2018 Agency Performance Analysis

Transcription

1 218 Agency Performance Analysis SAMPLE Performed for: Sample Client Fiscal Year End: December 31, 217 : 218 Best Practices Agencies with Revenues between $5.M and $1.M

2 TABLE OF CONTENTS Ranking of Key Operating Metrics 3 Agency Snapshot 4 Profile 5 Revenues 5 Revenue Growth 8 Organic Growth and Sales Velocity 9 Expenses 1 Pro Forma Expenses and Profitability 11 Agency Value and Shareholder Returns 12 Financial Stability and Technology 13 Productivity and Staffing 14 Producer Metrics 15 New Producer Metrics 17 Carriers 18 Definitions / Explanations 19 SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 2 If an asterisk is present, this denotes insufficient data.

3 RANKING OF KEY OPERATING METRICS EXPLANATION OF RANKINGS: The ranking below is provided to show 27 of the most important operating metrics for the typical insurance agency or brokerage. We have provided a breakdown to highlight your best metrics (Top Scores), your lowest metrics (Bottom Scores) and the remaining metrics that fall in the middle for your firm. Each item is also compared to your peer group in the column titled "Rank." For example, "1% " suggests that your results are either in the bottom 1% or fall short of all of the firms in your peer comparison group. "9%+" suggests that your results are in the top 1% of all the firms in your peer comparison group. Page 's Top Scoring Key Operating Metrics: Rank YOUR TOP SCORES Page 9 Page 8 Page 8 Page 14 Page 8 Page 13 Page 14 Sales Velocity Commercial P&C Growth (Organic) Net Revenue Growth (Organic) Pro Forma Revenue per Employee All Other Group L&H Growth (Organic) % of Receivables Aged Past 9 Days Pro Forma Spread per Employee 9%+ 9%+ 9%+ 85% 83% 83% 8% Page Page 8 Page 12 Page 8 Page 11 Page 1 Page 8 Page 11 Page 13 Page 13 Page 16 Page 8 Page 13 Page 15 Key Operating Metric: Individual L/H/F Growth (Organic) Value Creation Calculation (Rule of 2) Personal P&C Growth (Organic) Pro Forma EBITDA Margin (Profitability) Pro Forma Compensation as % of Net Revenues Group Medical Growth (Organic) Pro Forma Operating Profit as % of Net Revenues Tangible Net Worth as % of Net Revenues Receivable to Payable Ratio NUPP as % of Net Revenue Bonds/Surety Growth (Organic) Current Ratio L/H/F Producer Book of Business Rank 72% 71% 69% 55% 52% 52% 4% 35% 32% 25% 24% 24% NA Page 's Bottom Quartile Key Operating Metrics: Rank Page 15 Personal P&C Producer Book of Business NA YOUR BOTTOM SCORES Page 15 Page 15 Page 15 Page 15 Page 15 Multi line Producer Book of Business Commercial P&C Producer Book of Business New Commissions Produced per Multi line Producer New Commissions Produced per Commercial P&C Producer New Commissions Produced per L/H/F Producer NA NA NA NA NA Page 15 New Commissions Produced per Personal P&C Producer NA SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 3 If an asterisk is present, this denotes insufficient data.

4 AGENCY SNAPSHOT Revenues Regional Distribution : $7,15, : Northeast : $7,182,33 $7,182,33 $7,15, Northeast Midwest West Southeast Southwest 26.7% 2 6.7% 26.7% 2 Corporate Structure Population Density of Home Office Metropolitan Area : S Corp : More than 1,, 26.7% 24.4% 57.8% 26.7% 13.3% 8.9% C Corp S Corp 6.7% Partnership LLC Sole Proprietorship Other 35.6% Less than 5, 5, 25, 25, 1,, More than 1,, Number of Agency Locations : 1. : 2.6 SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 4 If an asterisk is present, this denotes insufficient data.

