2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

John M. WeplerPresident

Marsh, Berry & Company, Inc.440-392-6572

John@MarshBerry.comwww.MarshBerry.com

PerpetuationWhat is Your Plan?

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Information Services

Benchmarking ServicesPerspectives for High Performance (PHP) Sales Portal – Pipeline / Service TimelineConfidential Employee Morale IndexingPerpetuation PreparednessOperational AssessmentSales Management Benchmark Report

MarshBerry.comPerformance CalculatorsForms & DocumentsPosition DescriptionsDiscussion GroupsResearch StudiesMarket DataOn-Line Value EstimatorPublished Articles

Monthly PublicationsThe MarshBerry Letter

a. Market & Financialb. Agency Compensationc. Agency Operationsd. Surveys

For The Record (Statistical Analysis)

Dealmaker’s Dialogue (M&A Advisory)

Public Speaking EngagementsKeynote / State of the IndustryTopical education

Carrier ServicesDistribution System ManagementField Personnel Training and DevelopmentAgency Management Symposiums

Sales Management Cultural Mapping and AlignmentSales Person Goal SettingSales Portal – Pipeline / Service TimelineAccountability / Compensation DesignProducer and Sales Manager TrainingDifferentiation Design and Execution

Business Planning Strategic Business PlanningExecution / Action Plan ManagementStrategic Options Analysis

Agency ValuationAgency Fair Market ValuationESOP Valuations by Certified AppraisersValuation Assessment

Perpetuation PlansPerpetuation Plan DesignPlan Execution ManagementTransfer Strategies (Stock / Leadership /

Books-of-Business)

Financial ConsultingInternal Financial Controls Compensation ConsultingValue Enhancement PlanningContingent/Supplemental Plan Mgmt.

Operational ConsultingStaff Workload / Comp. ManagementWorkflow and ProceduresE&O Audit, Policies and ProceduresE&O Market Access

RecruitingPosition profile, search, screen, hireCompensation development planTechnical and sales training - year one

Peer Networks

Agency Peak Performance EXchange (APPEX)

Over 115 AgenciesOver $1.1 Billion Revenue

Bank Agency NetworK (BANK)Over 25 BanksOver $1.0 Billion Revenue

Total Agency Sales Culture (TASC) Network

Over 35 AgenciesOver $1.1 Billion RevenueNation’s leading organic growth agenciesEnhanced new business production and

retention strategies

Royal Sun Alliance (RSA) Summit Brokers Improvement Network

Canadian agencies affiliated with Royal & Sun Alliance Insurance Company

Standard Partner ServicesState of the Industry ResearchCEO Peer Exchange / NetworkingSemi-annual ConferencesSemi-annual ConsultationRegimented Benchmarking ServicesMarshBerry.comThe MarshBerry Letter and other Monthly

PublicationsPriority Consulting OpportunitiesExclusive ProgramsDistance Learning Groups (DLGs)

Management Consulting

StrategyAcquisition PlanningDeal Return ModelingStrategic Options AnalysisAlternative Buyer Comparison

PreparationSale Preparation Management Offering Memorandum DevelopmentStrategic Pitch Book DesignCandidate Profile Creation

RepresentationBuy Side Representation

(including Search and Screen)Sell Side RepresentationLetter of Intent / NegotiationCreative Deal Structure Alternatives

AnalyticsAgency Fair Market ValuationMarket Comparables / BenchmarkingAfter-Tax Return Optimization IRR, ROI and EPS Analysis

ExecutionDiagnostic Due DiligenceConfirmatory Due DiligenceIntangible Asset Allocation – GAAP Rep.Fairness OpinionDefinitive Agreement (Best Terms /

Conditions)

Post-Deal ManagementPost-Closing IntegrationGoodwill Impairment TestingPeer to Peer CEO ExchangeEarn-Out Maximization Consultation

M&A Advisory

MarshBerry Solutions

2

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network SummitMerger & Acquisition

Advisory

#1 Insurance Industry M&A Advisory Firm

• MarshBerry is a buy-side and sell-side M&A Advisor

• Closed 29% of total advised deal flow since 1999

• 287 M&A Transactions with the Top 100 Brokers

• 163 Bank Insurance M&A transactions

• 690 total M&A transactions closed

• Ranked #1 by SNL for each of the past 15 years

#1 Insurance Management Consulting Firm

MarshBerry is a consultant to 54 of the Top 100 Brokers and

over 900 of the nation’s leading insurance agencies, brokerage

firms and financial institutions in insurance.

