8% 4.6% 1.8% 0.7% 0.0% 0.6% 0.1%

0.0% 4.3% 6.0% 1.5% 0.0% 0.0% 0.2% 0.0%

0.1% 8.6% 5.3% 3.5% 2.7% 0.0% 0.3% 0.0%

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

0.0%

0.0%

0.0%

100.0%

100.0%

100.0%

Net Revenues

Expenses (as % of Net Revenues) Compensation

58.9%

47.2%

57.0%

Selling

6.0%

4.5%

5.0%

Operating

17.0%

17.9%

17.2%

Administrative

1.5%

1.2%

1.4%

Total Expenses

83.4%

70.8%

80.6%

Pre-Tax Profit

16.6% 23.0%

29.2% 39.5% 15.9% 29.2% 39.4%

19.4% 25.0%

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

5.0%

6.9%

EBITDA 3

18.5% 24.8%

20.1% 25.7%

Pro Forma EBITDA 4

9 2009 Best Practices Study | Agencies with Revenues Less than $1,250,000 | Revenues/Expenses