5 OWNERSHIP PROFILE Number of Shareholders Employee Stock Ownership Plans (ESOPs) : 2. Does your firm have an ESOP? If yes, what % of your firm is owned by the ESOP? No : 1. Low High What percentage of firms in your comparison group have an ESOP? 2.2% Age of Largest Shareholder Ownership of Largest Shareholder : 65. : 75.% : Low High : 14.% Low 6.9% 1 High Weighted Shareholder Age (WASA) How old is your ownership team? Is ownership concentrated among the older shareholders, or is it spread out among a wider age group? REVENUES Acquisitions % of agencies making acquisitions in the last fiscal year: 15.6% : $ annualized commissions acquired: : $577,293 SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 5 If an asterisk is present, this denotes insufficient data.

6 REVENUES Revenue by Source Property & Casualty Commercial Commissions & Fees Bonds / Surety Personal Commissions & Fees Contingent / Bonus Total P&C Life & Health / Financial Group Medical Comm & Fees All Other Group Comm & Fees Individual L/H/F Comm & Fees Bonus / Overrides Total L&H / Financial Reported Amount Pro Forma Adjustments Pro Forma Amount % of Total Revenues $5,5, $1, $5,6, 55.9% 51.1% 3.% 1,, 1,, 24.8% 21.9% 1, 1, 12.2% 8.2% $6,6, $1, $6,7, 92.9% 84.1% $25, ($5,) $2, 1.8% 9.9% 5, 5, 1.7% 3.% 2, (1,) 1, 2.7% 1.4% 5, 5,.9%.5% $55, ($5,) $4, 7.% 14.9% Investment Miscellaneous Gross Revenues 2,5 2,5 $7,155, 5 (5) $5, 3, 2, $7,15,.1% 1.5%.6% 1 Brokerage Comm Expense Net Revenues $7,155, 5, $7,15, 1.3% 99.7% 1% % of Gross Revenue 75% 5% 55.9% 51.1% 25% % 3.% 24.8% 21.9% Commercial P&C Bonds/Surety Personal Lines P&C Contingent/Bonus 12.2% 8.2% 9.9% 1.8% 1.7% 3.% 2.7% 1.4%.9%.5%.1% 1.1% Group Medical All Other Group Individual L/H/F L/H/F Bonus/Overrides Investment/Misc All Other Group L/H/F Revenue This is a breakdown of commissions and fees listed under "All Other Group Life, Health, and Financial" revenues. Agency All Other Group L/H/F % of Revenues: 1.7% 3.% Life Disability Dental & Vision Retirement/Pension Worksite/Voluntary/Supplement Long Term Care Employee Benefits TPA All Other Total 's All Other Group L/H/F Revenue $7,5 5, 6,5 4, 2, 25, $5, 's % of All Other Group L/H/F Revenue 15.% 1 13.% 8.% 4.% 5 1 's % of All Other Group L/H/F Revenue 22.% 17.% 31.4% 5.% 8.2% 2.9% 2.5% 11.1% 1 SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 6 If an asterisk is present, this denotes insufficient data.

7 REVENUES Account Concentration Largest Single Account (% of Net Revenue) Ten Largest Accounts (% of Net Revenue) : 5.% : 3 :.4% 14.9% 3.3% Low High : 2.4% Low 14.3% 37.3% High Account Size Commercial P&C as measured by commissions and fees Greater than $5K Between $25K and $5K Between $1K and $25K Between $5K and $1K Less than $5K Group L/H/F as measured by number of lives % of Book 2.1% 23.2% % of Book 33.3% 33.% Over # of Accounts # of Accounts Total Revenue $878,255 $1,34,818 Total Revenue $675,19 $52,955 Lives Revenue per Account $84,15 $94,81 Revenue per Account $46,94 $45,8 % of Book 14.% 13.6% % of Book 21.8% 21.3% # of Accounts # of Accounts Total Revenue $599,918 $591,289 Lives Total Revenue $261,385 $276,475 Revenue per Account $34,246 $32,93 Revenue per Account $16,36 $17,211 % of Book 2.2% 19.1% % of Book 44.8% 45.5% # of Accounts Under # of Accounts Total Revenue $797,48 $778,383 5 Lives Total Revenue $435,716 $463,231 Revenue per Account $15,15 $15,347 Revenue per Account $2,944 $2,966 % of Book # of Accounts Total Revenue Revenue per Account % of Book # of Accounts Total Revenue Revenue per Account 13.6% 72.2 $53,729 $7, 32.1% 1,921.8 $1,15,584 $822 Comparison Grp 12.9% 72. $493,961 $6, % 1,563.7 $1,113,426 $976 Agency Specialization Comparison Grp Note that s are based on the average for each individual line item and therefore may not validate when attempting to replicate calculations. Agency Total Specialty Revenue $2,, as % Net Revenue 28.6% % of Agencies with any Specialty Revenue Total Specialty Revenue 1 % Net Revenue % $2,954, % 1 Only for those firms who reported speciality revenues Agriculture % of Comparison Grp with Specialty 11.1% 's Revenues from this Specialty 's Rev from Specialty as % of NR For firms that specialize in this, what % of NR is from this specialty? 4.9% Construction 31.1% 31.9% Energy 6.7% 11.1% Government/Municipality 13.3% 3.9% Healthcare 13.3% 6.1% Hospitality 17.8% 5.3% Manufacturing 22.2% 11.8% Non profits 17.8% 5.3% Real Estate 22.2% 13.8% Schools/Education 17.8% 2.4% Transportation 17.8% 6.4% Other TOTAL 42.2% $2,, $2,, 28.6% 28.6% 1.6% SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 7 If an asterisk is present, this denotes insufficient data.