• Valuation • Sales Management

• Perpetuation • Producer Recruiting

• Strategic Planning • Compensation Consulting

Peer ExchangeNetworks

#1 Insurance Industry Peer Networks

MarshBerry facilitates APPEX, BANK, TASC and RSA, which are

CEO peer-to-peer exchange groups committed to driving organic

growth and value.

• 180 insurance agencies and brokerage firms

• $30 B in aggregate premium

• $2.5 B in aggregate revenue

#1 Insurance Industry Information Resource

MarshBerry maintains proprietary benchmark statistics on

insurance agencies and brokerage firms across the United

States and Canada.

• 1,000+ insurance agencies and brokerage firms

• $50 B in aggregate premium

• $4 B in aggregate revenue

InformationServices

MarshBerry Market Position

3

ManagementConsulting

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Spring 2010 TASC Network Summit

4

Perpetuation Defined1. Plan for long-term sustainability

2. Continuous process with no beginning or end

3. A continual series of activities and transactions, not an event

4. Supported by a formal written plan and a buy-sell agreement

5. Plan: “People, Commitments, Value, Cash flow & Funding”

6. Paramount : Maximization of after-tax value for Sellers and Buyers

7. Catastrophic considerations: Death, Disability or Termination

8. Ordinary course of business considerations: Retirement

9. Supported by feasibility analysis updated annually

10. Feasibility Analysis: current/future value, debt capacity and cash flow

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Spring 2010 TASC Network Summit

5

Why Bother?

1. Largest asset in estate

2. Protect value

3. Enhance value (irrespective of internal or external)

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

6

The Basics

1. Cash Flow (Must remain positive) =

Net Income + Non-Cash Expenses – CPLTD

2. Debt Coverage Ratio (Must be greater than 1.0) =

Net Income + Non-Cash Expenses+ Interest ExpenseAnnual Principal and Interest Payments

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

7

The Easy PartThe Structure

1. Not Tax Deductiblea) Stock Redemption

b) Personal Buyout

2. Tax Deductiblea) ESOP

b) Compensation (Deferred Compensation / Consulting Agreements)

3. Freea) Gifting

b) Stock Bonuses

4. Capital Infusiona) Stock Options

b) Private Equity

Detailed options available upon request

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Approximately 77% of Companies

will NOT Perpetuate

No Discipline has been executed to :1. Reverse Perception and Embrace Reality

2. Reinvest In the Staff to offset Aging

3. Relentless focus on Organic Growth

4. Relentless focus to Operate at Pro Forma

5. Discipline to Retain Earnings

6. Relinquish stock gradually

7. Reduce Seller Risk

The Hard Part

8

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1. Continuity of cash flow?

2. Continuity of diversified talent?

3. Continuity of adequate capital?

Without Discipline Will There Be?

Shift Control AND Retain Risk (internal)

VS.

Shift Control AND Shift Risk (external)

Without Continuity Will Owners:

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

10

Will You Be Able to Perpetuate?

Take a Close look in the Mirror . . . .

