2016 Budget Presentation2

Citizens Property Insurance Corporation Information Technology2016 Budget

December 2015

December 2015 Citizens Property Insurance Corporation

1

Information Technology2016 Budget To be revised

2Citizens Property Insurance Corporation

December 2015

Table of Contents

Alignment with Corporate Priorities 3Comparative Annual Totals 4Comparison to Industry Benchmarks 5-6Drivers of IT Spend 7Perspective - Spend Drivers "Less Visible“ 8Expense Category Totals 9Budget by IT Cost Center 10Expense Total Variance 11Budget Highlights 12Historical Expense Ratios 13Historical Expense Totals 14Full-Time Headcount 15Contingent Staffing 16Professional Services 17Business Areas Supported 18Budget Highlights 19Run, Improve, & Transform 20-21Project, Enhancements and Operational Activities

22IT Allocation to Business Units 23Capital Expenditures 24

Information Technology IT Alignment


December 2015

2016 Budget Curt, Robert Aditya

2016 Information Technology Plan and Budget

Aligned with Corporate Goals and Priorities

Integrated with Enterprise Planningo 2016 Planning Process – Managed by Enterprise Planning (not IT)o Budget Guidelines Set by Corporate Financial Managemento Lists of Priority Projects – Finalized by Executive Team

Iterative Review - Vetting and “Trim” of Proposed Projects Focused on Priorities and Optimal Resource Allocation

IT Plan and Budget – Support for Critical 2016 Business Objectiveso Transition of the Citizens Insurance Suite to Full Production Status

o Clearinghouse - Additional Product Line Implementation Objectives o Citizens Data Warehouse Projects, Including Key Objectives for

Actuarial/Analytic Requirementso Claims – Managed Services Initiativeso Enterprise Resource Planning Systems (ERP) –

Requirements/Procuremento Public Web and Internal Portalo Jacksonville Facility Costs – Building Consolidation

Information Technology Comparative Annual Totals

2011 Actual 2012 Actual 2013 Actual 2014 Actual 2015 Forecast

Note: Beginning in 2014 Depreciation is included in annual budgets. Prior to this change Depreciation was budgeted at the Corporate Level. Change in Accounting practice, with $6.2mil Depreciation in IT for 2014, 2015 Depreciation Budget $4.7mil,

65

60

55

50

45

40

35

30

25

20

15

10

5

-

75

70

$43.3$48.6

$42.5

$52.8 $62.3

$3.0$3.0

$3.8

$2.5

$2.0

Mill

ions

$51.6$46.3

$55.3

$64.3

$46.3

Non-recurring Programs, Included for 2016 - Clearinghouse, Jax Bldg. Consolidation

Once 2016 numbers are available 2016 Bar will be added. Also, what should we call out as non-recurring programs:1. Consolidation – Jax

offices and Data Centers

2. ERP3. Active Directory

project for Security


December 2015

2016 Budget Vicki $’s, Notes: Curt, Robert, Aditya

Information Technology2016 Budget Need new Benchmarks, 2015 Forecast and 2016 final budget : Curt, Robert Aditya We deleted 2008, 2009 and 2010

Industry Benchmarks

2011 2012 2013 2014 2015 20160.0%

0.5%

1.0%

1.5%

2.0%

2.5%

3.0%

3.5%

4.0%

4.5%

3.0%3.3%

3.9%

1.5%1.9% 1.8%

2.6%

3.8% 3.8%

IT Forecast

IT + Core Forecast

Average P & C Insurance Industry IT Spend as Percentage of Revenue (DWP)

2014 and 2015 include Depreciation Expense, prior years included capital outlayDirect Written Premium for 2015 reduces to $1.7B from $2.1B in 2014.