8 REVENUE GROWTH Total Commissions and Fees Renewal Business New Business Acquired Business Total Growth Organic Growth Brokerage Commission Expense Net Commissions and Fees Total Growth Organic Growth P&C Contingent Income L/H/F Bonus Income Investment Income Miscellaneous Income NET REVENUE TOTAL GROWTH NET REV ORGANIC GROWTH Revenue Growth by Source Amount $5,42,17 1,171, , , , , ,878 14,21 1,647 $684,65 $684,65 % Prior Year 86.6% 2.1% 6.8% 6.8% 3.% 3.% 52.2% 33.4% 38.3% 1.7% 1.7% Median 9.5% 11.5% 3.6% 3.3% 5.% 3.6% 3.3% 5.6% 1.9% 2.6% 9.7% 3.5% 3.5% 99.9% 17.5% 1.8% 12.5% 12.2% 3.9% 12.6% 12.1% 26.6% 32.5% 34.7% 19.1% 13.1% 12.8% Growth in Commissions and Fees by Line of Business Commercial P&C Renewal Business New Business Acquired Business TOTAL GROWTH ORGANIC GROWTH Amount $3,5, 8, $375, $375, % Prior Year 85.% 15.% 1 1 Median 93.1% 1.6% 1.3% 17.4% 2.% 4.5% 5.6% 12.7% 11.7% Bonds/Surety Renewal Business New Business Acquired Business TOTAL GROWTH ORGANIC GROWTH $ $ $ % 15.2% 13.2% 84.1%.3%.2% 22.2%.2% 23.9% Personal P&C Renewal Business New Business Acquired Business TOTAL GROWTH ORGANIC GROWTH $1,5, 18, $25, $25, % 1.4% 92.2% 19.4% 8.9% 18.% 2.3% 3.% 13.1% 3.1% 12.1% Group Medical Renewal Business New Business Acquired Business TOTAL GROWTH ORGANIC GROWTH $15, 25, ($1,) ($1,) 75.% 15.% 5.% 5.% 86.4% 18.% 1.2% 4.2%.8% 2.5% 29.7% 2.5% 29.7% All Other Group Renewal Business New Business Acquired Business TOTAL GROWTH ORGANIC GROWTH $5, 5, $25, $25, % 25.% 71.4% 123.8% 5.3% 4.3%.9%.8% 3.8%.8% 32.2% Individual L/H/F Renewal Business New Business Acquired Business TOTAL GROWTH ORGANIC GROWTH $8, 95, ($15,) ($15,) % 5.% 39.7% 17.3% 13.8% 13.8% 89.5% 118.6%.3% 1.4% 1.4% Note: The Median is the mid point in a list of data it is different than the Mean or. Median data cannot be added / subtracted to arrive at related Medians. Each data point presented above (Renewal Business %, New Business %, Total Growth %, Organic Growth %, etc.) must be viewed as a discrete Median data point. SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 8 If an asterisk is present, this denotes insufficient data.

