1. Indiana University Corporate Accounting POOP Session
February 1, 2000

2. DEFINITION
Promise
Transfer of Risk
Indemnity Principle
Social Device

3. REGULATION
Highly Regulated By the States

4. GAAP vs. Statutory Accounting
FINANCIAL STATEMENTS
GAAP vs. Statutory Accounting
Operating Statement
Statement of Assets and Liabilities

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

6. STATEMENT OF ASSETS AND LIABILITIES Admitted vs. Non-Admitted
Premium Receivables
+ Investment Assets
- Loss Reserves
- Unearned Premiums
- Operating Liabilities
= Policyholder Protection Fund

7. TYPES OF INSURANCE
Life
Health
Property
Casualty

8. PROPERTY AND CASUALTY LINES
Personal
Auto
Home
Liability
Commercial
Workers Comp
Malpractice
Aviation
Toxic Waste

9. STATE FARM COMPANIES
Auto (Health)
Fire
Life
Bank

10. STATE FARM IN THE FORTUNE 500
With over 40 billion dollars in combined revenue, State Farm is currently the 12th largest revenue earner in the country.
But in the insurance industry…..

11. INDUSTRY POSITIONS
Enjoy a tremendous market share.
* State Farm has been the largest insurer of automobiles since 1942.
* We also insure more homes than any other company. We’ve been number 1 since 1964.
* With over 250 billion dollars of ordinary life insurance in force, State Farm ranks number 6.
* State Farm ranks number 8 overall in the health insurance industry. Of companies writing individual health policies, we rank 2nd.
Policies in force 35,019, ,163, ,535, ,123,546

12. Source Insurance Information Institute 1999 Fact book
INDUSTRY SCOPE
7,900 domestic insurance companies
2.3 million jobs
$3.4 trillion assets
$900 billion premiums
Source Insurance Information Institute 1999 Fact book

13. ACCOUNTING STRUCTURE Centralized vs. De-centralized
Corporate
Regional Offices
Insurance Support Centers (ISC’s)
Supervisory vs. Analytical

14. CORPORATE FUNCTIONS Financial Reporting & Analysis Tax
Investment Accounting

15. CORPORATE FUNCTIONS Mutual Funds/Accounting Benefits Loss Reserves
Data Management Services

16. CORPORATE FUNCTIONS Auditing Treasury Services
General Accounting Services

17. CORPORATE FUNCTIONS Financial Shared Services Accounts Payable
Agency Compensation
Employee Compensation
Travel-Expense
Shared Services Process Analysis

18. CORPORATE FUNCTIONS
Compliance
Change Management

19. SYSTEMS Financial Business Analyst
Current Systems Support
New Systems Development
Create and maintain detailed operating procedures
30 Month Accounting Business Analyst Trainee

20. REGIONAL OFFICE FUNCTIONS
Premium Payment Processing
Cash Disbursements / Claims Support
Agency Compensation
Self Audits
Transformational / Expense Analysis

21. TECHNICAL TRAINING Operating Procedures Hardware and Software
Supervisory Skills

22. PROFESSIONAL DEVELOPMENT
In-House Courses
Insurance Education
ChFC, CLU, CPCU
Professional Designations
CPA, CMA, MBA

23. DAILY DUTIES - SUPERVISION
People Skills
Performance Management
Organization & Planning
Problem Solving
Time Management
Communication

24. DAILY DUTIES - ANALYST Problem Solving Project Development
Operational Assistance
Coordination
Communication
Functional Area of Expertise

25. BENEFITS Medical and Life Insurance Defined-Benefit Retirement Plan
Profit Sharing (401K match)
Education Costs
Flexible Work Hours

26. CAREER PATHS
Stability
Diversity
Opportunity
Mobility

27. STATE FARM DATA

28. Source June 1999 People Counts
STATE FARM DATA
16 Affiliated Companies
Over $111 Billion in Assets (12/31/98)
Approximately 150,000 State Farm Associates
16,221 Agents
80,429 Employees
1,932 Accounting Employees
Source June 1999 People Counts