ITBudgeted

3.8%3.6% - Novarica (2013)3.8% - Novarica (2011)3.6% - Gartner (2011)

December 2015 5Citizens Property Insurance Corporation

Information Technology2016 Budget Vicki & Lori (We need salary Dollars to get final 2016 budget)

IT Investment TrendsComparison to

Benchmarks


December 2015

Citizens 2016 IT Expense Budget Includes IT Depreciation Budget - $2.7M

$64.3M

Expense Budget - 3.8% of Budgeted $1.7 Billion Direct Written Premium (DWP)

Citizens 2015 IT Capital Budget $2.9M

Benchmark InformationNovarica (Dec 2011) P&C over $1B DWP – 3.8% of premiumGartner, Dec 2011: Insurance Sector – 3.6% of revenueNovarica (July 2013) P&C insurers under 2500 employees – 3.6% of premiumWard Group P&C Review/Outlook (Dec 2010) – 4% of revenue spent on IT (personal lines)

Note – Current Benchmarks are difficult to find and are typically “fuzzy”. Issues related to expense vs. capital,

expense allocation to departments, central vs. departmental organizations, etc.

Information Technology2016 Budget: Curt, Robert, Aditya Review and revise

3 Geographic Locations, 4 Data Centers, 8 Facilities Transition of Core Insurance Suite expense to I.T. (from Core Program) 100+ Applications (including IT Management, COTS and SaaS) 30+ In-House Developed Applications (Cost of Custom Development) 1.7 Petabytes of Managed Storage Information Security Requirements 350+ Network Devices, 17 Major High Speed Data Circuits 1350 Virtual and Physical Servers and 10 Mid Range Devices (i-Series/AIX) Increased Governance and Risk Management Focus Scalability of Information Systems validated through performance testing 1000+ Call Center Agents Supported (Internal and External Call Centers) 1,400 Toll Free Lines, 250+ local lines 8,500+ End User Devices Supported (PC’s, Monitors, Printers, Phones) 12,000 IT Customers - Employees and Consultants, Adjusters, Agents Catastrophe Readiness, Business Continuity/Disaster Recovery Keep the Technology current ( SIT and JDK upgrades - $2M+, Guidewire version upgrade planning) 140+ Systems Integration in Production Annual Software License & Maintenance Compliance (Security, Audits & Internal Controls)


December 2015

Drivers of IT Spend

Information Technology2016 Budget

What Business Partners don’t see

is critical ! Information

Architecture& Systems

Availability


December 2015

Mobile

Storage

Measurement Systems

Disaster RecoveryNetworks

User Perspective

- Applications

Data Centers

ServersOperations

Laptops/Desktops

Capacity

Telecommunications

Technical Support Services

Information Technology2016 Budget: Need Staffing $ from Vicki graph below has 2015 salary $

Expense Category Totals Total

$64.3M

(Dollars - Thousands)


December 2015

Full Time Staffing Costs $25,145,000 43.3% This is

last years number

Contingent Staffing $4,078,297 7.0%Professional Services $4,995,641 8.6%

Computer Hardware $3,396,817

5.8%

Software Maint. & Li-

censing $11,555,939

19.9%

Telecom-munica-

tions $4,273,721

7.4%

Mainte-nance & Repairs

$152,787 0.3%

Other $4,492,613 7.7%

Information Technology2016 Budget: Need Salary info by cost center from Vicki

Budget by IT Cost Center

Total $64.3M


December 2015

767-IT Planning and Delivery; 30240; 0%

710-IT Engineering Services;

12787837.4276; 39%

769-IT Application Delivery Mgmt Admin; 9748663.15120533; 30%

714-IT Services De-livery;

437854.057180888; 1%

719-IT Infrastructure and Ops Mgmt Admin;

830427.509424; 3%718-IT Security; 700606.97; 2%

760-IT Information Services;

498257.23728; 2%799-IT Mgmt Admin;

3022551.8; 9%

768-IT Application Development;

2570060.996332; 8%

713-IT Operation Ser-vices;