9 ORGANIC GROWTH AND SALES VELOCITY Organic Growth in Net Commissions and Fees Total Agency and by Line of Business 14.% 12.% 12.1% 25.% % 1 8.% 15.% 11.3% 12.1% 6.% 4.% 2.% 3.% 3.3% Median 1 5.% 8.% 5.2% 3.1% 1.4% 1.%.4% Commercial P&C Personal P&C Group L/H/F Median Note: Commercial P&C includes Bonds/Surety; Group L/H/F includes Group Medical, All Other Group, and Individual L/H/F. Sales Velocity Total Agency What is the agency's new business contribution to organic growth? Organic growth is the result of a combination of retention, pricing, and new business. Sales velocity, on the other hand, isolates the component of organic growth that an agency can most influence new business. Is your sales engine strong enough to produce enough new business to hit your growth rates even after the effects of customer attrition and pricing changes? SALES VELOCITY = This year's new business Last year's net commissions and fees Top quartile 17.5% Comparison Group 12.3% 12.% 2.% 4.% 6.% 8.% 1 12.% 14.% 16.% 18.% 2 Age Banding of Sales Velocity How old are those producing your firm's new business? Is your new business highly concentrated among a single age band or is it spread out across producers of all ages? 2.8% 4.4% 2.4% 2.7% 2.% 4.% 6.% 8.% 1 12.% 14.% 16.% 18.% 2 Up to age 35 Age Age Over age 55 2.% 2.% 2.% 2.% 2.% 4.% 6.% 8.% 1 12.% 14.% 16.% 18.% 2 Up to age 35 Age Age Over age 55 SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 9 If an asterisk is present, this denotes insufficient data.

10 Compensation Payroll Employees "Non employees" 199 Producers and outsourced labor Total Payroll Benefits Payroll Taxes Retirement Insurance Other Total Benefits Total Compensation Reported Amount $3,5, 75, 4,25, Pro Forma Adjustments EXPENSES Pro Forma Amount $3,5, 75, 2, 2, 6, 6, 2, 2, 4, 4, 5, 5, 4,75, 4,75, Percent of Pro Forma Net Revenues 42.2% 11.9% 4,25, 54.1% 3.5% 1.% 3.1%.6% 8.2% 62.2% Pro Forma 49.9% 2.6% 52.5% 3.2% 1.5% 3.2%.2% 8.1% 6.6% Top Quartile % 43.5% 2.5%.4% 2.% 5.9% 5.7% Selling Travel and Ent./Conventions 8, 8, 1.4% 1.3%.5% Automobile Expense 6, 6,.9%.7%.2% Advertising/Promotions 1, 1, 1.5% 1.5%.4% Total Selling 24, 24, 3.8% 3.5% 1.9% Operating Occupancy Expenses 2 32, 32, 4.8% 4.1% 2.7% Office Equipment Expenses 2, 2,.3%.4%.1% IT Expenses 15, 15, 2.4% 2.6% 1.4% Telephone 6, 6,.9%.7%.3% Postage 1, 1,.2%.3%.1% Supplies/Printing 3, 3,.5%.6%.3% Dues/Subscriptions/Contributions 3, 3,.5%.8%.3% Taxes/Licenses 2, 2,.3%.3%.1% Insurance 7, 7, 1.% 1.3%.7% Professional Fees 8, 8, 1.2% 1.1%.2% Bad Debts 1,5 1,5.1% Outside Services 15, 15, 1.9% 1.%.1% Education/Training 1, 1,.1%.4%.1% Miscellaneous.2% Total Operating 951,5 951,5 14.% 13.8% 9.7% Administrative Depreciation Amortization of Intangibles Officer Life 25, 5, (5,) 25,.4%.5% Interest Other Total Administrative 25, 1, (25,) (75,) 25,.4%.5% TOTAL EXPENSES $6,41,5 (75,) $5,966,5 8.5% 78.4% 66.9% PRE TAX PROFIT/LOSS EBITDA 3 $1,113,5 $935,513 $1,138,5 19.5% 21.6% $1,33, % 22.1% 33.1% 33.8% 1 Top quartile for these metrics are those with the lowest expense, which does not necessarily indicate the best performance in all cases. 2 For firms that own their building and reported a much lower than peer expense load, we have normalized their occupancy expense. 3 Pro Forma EBITDA excludes all administrative expenses (depreciation, amortization of intangibles, officer life, interest and other). SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 1 If an asterisk is present, this denotes insufficient data.