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

The Problem with Selling Shareholders:

11

1. Not comfortable with the people component of perpetuationa. Have not adequately reinvested over timeb. Shortage of high performers that are also risk takers c. Next generation has not operated at best practices growth and profitability

2. Not comfortable or capable of funding the purchasea. Cannot afford or are not willing to reduce compensation during note paymentb. Cannot afford or are not willing to hold the note and transfer controlc. Need lump sum purchase price versus selling over time

3. Want external value & risk transfer vs. internal value & retention of riska. Not willing to operate at pro forma to enable debt serviceb. Not willing to sell at discount to external valuec. Try to retain control while desiring next generation to accept debt

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

12

1. Have little personal savings and inadequate collateral

2. Not willing to sign note unless profitability supports debt service

3. Not willing to sign and collateralize note without control

4. Not accustomed to operating in a leveraged environment

5. Want sweat equity versus purchase

6. Not willing to accept more responsibility with deferred reward

7. Will not save for perpetuation (spend more than w2)

8. Need to become brought into ownership over time

The Problem with Buying Shareholders:

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Perception vs. Reality

13

1. Next generation deserves ownership due to past performance

2. Seller does not have to take a cut in pay or perks to get fair value

3. Seller can get external price in an internal transaction

4. Seller can keep control until completely bought out

1. Next generation must pay for ownership

2. Seller’s need to transition responsibility and reduce pay to help cash flow debt payments

3. External buyers often will accept deficit cash flow that breaks even on a cumulative basis in 7 years

4. Internal Buyers will not accept leverage and pledge collateral without the ability to make decisions

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Perception vs. Reality

14

1. Perpetuation can occur without generating a significant amount of cash flow

2. Internal perpetuation pays you with your money and not in external sale

3. You can sell at any time for top dollar

1. An agency must operate at its pro forma to cash flow an internal transaction

2. Both use seller money to cash flow the purchase; the difference is risk transfer

3. If the agency is dependent on shareholders, value declines with an increase in shareholder age.

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

15

Execute PPOG

Control the future

Drive value

Willing Unwilling

Able

Unable

Divest

Get Help Divest

Are You Willing and Able?

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Capital Gains Rate Lowest Since the Great Depression (10/29/29)

16

10%

13%

15%

18%

20%

23%

25%

28%

30%

33%

35%

38%

40%

43%

45%

19

23

19

26

19

29

19

32

19

35

19

38

19

41

19

44

19

47

19

50

19

53

19

56

19

59

19

62

19

65

19

68

19

71

19

74

19

77

19

80

19

83

19

86

19

89

19

92

19

95

19

98

20

01

20

04

20

07

20

10

20

13

20

16

Jobs and Growth Tax Relief Reconciliation Act of 20031. Current Capital Gains Rate of 15%2. Rate Cut will Sunset 1/1/13, Revert to 20%3. 3.8% Healthcare Surtax in 2013

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc. 17

Reinvest In the Staff to Offset Aging

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

1. Shift in focus; from hiring event to process

2. Commit to Hire 10% of Prior-Year Staff Annuallya. Replace terminated employees and retired employees

b. Net new hires must keep pace with revenue growth

18

***Revenue per Employee # adjusted for inflation

Revenue Revenue Retirement Net New NNHR Divided Annual New5% Per Staff or Hire by Success Hire as

Year Growth Employee FTE Termination Required Rate (75%) % PY Staff2009 10,500,000 150,000 70 n/a n/a n/a n/a2010 11,025,000 151,500 73 2 5 6 9.1%2011 11,576,250 153,015 76 3 6 8 10.8%2012 12,155,063 154,545 79 2 5 7 8.8%2013 12,762,816 156,091 82 2 5 7 8.7%2014 13,400,956 157,652 85 4 7 10 11.8%2015 14,071,004 159,228 88 3 6 8 10.0%2016 14,774,554 160,820 92 2 5 7 8.3%2017 15,513,282 162,429 96 2 6 8 8.2%2018 16,288,946 164,053 99 3 7 9 9.5%2019 17,103,394 165,693 103 4 8 11 10.7%

