This brief captures the 2025 GPS operating profile for the $3M+ revenue tier — enterprise-scale agencies running ~40 staff and 7.8 producers, with the highest productivity per person and the deepest commercial-lines book in the study. The reported 5.21% pre-tax margin is the lowest of any tier, and §05's owner-compensation note explains why that figure understates true earnings. Every figure here is a segment benchmark; the companion GPS tier reference explains how the tiers compare.
§ 01 · ProfitabilityProfitability & cost structure.
A 5.21% reported pre-tax margin sits on the highest compensation ratio in the study (70.98%) — but the largest line is producer compensation (22.83%), not owner pay, which has fallen to 13.90%. That mix is the signature of a professionally-managed agency.
| Metric | Benchmark |
|---|---|
| Pre-tax profit margin (reported) | 5.21% |
| Total expense ratio | 94.79% |
| Total compensation (% of revenue) | 70.98% |
| Sales (producer) compensation | 22.83% |
| Office (service) compensation | 24.69% |
| Executive / owner compensation | 13.90% |
| Total administrative expenses | 23.81% |
§ 02 · Revenue mixRevenue mix.
The most commercial-lines-concentrated tier at 57.15%, with the lowest personal-lines share (17.59%) and the highest health-lines presence (11.66%) — the diversified, middle-market profile.
| Line | % of revenue |
|---|---|
| Commercial lines | 57.15% |
| Personal lines | 17.59% |
| Life | 1.94% |
| Health | 11.66% |
| Contingent / bonus | 9.09% |
| Fees | 0.09% |
| Other | 1.67% |
Revenue mix, at a glance.
Commercial-lines-dominant, the enterprise profile. Bar widths are exact percentages of revenue.
§ 03 · Growth & retentionGrowth & retention.
Solid 8% growth at scale, with the best P&C retention in the study (93% CL, 92% PL). Life & health retention is the one soft spot at 83% — a portfolio question rather than a red flag.
| Metric | Benchmark |
|---|---|
| Annual revenue growth | 8% |
| Commercial-lines retention | 93% |
| Personal-lines retention | 92% |
| Life & health retention | 83% |
§ 04 · ProductivityProductivity per person.
Peak productivity in the study: $187,449 revenue per employee across a 40-person team with 7.8 producers. Producer compensation of ~$220,000 reflects a competitive talent market — and a retention priority post-close.
| Metric | Benchmark |
|---|---|
| Revenue per employee | $187,449 |
| Commission per employee | $166,962 |
| Compensation per employee | $133,045 |
| Compensation spread | $54,404 |
| Total staff (average) | 40.1 |
| Producers (average) | 7.8 |
§ 05 · Owner compensationThe owner-compensation read.
This is the line that reframes the whole margin. Owner compensation is the lowest share of any tier (13.90%) but the highest absolute figure (~$454,000 per owner across 2.3 owners). It signals owners in strategic and managerial roles rather than front-line production — and it's the add-back that bridges a 5.21% reported margin toward a materially higher normalized figure.
| Metric | Benchmark |
|---|---|
| Owner compensation (% of revenue) | 13.90% |
| Compensation per owner | $454,283 |
| Owners (average) | 2.3 |
| Trust position ratio | 2.77 |
| Current ratio | 1.77 |
| Average age of receivables | 20.0 days |
- Most commercial-lines-concentrated. 57.15% CL — the enterprise / middle-market profile.
- Peak productivity. $187,449 revenue per employee, the highest in the study.
- Largest team, deepest producer bench. 40.1 staff and 7.8 producers — low key-person risk.
- Best P&C retention. 93% CL / 92% PL; L&H softer at 83%.
- Lowest reported margin, biggest add-back. 5.21% reported, normalized materially higher once owner comp is adjusted.
- Owners in strategic roles. 13.90% owner-comp share but ~$454K per owner.
Read the normalized number, not the reported one.
GPS benchmarks don't value an agency — they're the operating baseline a valuation is built on. The $3M+ tier is the clearest case for why normalization decides the price: a 5.21% reported margin would look weak at face value, but with owner compensation at ~$454,000 per owner, the add-back to a market-rate replacement lifts normalized earnings well above the reported line. A buyer who underwrites the reported figure mis-prices the book; one who normalizes correctly sees a scaled, high-retention, multi-producer platform.
The metrics that move a multiple here are commercial-lines depth, producer retention, and the normalized margin. The companion financial & transactional mechanics reference walks the normalization bridge in full.
What GPS measures. The Growth & Performance Standards study tracks growth, profitability, and stability across reporting independent agencies, segmented by revenue tier. This brief reflects the $3M+ band.
Percentages of revenue. Expense, compensation, and revenue-mix lines are expressed as a percentage of total agency revenue unless a dollar figure is shown.
Reported vs normalized. The pre-tax margin shown is the segment's reported figure before owner-compensation normalization. A transaction analysis re-runs the bridge for the specific agency.
Frequency. The GPS study publishes annually. Milly Books refreshes this brief with each new edition.