11 PRO FORMA EXPENSES AND PROFITABILITY % 6.6% 5 5.7% % 13.8% 9.7% 3.8% 3.5% 1.9%.4%.5% Compensation Expenses Selling Expenses Operating Expenses Administrative Expenses Profitability Pre Tax Profit Amount $1,113,5 Percent of Net Revenues 12.9% 17.1% 31.3% Pro Forma Pre Tax Profit $1,138,5 19.5% 21.6% 33.1% Operating Profit 1 $51,719.8% 9.1% 23.8% Pro Forma Operating Profit $421, % 13.4% 24.% EBITDA $935, % 19.5% 33.% Pro Forma EBITDA 2 $1,33, % 22.1% 33.8% 1 Operating profit is pre tax profit less contingent income and less bonus/override income. 2 Pro Forma EBITDA excludes all administrative expenses (depreciation, amortization of intangibles, officer life, interest and other). 4% 35% 33.1% 33.8% 3% 25% 2% 19.5% 21.6% 24.% 19.9% 22.1% Group 15% 13.4% 1% 7.4% 5% % Pro Forma Pre Tax Profit Pro Forma Operating Pre Tax Profit Pro Forma EBITDA SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 11 If an asterisk is present, this denotes insufficient data.

12 AGENCY VALUE AND SHAREHOLDER RETURNS The Rule of 2 Agency value is driven by organic growth and profitability. The "Rule of 2" provides a quick means of calculating whether or not an agency is creating significant returns for its shareholders. It is the sum of 1/2 an agency's pro forma EBITDA margin plus its net organic commissions and fees growth rate. A score of 2 or more indicates excellent performance. Rule of 2 Results 3. Rule of : : 3.1 Low High Rule of 2 results in the Best Practices Study The graph below provides a look at the Rule of 2 results for agencies included in the Best Practices Study. The solid black line represents all combinations of organic growth and EBITDA margin that result in a Rule of 2 score of 2. The scatter plot shows the wide range of organic growth and profitability results in the study. NOTE: Firms whose results qualify them as statistical outliers have been set to have a minimum growth of 1% and a maximum of 2%, or a minimum profitability of % or maximum of 5%. They appear on the graph line bordering the chart instead of plotting their actual results % 4 Profitability (EBITDA Margin) 35.% 3 25.% 2 15.% 1 5.% 1 5.% 5.% 1 15.% 2 Organic Growth Agencies with revenues less than $1.25M Agencies with revenues between $1.25 and $2.5M Agencies with revenues between $2.5 and $5.M Agencies with revenues between $5. and $1.M Agencies with revenues between $1. and $25.M Agencies with revenues greater than $25.M Linear (Rule of 2) SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 12 If an asterisk is present, this denotes insufficient data.

13 FINANCIAL STABILITY AND TECHNOLOGY Balance Sheet Metrics Amount Percent Working Capital $11, Current Ratio 1.4:1 1.78:1 3.1:1 Trust Ratio 1.7:1 2.12:1 3.58:1 Stockholders Equity $3, Tangible Net Worth ($) $3, Tangible Net Worth (% of Net Rev) 4.5% 12.6% 28.4% Receivables/Payable Ratio 45.% 39.2% 1.6% Accounts Receivables: % Receivables Aged 61 9 Days $4,.4% 11.1% 3.% % Receivables Aged Past 9 Days $2, 1.7% 7.5% 13.4% % of P&C Revenues Agency Billed 3 3.9% N/A % of P&C Revenues Direct Billed % N/A Technology Top 5 Agency Management Systems Used in Home Office : EPIC : Number of IT Employees Note: Includes regularly outsourced IT support staff : % % 34.9% :.7 IT Payroll as a % of Pro Forma Net Revenue 25.% 23.3% : 1.2% 2 15.% :.6% 1 5.% 4.7% EPIC AMS36 TAM Sagitta Other IT Expenses (non compensation) as a % of Pro Forma Net Revenue Note: Excludes hardware depreciation and software amortization Note that only the Top 5 systems are shown; additional participant choices not reflected. : 2.4% : 2.6% SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 13 If an asterisk is present, this denotes insufficient data.

