Indiana University POOP Session – Financial Opportunities September 24, 2002

DEFINITION Promise Transfer of Risk Indemnity Principle Social Device

REGULATION Highly Regulated By the States

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

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

TYPES OF INSURANCE Life Health Property Casualty

STATE FARM PRODUCT LINES Auto Health Fire Life Financial Services SF Bank Mutual Funds

INDUSTRY 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 STRUCTURE Centralized vs. De-centralized –Corporate –Zone Offices –Insurance Support Centers (ISC’s) Supervisory vs. Analytical

CORPORATE FUNCTIONS Financial Reporting & Analysis Tax Investment Accounting

CORPORATE FUNCTIONS Accounting Benefits Loss Reserves Data Management Services

CORPORATE FUNCTIONS Auditing Treasury Services General Accounting Services

CORPORATE FUNCTIONS Financial Shared Services –Accounts Payable –Agency Compensation –Employee Compensation –Travel & Expense –Shared Services Process Analysis

CORPORATE FUNCTIONS Compliance Change Management

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

ZONE 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 DUTIES

SPECIFIC DUTIES Analysts Project Development Operational Assistance Functional Area of Expertise Supervisors Performance Management

TECHNICAL TRAINING On-Line Operating Procedures Hardware and Software –PeopleSoft Application –Microsoft –Numerous proprietary applications Supervisory Skills –CD-ROM Leadership Development Series

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

CAREER PATHS Stability Diversity Opportunity Mobility

IDEAL 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 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

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

STATE 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