DCAP Group, Inc. Financial Analysts and Money Managers Society November 10, 2005

DCAP Group, Inc.DCAP Group, Inc.

Financial Analysts and Money Financial Analysts and Money Managers Society Managers Society November 10, 2005November 10, 2005

DCAP Group, Inc. [Nasdaq: DCAP]

2

Legal DisclaimerLegal Disclaimer

Forward Looking StatementsForward Looking Statements

This presentation, and the related oral presentation, may contain certain “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements, other than statements of historical facts, may be forward-looking statements. These statements are based on management’s current expectations and are subject to uncertainty and changes in circumstances. These statements involve risks and uncertainties that could cause actual results to differ materially from those included in forward looking statements due to a variety of factors. More information about these factors can be found in DCAP’s latest Annual Report filed with Securities and Exchange Commission under Form 10-K. The company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise.


3

AgendaAgenda

• Corporate OverviewCorporate Overview

• Operating StrategyOperating Strategy

• AddendumAddendum


4

Corporate OverviewCorporate Overview

The DCAP OrganizationThe DCAP Organization

• DCAP Group, Inc. owns and operates the largest chain of independent storefront insurance agencies in the Northeast.

• We focus predominantly on providing affordable auto insurance, enhanced by our complimentary premium financing capabilities to our target market in New York, New Jersey, and Pennsylvania. We also offer motorcycle, commercial auto, homeowners and other coverages, as well as tax preparation and roadside assistance services.

• Our mission is to build our business into a community-based, vertically integrated financial services center for moderate to middle income customers.


5

Corporate OverviewCorporate OverviewExecutives & AdvisorsExecutives & Advisors

Senior Management• Barry B. Goldstein, Chairman and Chief Executive Officer, CFO• Dana Jimenez, Corporate Controller and Treasurer of Agency

Operations• Jeanne M. Egan, Vice President - Agency Operations• Jeffrey C. Schwartz, Vice President - Payments, Inc.• Barry Lefkowitz, Vice President - Marketing & Product Development

Professional Advisors• Legal Counsel - Certilman Balin Adler & Hyman, LLP• Independent Accountants - Holtz Rubenstein Reminick & Co., LLP• Financial Consultant - Richard Maikis, CPA Maikis Associates, Inc.


6

Corporate OverviewCorporate OverviewDCAP Group, Inc.

Insurance Premium Finance

Company Owned Locations (24) Franchises (48) Loan AdministrationSales and Marketing

Hewlett, New YorkInput 1

Woodland Hills, CABarry Scott Agency

(Central NYS)Atlantic Insurance Agency

(Eastern PA)DCAP(NJ)


7

Corporate OverviewCorporate OverviewBroad Array of Carrier RelationshipsBroad Array of Carrier Relationships

COMMERCIAL MUTUAL INSURANCE COMPANY


8

Corporate OverviewCorporate OverviewMilestonesMilestones

• 1999 - Extech merged with DCAP Insurance, name changed to DCAP Group, Inc.

• April 2001 - Barry Goldstein elected Chairman and CEO after serving as a consultant

• August 2002 - Private placement to fund purchase of Barry Scott Companies, Inc. (19 additional agency locations) from Progressive

• January 2003 - sold leasehold interest on the International Airport Hotel in Puerto Rico

• May 2003 - purchased Atlantic Insurance Agency locations in Pennsylvania from investor group affiliated with Mr. Goldstein via issuance of convertible preferred stock

• July 2003 - restructured premium finance operations. Formerly originated loans for an unrelated finance company, Payments now retains ownership over the receivables it creates. Payments, Inc. obtained $18m credit line from M&T bank, raised $3.5m of subordinated debt


9

• August 2004 - completed a one-for-five reverse stock split

• October 2004 - DCAP Group, Inc. received approval for NASDAQ Small Cap Market Listing

• December 2004 - Refinanced and increased line of credit with M&T Bank from $18m to $25m - base rate reduced by 150bps

• April 2005 - Repaid $2.0 million of subordinated debt


10

Corporate OverviewCorporate OverviewCurrent ProfileCurrent Profile

Leading Personal Lines Insurance Provider

• Largest Northeast agency group with strong consumer value proposition• Estimated annual premium volume of over $140,000,000• Highly scalable business model, disciplined acquisition strategy

Exceptional Growth Outlook

• 72 stores in three states today-24 owned/48 franchised• Limited, fragmented competition in core market