Average 3 6 8 9.6%

Budget Staff Reinvestment

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

15.4%

19.6%

23.2%26.3%

15.5%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

21 - 30 31 - 40 41 - 50 51 - 60 60 +

% o

f Tot

al p

rodu

cers

Age

Support Staff - Average Age Dispersion

Support Staff Over 50 years

41.8%

19

Balance Support and Service Age Dispersion

12.3%

20.2%

28.3% 28.4%

10.8%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

21 - 30 31 - 40 41 - 50 51 - 60 60 +%

of T

otal

pro

duce

rs

Age

Service Staff - Entire Age Dispersion

Service Staff Over 50 years

39.2%

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

11.6%

20.2%

29.2%25.8%

13.2%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

21 - 30 31 - 40 41 - 50 51 - 60 60 +

% o

f Tot

al p

rodu

cers

Age

Producer Age Dispersion - Average Agency

13.7%

26.6%

31.3%

20.0%

8.4%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

21 - 30 31 - 40 41 - 50 51 - 60 60 +

% o

f Tot

al p

rodu

cers

Age

Producer Age Dispersion - High-Growth

Insurance Example: Producer Age Dispersion

Producers Under 40 years

31.8% 40.3%

20

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Who to Hire?

1. Bus in front of a law firm

Can you teach

…Desire to win, ego drive?

…Technical skills?

2. Proven sales experience outside industry

3. Appointment setting while training

4. Partner new sales people with mentors

5. Ability to cut cord

21

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

1.9

4.8

0.0

1.0

2.0

3.0

4.0

5.0

6.0

Average Top 25%

New Business Appointments per Month per Producer

The Ball is Being DroppedNot Enough New Business Appointments

22

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc. 23

Target Producer

1. Qualificationa) Successful sales experience, not industry experience

2. Compensationa) 3-year declining base salary (100k, 66k, 33k) + commission

b) Commission shared with mentor

3. Accountabilitya) Monthly base salary subject to appointment validation

$100,000 first year goal / $7,500 = 13 accounts written

Assume 35% proposal to close

Assume 35% appointment to proposal

~100 appointments, ~ 8 per month

Salary $100,000 / 12 mo = $10,000 / 8 appts per mo =$1,250 per qualified appointment

b) Activity tracking

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Spring 2010 TASC Network Summit

Mentor Required 1st Year

No Mentoring1. Small accounts

2. No product knowledge

3. Low quote to close ratio

4. Transactional versus Relationship

5. Low new business

6. Higher failure rate

24

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

The 15-Step Process

1. Attractive Recruiting Brochure Outlining Unique Opportunity

2. Dedicated, Regimented and Continual Search

3. Rigorous Screening and Testing

4. Benchmark Personality Assessments

5. Structured Candidate Interviews

6. Candidate Profile: Prior Sales Experience; No Industry Experience

7. Self Selection Compensation Plan - Appointment-Based Validation System

8. Mentor Assigned, Required and Compensated

9. Mentor Gets Credit Counts Toward Carrot and Stick

10. Technical Training Program (if demonstrate ability to set appointments)

11. Prospecting Training (if demonstrate ability to set appointments)

12. Define Qualified Appointments (# Employees, CEO Present, SIC Code, Class research)

13. Reduction in Month 5 if during Month 4, below Target # of Appointments

14. Wash-Out Rate Accepted, Reload is Accepted Strategy

15. Pipeline Required

Follow the Road to the Casino

25

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc. 26

The Beacon of Clarity

Producer Reinvestment Assumptions

1. New Sales Person Hire 50% Success Ratio

2. Failed Sales People Terminated Early

Results (Modeling Available Upon Request)

1. IRR of 52% versus acquisition (27.2% with Debt; 18.8% without)

2. Control your Culture, Hire The Next Generation

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Organic GrowthWhy is Growth Important?

1. Culture: Energy and excitement

2. Profit to reinvest in the next generation

3. Profit to pay bonuses and raises

4. Promotion opportunities for staff

5. Ability to hire quality new employees

6. Profit to buy stock from owners (ownership perpetuation)

7. Growth + Profit - Risk = Value

8. Sustainability: Control your future versus letting the future control you

27

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Largest Challenge to Commission Growth?

