2014 Best Practices Study

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

Key Benchmarks

Profit/Loss Summary

Profile

Revenues

Average

+25% Profit

+25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

Expenses Profitability

51.5%

45.2%

48.7%

Bonds

1.4%

0.3%

0.6%

Employee Overview

Personal Lines

24.1%

28.4%

21.7%

VAS - P&C

1.7% 7.8% 8.4% 2.2% 1.2% 0.8% 0.2% 0.7%

5.5% 9.0% 7.9% 1.9% 1.1% 0.2% 0.1% 0.4%

5.6% 9.1% 8.9% 1.6% 1.6% 1.0% 0.1% 1.0%

Producer Info

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

Service Staff Info

Technology

Insurance Carriers

Appendix

100.0%

100.0%

100.0%

Brokerage Commission Expense

1.0%

0.0%

0.1%

Net Revenues

99.0%

100.0%

99.9%

Expenses (as % of Net Revenues) Compensation

61.7%

56.9%

58.4%

Selling

3.2%

2.7%

3.0%

Operating

14.5%

12.5%

12.3%

Administrative Total Expenses

2.6%

1.9%

3.5%

82.0%

74.0%

77.2%

Profit/Loss (as % of Net Revenues)

Average

+25% Profit

+25% Growth

Pre-Tax Profit

18.0% 21.8% 10.1% 21.2% 25.1%

26.0% 34.9% 18.3% 28.2% 37.2%

22.8% 23.8% 14.0% 26.9% 27.9%

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

EBITDA 3

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 $5,000,000 and $10,000,000

92