2319316.1079396; 7%

Information Technology2016 BudgetVicki

Expense Total Variance

2016Budget Forecast Budget Variance $ Variance %

Total Administrative Expenses 54,519,865

2015


December 2015

Salaries 19,620,018 Employee Benefits 4,108,808 Payroll Taxes 1,416,489 Contingent Staffing 7,702,765 Training 261,199 Recruiting 0 Printing 1,600 Operating Supplies 5,640 Subscriptions & Dues 152,935 Postage 4,600 Telecommunications 4,674,884 Legal 0 Insurance 0 Travel & Meals 243,050 Professional Services 3,536,400 Miscellaneous 0 Rent - Facilities 883,202 Rent - Ofc Equip & Furn 0 Depreciation 4,731,859 Producer Fees Collected 0 Maintenance & Repairs 405,262 Bank Charges 0 Software Maint & Licensing 11,715,217 Computer Hardware 4,872,655 FMAP Funding (20,000)ULAE Expense Allocation

Total Administrative Expenses 64,316,583

Information Technology2016 Budget: Curt, Robert, Aditya (need info to highlight)

• The IT expense budget is proposed at $64.3M. This is an increase of approximately $10M above 2014 budget reflecting, primarily, increased expense associated with transition of Citizens Insurance Suite Software to IT from the Core Program and also increased hardware maintenance expense, related to recent year growth in technical infrastructure.

• IT headcount is essentially level with the 2014 budget. The budget is for 240 employees, up 1 from the prior year. Anew position is planned to support implementation of control frameworks, an approved enterprise-level initiative.

• The budget for training is up significantly from prior year, to $261,000 from a 2014 level of $132,000. The increase supports training needed for support of the Citizens Insurance Suite and also broad general training needs related to the level of new hires (hiring associated with high level of attrition – Jacksonville consolidation). Training objectives also support key employee engagement and retention initiatives.

• The software and maintenance budget increases from 2014 by $3.7M to $11.7M. This increase predominantly is attributable to Citizens Insurance Suite licenses moving to IT budgets (from prior-year Core Program budget).

• Computer hardware and maintenance expense is up approximately $3.1M from 2014 to $4.8M in 2015. Approximately$1M of the increase supports replacement of aged desktop and notebook computers. Approximately $500,000 of increase is for equipment expense related to planned Jacksonville building consolidation. The balance of the increase is predominantly associated with hardware maintenance increase, reflective of growth in the technical infrastructure.

• Budgeted IT charge-out for 2015, increases from a 2014 budget of $19M to approximately $25M. Charge-out increase is attributable to new allocations for business software licenses, approximately $4.6M as well as charge-out for development work on the Citizens Insurance Suite.

• The capital budget for 2015 is $6.3M, a level consistent with historical trends for equipment replacement and growth in infrastructure.

Budget Highlights


December 2015

Information Technology

Historical Expense RatiosComparing 2011-

20162016 Budget Vicki – Need 2015 Forecast and 2016 #’s


13

Expense Category 2011 Actual 2012 Actual 2013 Actual 2014 Actual 2015 Forecast 2016 Budget

Full Time Staff 21,511,632 21,460,732 22,986,444 24,787,335 25,145,315 25,145,315

Staff Aug and Services 9,828,236 14,548,657 7,834,855 11,239,165 11,239,165 4,078,297

Software & Hardware Maint 6,198,809 9,109,964 9,499,776 9,567,223 16,587,872 11,555,939

Telecommunications 4,045,979 3,421,673 4,351,967 4,674,884 4,674,884 4,273,721

Computer Expense & Supplies 462,728 2,006,918 43,699 5,640 5,640 3,396,817

Maintenance & Repairs 411,472 252,650 432,014 369,428 405,262 152,787

Other 811,336 820,007 1,162,650 7,411,569 6,258,445 9,488,254

IT Operating Expense $ 43,270,192 $ 51,620,601 $ 46,311,405 $ 58,055,244 $ 64,316,583 $ 58,091,130

IT Total Admin as % of CPIC Totals: 2011 Actual 2012 Actual 2013 Actual 2014 Forecast 2015 Forecast 2016 Budget

Percentage of Admin 33.65% 29.98% 25.89% 32.82% 38.77% #DIV/0!

Percentage of Admin & Other UW Exp 29.90% 24.16% 23.71% 31.57% 37.33% #DIV/0!