14 PRODUCTIVITY AND STAFFING Productivity Total Number of FTE Employees: : $25, $22, $229,35 $2, $175,966 $15, $14, $1, $15,197 $81,825 $8, $7,769 $15,181 $5, $ Pro Forma Revenue per Employee Pro Forma Compensation per Employee Pro Forma Spread per Employee Staffing Administrative Support Staff: HR Employees: Number of Employees :. Payroll as a % of Net Revenue Accounting Employees: : Number of Employees % Payroll as a % of Net Revenue Marketing Employees: Number of Employees : 1..7% Payroll as a % of Net Revenue Number of Employees :.7.8% Payroll as a % of Net Revenue Number of Employees : % Payroll as a % of Net Revenue : Number of Employees % Payroll as a % of Net Revenue Service and Sales Support Staff: LOB = Line of Business excluding contingent/override income PROPERTY & CASUALTY Commercial Personal P&C Value Added Service Staff Number Avg. LOB revenue per staff $6, $3, $1,, Avg. LOB Payroll as a % Payroll as a % of revenue per of LOB LOB revenue Number staff revenue 12.4% 11.4 $369, % 24.9% 6.9 $217, % 5.1% 1.5 $2,485, % LIFE & HEALTH / FINANCIAL Life & Health / Financial L&H/F Value Added Service Staff Avg. LOB Avg. LOB Number revenue per staff Payroll as a % of LOB revenue Number revenue per staff 2. $25, 31.6% 3. $269, $9, 4.3%.1 $45,43 Payroll as a % of LOB revenue 17.% 4.2% SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 14 If an asterisk is present, this denotes insufficient data.

15 PRODUCER METRICS Validated Producers Commercial P&C Life/Health/Financial Top 25% Top 25% Number of Validated Producers New Commissions Book Serviced Compensation Avg. Comp. as % of Book 5. $5, $5, $15, 31.% 5.3 $67,161 $573,68 $195, % $117,268 $857, $1, $5, $15, 32.% 1.1 $81,812 $58,762 $169,4 34.8% $157,4 $966,752 Personal P&C Multi line Top 25% Top 25% Number of Validated Producers New Commissions Book Serviced Compensation Avg. Comp. as % of Book 1. $5, $3, $85, 25.% 1. $59,24 $277,412 $1, % $12,96 $398,425. $ $ $ 1.4 $69,45 $549,394 $153, % $127,613 $939,167 Weighted Producer Age (WAPA) WAPA and % Total Book by Producer Age both include Validated and Unvalidated Producers 35% 3% 25% 2% 15% 1% 5% % % Total Book by Producer Age 32.1% 25.% 25.% 27.9% 25.% 26.4% 25.% 13.5% Up to age 35 Age Age Over age 55 Agency Commission Structure New Rate Renewal Rate Minimum 1 Commercial P&C Bonds/Surety Small Commercial P&C Personal P&C Group Medical Other Group L/H/F Individual L/H/F % 25.% 25.% 25.% 25.% 25.% 25.% $ $ $ $ $ $ $ 1 The minimum account size on which commissions are paid. New Rate 42.4% 42.6% 41.8% 44.% 42.5% 42.7% 45.2% Renewal Rate 29.9% 3.6% 28.4% 19.3% 29.8% 28.6% 25.4% Minimum $1,148 $477 $526 $183 $476 $421 $272 Additional Benefits Paid Travel & Entertainment Health Benefits Automobile : Yes Yes No Percentage of agencies providing this benefit to producers: 84.4% 88.9% 48.9% SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 15 If an asterisk is present, this denotes insufficient data.

