2014 Best Practices Study

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

Key Benchmarks

Profit/Loss Summary

Profile

Revenues

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Expenses Profitability

52.8% 3.5% 6.7% 1.9% 5.6% 5.9% 1.2% 1.7% 0.5% 0.8% 19.4%

59.1% 4.2% 4.0% 1.2% 6.0% 4.0% 1.4% 1.6% 0.1% 0.6% 17.7%

40.5%

Bonds

2.7%

Employee Overview

Personal Lines

11.1%

VAS - P&C

2.3% 6.4%

Producer Info

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

Service Staff Info

21.7%

8.6% 1.9% 2.7% 0.8% 1.3%

Technology

Insurance Carriers

Appendix

100.0%

100.0%

100.0%

Brokerage Commission Expense

2.4%

2.0%

3.1%

Net Revenues

97.6%

98.0%

96.9%

Expenses (as % of Net Revenues) Compensation

64.8%

58.6%

64.4%

Selling

4.2%

3.8%

4.8%

Operating

13.3%

12.0%

13.7%

Administrative Total Expenses

2.9%

0.6%

3.0%

85.2%

75.0%

85.9%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

14.8% 16.8%

25.0% 25.6% 18.5% 26.5% 27.1%

14.1% 14.8%

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

7.9%

5.2%

EBITDA 3

17.8% 19.9%

17.7% 18.4%

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 Over $25,000,000

144