28

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Farm

erF

armer

HunterHunter Originates new business

Manage existing relationships

Organic GrowthDefine Roles and Restructure to Drive Growth

29

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Spring 2010 TASC Network Summit

57%

68%

50%52%54%56%58%60%62%64%66%68%70%

% Answering "YES"

Do producers have minimum annual new business production goals to retain producer status?

Average High-Growth

57%

68%

50%52%54%56%58%60%62%64%66%68%70%

% Answering "YES"

Do producers have minimum annual new business production goals to retain producer status?

Average High-Growth

Producer AccountabilityCommunicate Expectations and Ramifications

30

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

66%

78%

58%60%62%64%66%68%70%72%74%76%78%80%

% Answering "YES"

Do you enforce negative consequences fornon-performing producers?

Average High-Growth

66%

78%

58%60%62%64%66%68%70%72%74%76%78%80%

% Answering "YES"

Do you enforce negative consequences fornon-performing producers?

Average High-Growth

Producer AccountabilityFollow Through with Incentives and Consequences

31

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc. 32

AccountabilityThe Carrot: Excess Compensation Potential

Target: 20% PY Revenue

Wholesale Sales ForceSalary 25% 27.5%

30%

Salary $100k $100k $100k $100k

Incentive as % Base 10%-40% 20% 30% 40%

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc. 33

Accountability The Stick: Termination or Transition

Minimum: < of $100,000 or 15% PY Revenue

Sales Force Salary Yr. 1 Yr. 2

Yr. 3

Salary $100k $90k $80k $70k

Incentive as % Base 10%-40% 0% 0% 0%

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc. 34

Square Pegs and Round Holes

Be Prepared to Hear the Following….

……what will be your answer……?

1. The reason I came into this industry was to build a block of clients at an early age so that I could slow down later in life and just manage a renewal book.

2. This is too cold hearted of a culture for me. I have been here 20 years. I should not be held accountable to new business production.

3. There is another company in this industry that would love to have me on staff. They pay higher compensation and all I need to do is maintain my book of business.

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Activity Management

Does your organization maintain producer accountability & tracking systems (i.e. relative to number of calls, appointments, submissions,

proposals, accounts closed & new revenue)?

35

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc. 36

Tangible Net Worth Ratio (TNW):

Total Stockholders Equity less Intangible AssetsAnnual Net Revenue

Tangible Net Worth

7.9% of Revenue

Net Fixed Assets

6.7% of Revenue

Notes Receivable Shareholders

2.8% of Revenue

Liquid Tangible Net Worth

(1.6%) of Revenue

Capital Position*

TNW Target for Perpetuation = 25%

Discipline To Retain Earnings

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Relinquish Stock Gradually

1. Buy-Sell Agreementa. Mandatory retirement age

b. Agency call provision at 55 years of age

c. Debt retirement completion by age 65

d. Seller financing on 7-10 year note

2. Transfer Goala. Typical Weighted Average Owner Age (WAOA) is 54

b. Agencies that perpetuate maintain WAOA at or below 46

c. 10% of agency stock always in transition

d. Largest shareholder at maximum of 51%

37

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Relinquish Stock Gradually

Largest Largest Largest Largest

Ownership Ownership Ownership Ownership

Valuation Assumptions 90% 75% 65% 51%

Agency Revenue 3,000 3,000 3,000 3,000

Agency Pre-Tax Profit (20%) 600 600 600 600

Multiply: Profit Multiple 6 6 6 6

Book of Business Value 3,600 3,600 3,600 3,600

Plus: Tangible Net Worth 300 300 300 300

Agency Value 3,900 3,900 3,900 3,900

Multiply: Stock % Buyout 90% 75% 65% 51%

Stock Transfer 3,510 2,925 2,553 1,989

38

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Spring 2010 TASC Network Summit

Relinquish Stock Gradually

Pre-Tax Profit (10% Growth) 660 660 660 660

Less: Yr. 1 Interest* 211 176 153 119

Taxable Income 449 485 507 541

Tax (40% Combined Rate) 180 194 203 216

Pre-Tax Profit (10% Growth) 660 660 660 660

Less: Tax (180) (194) (203) (216)