16 PRODUCER METRICS Results Unvalidated Producers Number of Unvalidated Producers New Commissions Book Serviced Estimated Annual Compensation 1. $4, $3, $13, 2.5 $26,752 $56,177 $72,246 Note: The unvalidated producer metrics above are only for firms with at least one unvalidated producer. 5. $68,171 $142,25 Actual Books of Business (in Total): Annualized Payroll of Unvalid. Producers: "Earned" Compensation (based on Book): Net Investment in Unvalidated Producers: Shown as % of Pro Forma Net Revenues: Calculating the NUPP NUPP Net Investment in Unvalidated Producer Pay Expressed as a percentage of net revenue, the NUPP is the difference between what an agency pays its unvalidated producer(s) and what the producer(s) would earn under the agency's normal commission schedule. A NUPP of 1.5% is considered a healthy level of investment. NOTE: If your firm does not have unvalidated producers or if you did not provide information on your unvalidated producers, the metrics below will show zeroes. $3, $13, $12,457 $27,543.4% : : NUPP Results Low.4% 1.5% 6.3% High NUPP 3.3% 1.5%.4%.5% 1.% 1.5% 2.% 2.5% 3.% 3.5% 4.% Effective NUPP An "Effective NUPP" is your firm's NUPP times your firm's producer success rate, which is the percentage of your producers over the past five years that have met their production goals and are considered successful. An Effective NUPP of.75% 1.25% is desirable. Calculating 's Effective NUPP: 's Effective NUPP:.4% NUPP 1 Producer Success Rate.4% Effective NUPP 1.5% NUPP 63.% Producer Success Rate.9% Effective NUPP 1.9%.9%.4%.2%.4%.6%.8% 1.% 1.2% 1.4% 1.6% 1.8% 2.% SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 16 If an asterisk is present, this denotes insufficient data.

17 NEW PRODUCER METRICS New Producer Hiring Results Agencies that Hired New Producers Last Year No 64.4% N/A # of New Producers Hired Last Year annualized wages per producer hired $ $71,533 $126,281 # of Producers Hired over the past five years Producer Success Rate over past 5 years 1 63.% 95.7% Recruiting & Development Techniques % Using in Recruiting: Targeted college recruiting efforts/programs No 39.5% Use of outside recruiters Yes 53.5% Use of social media as a recruiting tool Yes 67.4% Assessment: Testing (sales, personality, intelligence capabilities, call reluctance, etc.) No 93.% Development: Internship Yes 51.2% Mentorship Yes 86.% Technical training Internal No 1 External Yes 9.7% Sales training Internal Yes 95.3% External Yes 95.3% Selling structure: Required specialization No 32.6% Team selling Yes 76.7% Assigned accounts No 58.1% Where New Producers Were Found UNDER age 35 WITHIN insurance industry 25.% UNDER age 35 WITHIN insurance industry 21.7% OVER age 35 WITHIN insurance industry 25.% OVER age 35 WITHIN insurance industry 31.5% UNDER age 35 OUTSIDE insurance industry 25.% UNDER age 35 OUTSIDE insurance industry 33.2% OVER age 35 OUTSIDE insurance industry 25.% OVER age 35 OUTSIDE insurance industry 13.6% SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 17 If an asterisk is present, this denotes insufficient data.

18 CARRIERS Carrier Representation Commercial Lines Personal Lines CL Regional PL Regional CL National PL National Life / Health / Financial Commission Income from Top Carriers Amount Percent of Net Revenues Percent of Net Revenues Top P&C Carrier Top 3 P&C Carriers $1,5, 19.6% $2,5, 35.5% 14.8% 28.4% Top L/H/F Carrier $1, 1.6% 4.9% Top 3 L/H/F Carriers $2, 2.6% 8.6% 's Top P&C Carrier Breakdown: 's Top P&C Carrier Breakdown: Personal 33.% Personal 34.9% Small Commercial 33.% Small Commercial 19.9% Mid/Large Commercial 33.% Mid/Large Commercial 45.3% 's Top 3 P&C Carrier Breakdown: 's Top 3 P&C Carriers Breakdown: Personal 33.% Personal 35.1% Small Commercial 33.% Small Commercial 17.8% Mid/Large Commercial 33.% Mid/Large Commercial 47.% Service Center Usage Commercial Lines Commission Personal Lines Commission : Amount: % of Line of Business: $15,.5% : Amount: % of Line of Business: $75, 5.% : 1.1% : 29.2% SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 18 If an asterisk is present, this denotes insufficient data.

