2013 Best Practices Study

Analysis of Agencies with Revenues Over $25,000,000

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

54.1%

56.9%

57.4%

Bonds

3.7% 6.2% 1.3% 5.7%

3.9% 7.2% 1.0% 5.4%

5.4% 4.6% 2.7% 6.0%

Personal Lines

VAS - P&C

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

17.9%

13.2%

14.7%

6.1% 1.4% 2.0% 0.6% 1.1%

6.1% 2.0% 1.5% 0.6% 2.1%

3.9% 1.7% 1.4% 1.0% 1.2%

100.0%

100.0%

100.0%

Brokerage Commission Expense

2.5%

1.1%

3.7%

Net Revenues

97.5%

98.9%

96.3%

Expenses (as % of Net Revenues) Compensation

64.1%

58.1%

65.8%

Selling

3.8%

2.9%

3.4%

Operating

13.2%

12.9%

12.2%

Administrative Total Expenses

3.5%

0.9%

3.8%

84.6%

74.8%

85.3%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

15.4% 17.9%

25.2% 27.0% 18.2% 26.4% 28.3%

14.7% 18.1%

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

7.5%

7.0%

EBITDA 3

19.2% 21.7%

19.0% 22.4%

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 Over $25,000,000

177