11

Competitive Advantages

• Strong brand-name recognition• Existing scale to create a set of services and product offerings not easily

attainable by the lesser sized competitors

Strong Carrier Relationships

• DCAP is the largest producer for Progressive in the US-Progressive is the largest US auto insurer through Independent agencies and third largest overall, after State Farm and Allstate

• DCAP is the largest producer of Assigned Risk coverage in New York• Additional relationships: GMAC, Metropolitan, OneBeacon, AIG, Infinity


12

Corporate OverviewCorporate OverviewInvestment CaseInvestment Case

Tremendous current growth potential

• Unique status with Progressive; DCAP is being rewarded with above-typical commission levels during 2005

• Future storefront insurance agency acquisitions-four locations to be acquired before year-end

• Ongoing expansion of franchise locations-added four locations in 2005• Expansion of premium finance business into more states and more

products-three additional state license applications are pending

Highly experienced management team

• Solid operating discipline and financial controls• Proven record of long-term value creation• Significant ownership by CEO aligns interests with shareholders


13

Exciting future growth initiatives to capitalize on agency size and customer base

• Establishment of 24/7 customer quoting, sales and service

• Creation of DCAP-branded risk-bearing entity

• Increasing the front and back-office scale of Payments, Inc. via potential acquisitions


14

AgendaAgenda





15

Operating StrategyOperating Strategy

Increase Sales in Existing ChannelsIncrease Sales in Existing Channels


16

Operating StrategyOperating StrategyDay-to-Day Management Day-to-Day Management

Senior executive team 100% engaged in operational management Proprietary agency management system Daily Production reporting to CEO from:

• Company owned locations• Underwriting / Policy Administration• Premium finance operations• Carriers

Semi-annual regional meetings with store managers, quarterly meetings with franchisees, monthly meetings with executive staff

Ongoing agency automation initiatives focusing on customer service Store manager interests aligned with corporate / shareholder interests


17

Operating StrategyOperating Strategy

Growth Plan – Growth Plan – TodayToday

• Expand footprint through storefront agency acquisitions and new franchise sales-targeting Western New York and the Hudson Valley for acquisitions; Westchester, The Bronx and Manhattan for franchises

• Grow premium finance volumes through new product offerings and wider geographical distribution

• Further diversify revenue stream, cross-selling opportunities including sales of non-Property & Casualty products


18

Operating StrategyOperating StrategyDisciplined Acquisition ProcessDisciplined Acquisition Process

• Take advantage of inherent arbitrage on acquired locations

• Comprehensive financial, operational & legal due diligence

• Detailed analysis of earnings, cash flow potential and return on invested capital

• Review by senior management and Board of Directors

• Decision and execution

• Proven by highly profitable purchase of Barry Scott Agency (2002) and Atlantic Insurance Agency (2003)


19

Operating StrategyOperating StrategyGrowth Plan – Growth Plan – TomorrowTomorrow

• Fill void created by expansion of direct marketers and perceived complacency of competitor storefront operations

• Create a DCAP-branded risk bearing entity

• Focus on profitability and growth in shareholders’ equity


20

AgendaAgenda





21

AddendumAddendumHeadline Issues Facing the IndustryHeadline Issues Facing the Industry

Pressure on commission income as auto insurance premiums decline

Increased advertising by direct writers moving more policy sales to the Internet and toll - free numbers i.e. GEICO, Progressive Direct, Esurance, etc.

Increasing competition• Traditional companies like Hartford getting increasingly aggressive• A rush of small-cap insurers raising new equity capital

Ongoing industry investigation by NY and other states Attorneys General • Elimination of highly profitable contingent commissions• Increasing regulation = greater costs for all insurance companies may lead to

pressure on producers compensation

Escalating costs relating to Sarbanes-Oxley although Sec 404 compliance has been delayed until at least 2007


22

DCAP Group, Inc.DCAP Group, Inc.

For further information, please see DCAP’s reports filed with the SEC pursuant to the Securities Exchange Act of 1934 which are also available at the SEC’s website (www.sec.gov). Additional copies of this presentation and other background information are publicly available at www.dcapgroup.com. Interested investors are also invited to contact Barry Goldstein, Chairman and CEO, at (516) 374-7600.

Documents

DCAP Group, Inc. Financial Analysts and Money Managers Society November 10, 2005