1. Indiana University Corporate Accounting POOP Session September 19, 2000

2. DEFINITION Promise Transfer of Risk Indemnity Principle Social Device

3. REGULATION Highly Regulated By the States

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

5. OPERATING STATEMENTS 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. Personal –Auto –Home –Liability Commercial –Workers Comp –Malpractice –Aviation –Toxic Waste PROPERTY AND CASUALTY LINES

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

10. STATE FARM IN THE FORTUNE 500

11. INDUSTRY POSITIONS Policies in force 35,019,774 14,163,912 5,535,848 1,123,546

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

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. 16 Affiliated Companies 66.7 Million State Farm policies in force Approximately 150,000 State Farm Associates –16,200 Agents –79,300 Employees –1,900 Accounting Employees

29. WWW.STATEFARM.COM