Indiana University POOP Session – Financial OpportunitiesSeptember 24, 2002

DEFINITIONDEFINITION• Promise

• Transfer of Risk

• Indemnity Principle

• Social Device

REGULATIONREGULATION• Highly Regulated By the States

FINANCIAL STATEMENTSFINANCIAL STATEMENTS

• Operating Statement

• Statement of Assets and Liabilities

GAAP vs. Statutory AccountingGAAP vs. Statutory Accounting

OPERATING STATEMENTSOPERATING STATEMENTS

Earned Premiums (Sales)- Losses (Cost of Goods Sold)- Operating Expenses---------------------------------------------= Underwriting Profit/Loss+/- Investment Income---------------------------------------------= Operating Net Income

STATEMENT OF ASSETS AND LIABILITIES

Admitted vs. Non-Admitted

STATEMENT OF ASSETS AND LIABILITIES

Admitted vs. Non-Admitted

Premium Receivables+ Investment Assets- Loss Reserves- Unearned Premiums- Operating Liabilities---------------------------------------------= Policyholder Protection Fund

TYPES OF INSURANCETYPES OF INSURANCE

• Life

• Health

• Property

• Casualty

STATE FARM PRODUCT LINESSTATE FARM PRODUCT LINES

Auto

Health

Fire

Life

Financial ServicesSF BankMutual Funds

INDUSTRY SCOPEINDUSTRY SCOPE

• 7,200 domestic insurance companies

• 2.3 million jobs

• $3.4 trillion assets

• $900 billion premiums

Source Insurance Information Institute 2000 Fact book

STATE FARM’S INDUSTRY POSITION

• Ranked #25 within Fortune 500• #1 U.S. Auto insurer since 1942

• Insure 1 of every 5 automobiles• Met goal - 40 million Auto policies by 2003

• #1 U.S. Home insurer since 1964• Insure 1 of every 4 homes• Top U.S. insurer of pleasure boats

ACCOUNTING STRUCTUREACCOUNTING STRUCTURE

• Centralized vs. De-centralized– Corporate

– Zone Offices

– Insurance Support Centers (ISC’s)

• Supervisory vs. Analytical

CORPORATE FUNCTIONSCORPORATE FUNCTIONS

• Financial Reporting & Analysis

• Tax

• Investment Accounting

CORPORATE FUNCTIONSCORPORATE FUNCTIONS

• Accounting Benefits

• Loss Reserves

• Data Management Services

CORPORATE FUNCTIONSCORPORATE FUNCTIONS

• Auditing

• Treasury Services

• General Accounting Services

CORPORATE FUNCTIONSCORPORATE FUNCTIONS

• Financial Shared Services

– Accounts Payable

– Agency Compensation

– Employee Compensation

– Travel & Expense

– Shared Services Process Analysis

CORPORATE FUNCTIONSCORPORATE FUNCTIONS

• Compliance

• Change Management

SYSTEMSSYSTEMS

• Financial Business Analyst– Current Systems Support– New Systems Development– Create and maintain detailed operating

procedures

ZONE OFFICE FUNCTIONSZONE OFFICE FUNCTIONS

• Premium Payment Processing

• Cash Disbursements / Claims Support

• Agency Compensation

• Self Audits

• Transformational / Expense Analysis

• People Skills

• Organization & Planning

• Problem Solving

• Time Management

• Communication

• Coordination

GENERAL DUTIESGENERAL DUTIES

SPECIFIC DUTIESSPECIFIC DUTIES

Analysts

• Project Development

• Operational Assistance

• Functional Area of Expertise

Supervisors

• Performance Management

TECHNICAL TRAININGTECHNICAL TRAINING

• On-Line Operating Procedures

• Hardware and Software– PeopleSoft Application– Microsoft– Numerous proprietary applications

• Supervisory Skills– CD-ROM Leadership Development Series

PROFESSIONAL DEVELOPMENT

PROFESSIONAL DEVELOPMENT

• In-House Courses

• Insurance Education

–ChFC, CLU, CPCU

• Professional Designations

–CPA, CMA, MBA

CAREER PATHSCAREER PATHS

StabilityStability

DiversityDiversity

OpportunityOpportunity

MobilityMobility

IDEAL CANDIDATESIDEAL CANDIDATES

• Accounting majors with a minimum of 9 hours of CIS/MIS

• Finance and Other majors with a minimum of 9 hours of Accounting and 9 hours of CIS/MIS

• CIS/MIS majors with a minimum of 9 hours of Accounting

• “B+” GPA overall and in major

IMPORTANT TRAITSIMPORTANT TRAITS

Real world experiences

Technical skills GPA Leadership

qualities Personal

presentation Attitude Ability to learn

Problem analysis and analytical thinking

Customer service orientation

Adaptability, drive and initiative

Proven track record

Passion for work

BENEFITSBENEFITS

• Medical and Life Insurance

• Defined-Benefit Retirement Plan

• Profit Sharing (401K match)

• Education Costs

• Flexible Work Hours

STATE FARM DATASTATE FARM DATA

STATE FARM DATASTATE FARM DATA• 19 Affiliated Companies• Mutually owned company• 71.6 million policies in force• $117 billion in

Assets (12/31/01)• State Farm Associates

– 16,500 Agents– 78,155 Total Employees

• About 2,000 Accounting Employees

Source August 2002 People Counts

WWW.STATEFARM.COM