Percentage of Total UW Exp 2.41% 2.87% 2.62% 6.02% 8.22% #DIV/0!

Admin & Other Underwriting Expenses 2011 Actual 2012 Actual 2013 Actual 2014 Forecast 2015 Forecast 2016 Budget

Administrative Expenses 128,572,067 172,191,303 178,894,751 176,897,465 165,873,476 -

Other Underwriting Expenses 16,124,175 41,506,232 16,438,011 6,999,851 6,408,129 -

Admin & Other Underwriting Expenses 144,696,242 213,697,535 195,332,762 183,897,316 172,281,605

Underwriting Expenses 2011 Actual 2012 Actual 2013 Actual 2014 Forecast 2015 Forecast 2016 Budget

Losses Incurred 1,107,599,777 998,328,349 982,393,002 397,579,461 315,937,932 -

Loss Adjustment Expense Incurred 247,236,351 266,777,858 277,967,896 177,489,661 131,670,019 -

Commissions, net 243,011,103 267,023,290 264,187,608 168,403,493 137,799,510 -

Admin & Other Underwriting Exp (above) 144,696,242 213,697,535 195,332,762 188,634,029 172,281,605 -

Taxes & Assessments 49,501,195 50,107,533 50,691,767 32,814,045 24,755,933 -

Total Underwriting Expenses 1,792,044,668 1,795,934,565 1,770,573,035 964,920,689 782,444,999 -

Information Technology2016 BudgetWill update when we have Salaries, actual for 2014, forecast for2015

Historical Expense TotalsComparing 2011-

2016


December 2015

2.0%3.0%4.0%5.0%6.0%7.0%8.0%9.0%

2.41% 2.87% 2.62%

3.16^

8.22% 8.22%

IT Oper Exp % of Underwriting Exp

2011 Actual 2012 Actual 2013 Actual 2014 Actual 2015 Forecast 2016 Budget -

5,000,000 10,000,000 15,000,000 20,000,000 25,000,000 30,000,000 35,000,000 40,000,000 45,000,000 50,000,000 55,000,000 60,000,000 65,000,000

$21,511,632.2 $21,460,732.1 $22,986,444.0 $24,787,335.0 $25,145,315.0

$25,145,315.0

$9,828,236.4 $14,548,656.8 $7,834,855.0

$11,239,165.0 $11,239,165.0 $11,239,165.0 $6,198,808.9

$9,109,963.9

$9,499,776.0

$9,567,223.0 $16,587,872.0 $16,587,872.0

$4,045,978.7

$3,421,673.5 $4,351,967.0

$4,674,884.0

$4,674,884.0 $4,674,884.0 Operating Expense

Other

Maintenance & Repairs

Computer Expense & Supplies

Telecommunications

Software & Hardware Maint

Staff Aug and Services

Full Time Staff

$37.6

Information Technology2016 BudgetVicki (headcount by cost center)

Full-Time HeadcountBy IT

AreaBudgeted Full-Time Headcount:

240 Actual Headcount (Dec 2015): 221


December 2015

710 - IT-Infra-structure

39

713 - IT-Oper-ations

60 718 - IT-Security

13 719 - IT-Division Administration10

760 - IT-Enterprise Architecture10

767 - IT-Core Systems

64

768 - IT-Corp Syst & App Dev Serv

35

799 - IT-Mgmt / Admin-Div8

Information TechnologyTotal $4.078 M

2016 Budget No changes made to this slide yet What do we want to display? Administrative Services

$64 - 1%


December 2015

Contingent Staffing

Security Remediation/Operation

s Support$1,348-17%

Office Relocation/Consolidation$222- 3%

Technical OperationServices

$819 - 11%

Technical Operation

Center$434- 6%

Technical Engineering$199- 3%

Data Warehouse and Reporting

$1,659 21%

Personal Lines Policy Systems (ePAS) & Production

Support$546 - 7%

Content Management$309 - 4%

Enterprise Resource Planning (ERP)$73 - 1%

Legacy Applications Development $137 - 2%

Citizens Insurance Suite$1,892

24%

Information Technology2016 Budget: Complete

Professional Services Total $5M


December 2015

Description Total Year % of Total Year

ERP Professional Services $2,129,000 42.6%CAIS Development Services Outsourced (ADO) $1,200,000 24.0%Cognizant Design Advisory Services $571,321 11.4%

