2015 Best Practices Study

Analysis of Agencies with Revenues Between $1,250,000 and $2,500,000

Key Benchmarks Profile

Profit/Loss Summary

Revenues Expenses Profitability Employee Overview Producer Info Service Staff Info Technology Insurance Carriers Appendix

Average

Top 25% Profit Top 25% Growth

Revenues (as % of Gross Revenue) Commercial Lines

46.7%

43.2%

38.3%

Bonds

3.3%

5.9%

0.4%

Personal Lines

30.4%

25.6%

38.2%

VAS - P&C

0.1% 9.7% 3.8% 0.9% 4.2% 0.5% 0.1% 0.5%

0.1% 7.1% 9.0% 1.4% 5.8% 2.0% 0.1% 0.0%

0.1%

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

10.0%

1.8% 1.6% 9.0% 0.0% 0.2% 0.4%

100.0%

100.0%

100.0%

Brokerage Commission Expense

0.4%

1.3%

0.0%

NET REVENUES

99.6%

98.7%

100.0%

Expenses (as % of Net Revenues) Compensation

56.8%

50.3%

59.0%

Selling

4.5%

4.2%

6.2%

Operating

16.8%

14.0%

20.2%

Administrative

2.7%

0.5%

1.3%

TOTAL EXPENSES

80.8%

69.0%

86.7%

Profit/Loss (as % of Net Revenues)

Average

Top 25% Profit Top 25% Growth

Pre-Tax Profit

19.2% 23.4%

31.0% 37.9% 23.7% 31.7% 38.7%

13.3% 17.3%

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

9.7%

3.2%

EBITDA 3

22.5% 26.9%

15.7% 19.8%

2015 Best Practices Study

Pro Forma EBITDA 4

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

2 Pre-tax Profit 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 $1,250,000 and $2,500,000

40

Note: See page 163 for an explanation of column headings