Less: Interest (211) (176) (153) (119)

Less: Principal (418) (348) (304) (237)

First Year Cash Flow (149) (58) 0 87

* Seller financed 7 year note at 6%, no down payment

Largest Largest Largest LargestOwnership Ownership Ownership Ownership

Valuation Assumptions 90% 75% 65% 51%

39

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Spring 2010 TASC Network Summit

40

Ideal Age for Perpetuation Candidates

0%

20%

40%

60%

80%

100% 100%

80%

60%

40%

20%

0%0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62

Owner Age

Stock Purchase, Hold, Sale

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Spring 2010 TASC Network Summit

41

Cash Outflow / Inflow for Perpetuation Candidates

-$5,000,000

-$4,000,000

-$3,000,000

-$2,000,000

-$1,000,000

$0

$1,000,000

$2,000,000

$3,000,000

$4,000,000

$5,000,000

40 41 42 43 44 45 46 47 48 49 50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70 71 72

Owner Age

Debt Accumulation / Debt Service

Stock Sale / Stock Sale Receipts

Unencumbered Distributions

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Spring 2010 TASC Network Summit

Do producers have the opportunity to own agency / broker stock?

36%

71%

0%

10%

20%

30%

40%

50%

60%

70%

80%

% Answering "YES"

Average High-Growth

Retaining and Rewarding Talent

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2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Gradual Purchase1. Test willingness to accept perpetuation debt

2. Increase sales people and spouse comfort with managing perpetuation debt

3. Teach sales people to keep lifestyle costs in balance

4. Performance review tool to shape leadership characteristics

5. Wealth creation versus personal income discussion

6. Drive value by enhancing new business from new and current sales people

7. Increase attractiveness of agency to external and internal buyers

8. Accretive to the value of existing shareholders

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Train Them for Battle EarlyUnencumbered

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Outline Personality Traits Required for Ownership

Objective Criteria1. 3+ years experience in industry

2. 3+ years experience with agency

3. Individually develop revenue of $1,000,000

4. “New New” business of 15% of prior-year revenue during the year

5. Attainment of cross-referral goals during the prior year

6. At least one professional industry designation

7. Involved in at least two community organizations

8. Signed agreement with non-solicitation language

9. Satisfy employee survey–perception of leadership/management skills

10. Achieve target for minimal aged receivables during the year

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2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

Subjective Criteria1. Ability to communicate with others

2. Skill – new business, account handling, management, leadership

3. Committed to the future of the industry

4. Self-starter regularly demonstrating initiative

5. Personal confidence

6. Ability to delegate

7. Opinion of agency principals

8. Positive attitude

9. Demonstrated willingness to mentor new sales people

10. Demonstrates diligence and integrity

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Outline Personality Traits Required for Ownership

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

The “It is Yours To Lose” Discussion

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1. Promise me that you will not sell

2. I am here because I want to work for an independent company. These changes make me uncomfortable. If I wanted to be treated this way, I would just work for a public company. Why do you constantly change the rules?

3. I will not…• use pipeline• accept a minimum goal of $100k• accept a moderate compensation • Paying for my own car/country club

1. Prove to me you are a good credit risk and I maybe I won’t. Selling is the default option unless you prove you are worthy of perpetuating to.

2. If we can’t grow profitably, I won’t have faith in the debt capacity of the company, will not hold the note and will sell. Then, there will be real changes

3. You are not a victim. Changes will enable the business to grow profitability so that it can perpetuate.

Perpetuation requires growth and profit sufficient for 1) the next generation to be able to take risk and 2) the current owners to agree to hold the note

Reduce Seller Risk

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.

Spring 2010 TASC Network Summit

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Execute PPOG

Control the future

Drive value

Willing Unwilling

Able

Unable

Divest

Get Help Divest

Are You Willing and Able?

2012 Marsh, Berry & Company, Inc. – No part of this presentation may be reproduced, published, stored or transmitted by any means, electronic or mechanical, without prior written permission of Marsh, Berry & Company, Inc.