2014 Best Practices Study

Analysis of Agencies with Revenues Between $10,000,000 and $25,000,000

Key Benchmarks

Profit/Loss Summary

Profile

Revenues

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Expenses Profitability

50.3%

47.6%

38.4%

Bonds

1.8%

0.3%

3.7%

Employee Overview

Personal Lines

15.2%

14.2%

15.6%

VAS - P&C

0.8% 6.8%

0.1% 5.9%

1.2% 6.2%

Producer Info

Contingent/Bonus Group Medical All Other Group Bonus/Overrides Investments Miscellaneous Total Revenues Individual Life & Health

Service Staff Info

15.1%

19.1%

20.2%

5.0% 2.9% 1.3% 0.4% 0.4%

5.8% 4.6% 1.9% 0.4% 0.2%

5.9% 6.3% 1.5% 0.4% 0.5%

Technology

Insurance Carriers

Appendix

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.7%

0.6%

0.5%

Net Revenues

98.3%

99.4%

99.5%

Expenses (as % of Net Revenues) Compensation

64.7%

58.5%

63.8%

Selling

3.2%

2.7%

3.5%

Operating

14.2%

14.5%

16.0%

Administrative Total Expenses

2.6%

0.8%

2.7%

84.6%

76.4%

86.0%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

15.4% 19.2%

23.6% 27.1% 17.0% 25.1% 28.5%

14.0% 17.5%

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

7.6%

6.6%

EBITDA 3

17.9% 21.7%

17.2% 20.7%

2014 Best Practices Study

Pro Forma EBITDA 4

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

4 EBITDA if discretionary expenses are eliminated and all owners compensated as employees

Agencies with Revenues Between $10,000,000 and $25,000,000

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