Colo-CSX CSX Managed Services (Data Intensity) $203,000 4.1%Active Directory Admin Access & Security Control $150,000 3.0%GRC/RM Suite Implementation Services $90,000 1.8%Language Services Optimal Phone Interpreters $75,000 1.5%Language Services Tele Language $75,000 1.5%Guidewire (SOW No. 3) $63,000 1.3%Alfresco Document Management $60,000 1.2%NGT Consulting from Powerhouse for Implementation Assist $60,000 1.2%Automation Tool Consulting Services $50,000 1.0%Oracle Middlware SOA $50,000 1.0%Liferay Web Portal (Triton) $35,000 0.7%Oracle RightNow Upgrade Services $30,000 0.6%VMWare Professional Services $26,000 0.5%Wind Application Support (Keith + Celine) $24,000 0.5%Professional Services Checkpoint $20,000 0.4%Professional Services F5 $20,000 0.4%Thunderhead Document Preparation/Thunderhead Tune Up $20,000 0.4%Point Application Support $18,000 0.4%TSC Overflow Call Support $12,920 0.3%Professional Services for the Footprint Software $8,400 0.2%Plumtree Portal Services $5,000 0.1% Totals $4,995,641 100.0%

Information Technology2016 Budget Vicki, Lori (budget breakdown by business area)

Business Areas Supported Total

$64.3M

(Dollars - Thousands)

Estimated Allocations

Executive$2,854

5%


December 2015

HR, Facilities & General Services$822 - 1%Legal Services & Purchasing

$1,242 - 2%

Communications, Legislative & External Affairs - $3,814 - 7%

Financial Services$6,122

11%

Actuarial, Corporate Analytics, Risk Management &

Product Development$21,684

39%

Claims$19,267

35%

Information Technology2016 BudgetCurt, Robert, Aditya (what areas to highlight)

Budget Highlights

Total $64.3M


December 2015

2016 budget

Software/Maintenance & Licensing $11,566,440Telecommunications $4,273,000Data Center - Facility Service $979,000Disaster Recovery (Estimate) ?IT Security ?Citizens Insurance Suite $3,065,000Enterprise Resource Palnning (ERP) $2,129,000Depreciation $2,715,417Microsoft Maint. & Licensing - Annual (Estimate) $1,400,000Vmware - Annual (Estimate) $667,000App. Dev. Services (ADO) Outsourced $1,200,000CAT Prep/Ops $1,133,000Desktop Support ?Business Systems SW ?Technical Operations Center ?(other areas to be highlighted) ?

Information Technology2016 BudgetLori Best (budget breakdown by run, improve & transform)

Run, Improve & Transform Total

$64.3M

Gartner ResearchDecember 2013Run 64%Improve 21%Transform 15%

Estimated Allocations

Run 57%

$36.7M


December 2015

Improve17%

$10.9M

Transform 26%$16.7M

2016 Budget Lori Best (budget breakdown by run, improve & transform


Run, Improve & TransformAllocation of 437K IT Staff

Hours


21

2016 Budget Lori Best (need data)


Project, Enhancements & Operational Activities

Allocation of 437K IT Staff Hours

22December 2015 Citizens Property Insurance Corporation

2016 Budget Lori Best (need chargeback data)IT chargeback has been implemented to support cost/benefit decision making by business units consuming certain IT resources. Technology chargeback includes allocation for desktop and notebook computers, wireless devices, email and telecommunications Business software is licensing charges of software providing capability for business areas. Allocations are made based on actual equipment counts and communication services are pro-rated based on department staff. Application chargeback is based on actual hours applied to development and enhancement of business systems. Allocations are made monthly and represent “fully loaded” costs to include related fixed costs and overhead.