19 Definitions / Explanations Acquired Business Growth: Revenues that were puchased (i.e., the acquisition of another agency or book of business). This reflects acquired revenues in the first year they are booked only; the percentage indicates the significance of acquisition activity to the agency's revenues. Brokerage Commission Expense: Commissions paid to other agencies or brokers. In house producers compensated on a 199 are included in the compensation section. : The Best Practices firms in the same revenue category or the firms in the same affinity group against which your agency's results are being compared. EBITDA: An indicator of a company's financial performance and computes earnings from core business operations, without including the effects of capital structure, tax rates and depreciation policies. It includes all revenues and expenses except interest, taxes, depreciation and amortization. Net Commissions and Fees Growth: Excludes the impact of brokerage commission expenses; net revenue growth also includes the impact of growth in other revenue income, including contingents and bonuses. New Business Growth: New revenues as a percent of prior year's total revenues for the line of business. This reflects sales to new clients, as well as sales of new products and services to existing clients. Operating Pre Tax Profit: Provides a measure of profitability from controllable sources by eliminating contingents and bonuses. Organic Growth: Measured as a percent of prior year revenues; excludes acquisition revenues and divestitures. Pre Tax Profit: Provides a high level measure of profitability and includes all revenues and expenses with the exception of taxes. Pro Forma EBITDA: Excludes all administrative expenses (depreciation, amortization of intangibles, officer life, interest and other) as well as discretionary and non recurring revenues and expenses. Also adjusts compensation to owners to a level that reflects a comparable employee who would not receive the additional compensation/benefits associated with ownership. Pro Forma Operating Pre Tax Profit: Provides a measure of profitability from controllable sources by eliminating contingents and bonuses as well as eliminating discretionary and non recurring revenues and expenses and adjusting compensation to owners to a level that reflects a comparable employee who would not receive the additional compensation/benefits associated with ownership. Pro Forma Pre Tax Profit: Includes all revenues and expenses with the exception of taxes but eliminates discretionary and non recurring revenues and expenses and adjusts compensation to owners to a level that reflects a comparable employee who would not receive the additional compensation/benefits associated with ownership. Producer Classification: Producers are classified based on the percentage of their book that is in each individual line. If a producer has more than 7% of his book in any one of the three lines (commercial, personal, life & health), they're classified as that type of producer. Otherwise they are classified as a multiline producer. Renewal Business Growth: Renewal revenues as a percent of prior year's total revenues for the line of business. This is impacted by attrition (the loss or retention of existing accounts) and by changes in premium and commission levels; the higher the percentage, the more favorable the results. Rule of 2 Score: A quick means of benchmarking an agency's shareholder returns. The Rule of 2 is calculated by adding half of an agency's EBITDA margin to its organic revenue growth rate. An outcome of 2 or higher means an agency is likely generating, through profit distributions and / or share price appreciation, a shareholder return of approximately 15% 17%, which is a typical agency / brokerage return under normal market conditions. : The average results achieved by the Top 25% of the firms in the group for that particular factor or line item. The firms comprising this group will be different for each factor or line item. Total Growth: Measured as a percent of prior year revenues; includes acquisition revenues. WAPA (Weighted Producer Age): A metric designed to assess the relative age of an agency's production force. WAPA is calculated using the sum of the product of the agency's producers' ages and the percentage of the agency's "produced" business handled by each. House business is excluded from the WAPA calculation. As a guideline, a WAPA of less than 5 is considered relatively low. WASA (Weighted Shareholder Age): A metric designed to assess the relative age of an agency's ownership team. WASA is calculated using the sum of the product of the agency's owners' ages and their ownership percentages. As a guideline, a WASA below 5 is considered relatively low, with over 55 considered relatively high. SAMPLE REPORT FOR DEMONSTRATION PURPOSES ONLY 19 If an asterisk is present, this denotes insufficient data.