Drupal as a 3-tier system model We are planning to create an 'agency' site on drupal. The 'agency' site will serve as 3-tiered system model composed of the following levels:
1. Agents (users)
2. Agency (agent users will belong to a specific agency)
3. Super Administrator (controls everything, permissions etc)

The idea behind the site is to have the ability to register an 'agency' (only by the super admin), that will in-turn have the ability to create their own users (Agents).

If Agency1 logs in, he should be able to register their own sets of users. So goes with other agencies. New users created should belong exclusively to their respective agencies, automatically upon registration.

Are there any modules out there that can be configured to do this? I have 'Profile 2' Module but I don't think this fits the bill. I am looking at the Groups Module but not sure if this is really the right one.
You could use Organic groups.  

In that case, every agency would be a group with a group administrator that could set the users that are part of that agency. Every agency could have its own content, which would be created from the users that are associated with the agency. A user of another agency would not be able to create content for another agency, if not in the case the user is member of both the agencies.