Information Technology IT Chargeback

Division TechnologyCharges

Project Charges EnhancementCharges

Business Applications &

Software

Total Charges

Executive $380,220 $126,830 $11,880 $0 $518,930HR, Facilities & General Services $976,560 $797,940 $28,930 $73,675 $1,877,105Legal Services & Purchasing $373,572 $119,680 $12,540 $23,475 $529,267Communications, Legislative & External Affairs

$194,388 $139,260 $16,390 $12,600 $362,638

Financial Services $368,232 $908,930 $123,310 $1,045,275 $2,445,747

Actuarial, Corporate Analytics, Risk Management & Product Development

$330,696 $1,949,640 $214,940 $109,126 $2,604,402

Claims $3,784,441 $2,050,510 $243,650 $1,537,300 $7,615,901

Underwriting $1,068,732 $1,533,180 $244,200 $1,571,026 $4,417,138

Consumer and Agent Services $1,199,868 $2,431,110 $637,670 $294,100 $4,562,748

Systems & Operations $219,456 $61,270 $440 $23,475 $304,641Totals $8,896,165 $10,118,350 $1,533,950 $4,690,052 $25,238,517


23

Information Technology2016 Budget

Capital ExpendituresSources &

Types


December 2015

Capital Expenditure Description 2015 Budget 2016 Budget EDP Software Claims: Catastrophe Operations EOC Satellite Equipment 700,000 - - Communication System Lifecycle Project: Conference Equipmt. 100,000 - - Jacksonville Building Consolidation Project: EDP Equipment 2,562,500 - - Normal Equipment Capacity and Lifecycle: Network Hardware 20,000 - - Normal Equipment Capacity and Lifecycle: StorageHardware 1,935,500 - - Normal Equipment Capacity and Lifecycle: Server Hardware 200,000 - - Planned Citizens Insurance Suite Capacity: Server Hardware 199,999 - - Planned Citizens Insurance Suite Capacity: Storage Hardware 442,500 - - Software Automation Project: IT Operations Software 70,000 - - Telecommunications Software Projects: Workforce Mgmt. 61,660 - - Telecommunications Software Projects: Lifecycle Upgrade 10,500 - -

Fluke Vbroker Module 22,390 - 22,390 Checkpoint Smart Reporter 21,839 - 21,839 ASA Replace JAX Hosting & Tampa - Existing equipment at EOL 80,000 80,000 - ASA's for Cloud Tunnel Connections - Cloud initative 80,000 80,000 - Big-IQ Virtual Edition manager (30) Instances ADC Device Security Cloud 38,000 38,000 - Audio-video monitoring solution 40,000 40,000 - Projector Lifecycle Refresh - TLH/TPA 10,000 10,000 - Presentation Lifecycle Refresh - TLH/TPA 25,000 25,000 - Alternative Touch Panel AV - TLH/TPA 82,000 82,000 - Refresh Tampa DR server/network equipment 650,000 650,000 - Replace NTM (network Time Machines) 10,000 10,000 - Implement LOM (Lights out Management) 10,000 10,000 - NW - Research Cisco ISE Network Equipment 121,000 121,000 - TEL - MyVRM Scheduling Solution - Conferencing 44,000 44,000 - NW - Fluke Gold Support for Flowview Module 26,920 26,920 - STG - Additional Data Domain Capacity 132,000 132,000 -

STG - Disaster Recovery Site - Trade in TPA CX4 & VNX5300 CX4 and VNX5300 375,000

375,000 - STG - Hybrid Cloud Initiative-Alfresco, Ephesoft & Thunderhead file shares 600,000 600,000 - SE - 2016 - Additional HP Blade Server Hardware for CIS Dev 249,999 249,999 - Additional HP Blade Server Hardware * CAPEX 150,000 150,000 - SE - Capacity Planning Software 75,000 75,000 - VMware Virtual Desktop (Citrix Replacement) 95,000 95,000 - Total Capital Expenditures $ 6,302,659 $ 2,938,148 $ 2,893,919 $ 44,229

100.0% 98.5% 1.5%

Documents

2016 Budget Presentation2