2013 Best Practices Study

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

Key Benchmarks Mgmt. Perspectives Profile Revenues Expenses Profitability Employee Overview Producer Info Service Staff Info Technology Insurance Carriers Appendix

Profit/Loss Summary

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

49.8%

46.8%

52.5%

Bonds

1.5%

0.2%

0.9%

Personal Lines

23.2%

28.9%

22.3%

VAS - P&C

1.6% 7.0%

4.9% 8.0%

0.7% 6.6%

Contingent/Bonus Group Medical All Other Group Individual L&H Bonus/Overrides Investments Miscellaneous Total Revenues

10.7%

6.2% 1.9% 1.3% 0.2% 1.1% 0.5%

10.9%

2.5% 1.4% 0.9% 0.6% 0.8%

1.5% 0.9% 0.6% 1.2% 2.0%

100.0%

100.0%

100.0%

Brokerage Commission Expense

0.6%

0.0%

0.5%

Net Revenues

99.4%

100.0%

99.5%

Expenses (as % of Net Revenues) Compensation

61.8%

53.6%

64.3%

Selling

3.3%

2.9%

3.5%

Operating

14.2%

13.0%

13.3%

Administrative Total Expenses

3.2%

2.1%

2.8%

82.5%

71.6%

83.9%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

17.5% 21.7%

28.4% 37.2% 20.2% 30.6% 39.4%

16.1% 18.3%

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

9.6%

8.9%

EBITDA 3

21.0% 25.2%

19.3% 21.6%

2013 Best Practices Study

Pro Forma EBITDA

1 Pre-tax Profits if discretionary expenses are eliminated and all owners compensated as employees

2 Pre-tax Profits excluding contingents, bonus and investment income

3 EBITDA—Earnings Before Interest Taxes Depreciation and Amortization

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

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