1. Indiana University POOP Session – Financial Opportunities
January 28, 2003

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

9. Source Insurance Information Institute 2000 Fact book
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

10. 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
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.

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

12. CORPORATE FUNCTIONS Financial Reporting & Analysis Tax
Investment Accounting

13. CORPORATE FUNCTIONS Accounting Benefits Loss Reserves
Data Management Services

14. CORPORATE FUNCTIONS Auditing Treasury Services
General Accounting Services

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

16. CORPORATE FUNCTIONS
Compliance
Change Management

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

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

19. GENERAL DUTIES People Skills Organization & Planning Problem Solving
Time Management
Communication
Coordination

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

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

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

23. CAREER PATHS
Stability
Diversity
Opportunity
Mobility

24. 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

25. 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

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

27. STATE FARM DATA

28. Source August 2002 People Counts
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