indiana university scoop session – financial opportunities february 8, 2005

Indiana University SCOOP Session – Financial OpportunitiesFebruary 8, 2005

DEFINITIONDEFINITION• Promise

• Transfer of Risk

• Indemnity Principle

• Social Device

TYPES OF INSURANCETYPES OF INSURANCE

• Life

• Health

• Property

• Casualty

INDUSTRY SCOPEINDUSTRY SCOPE

• Almost 5,000 domestic insurance companies

• 2.3 million jobs in 2003 (2.1% average over

past 10 years) • $885 billion in premiums in 2002 (P/C &

L/H)

• Industry rate of return in 2002: 3.2% in P/C, 1.0% in L/H

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

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

CORPORATE SYSTEMSCORPORATE SYSTEMS

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

procedures

DAILY DUTIES - ANALYSTDAILY DUTIES - ANALYST

• Problem Solving

• Project Development

• Operational Assistance

• Coordination

• Communication

• Functional Area of Expertise

ZONE STRUCTUREZONE STRUCTURE

ZONE OFFICE FUNCTIONSZONE OFFICE FUNCTIONS

• Premium Payment Processing

• Cash Disbursements / Claims Support

• Agency Compensation

• Self Audits

• Transformational / Expense Analysis

• People Skills

• Performance Management

• Organization & Planning

• Problem Solving

• Time Management

• Communication

• Coordination

DAILY DUTIES - SUPERVISIONDAILY DUTIES - SUPERVISION

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

STATE FARM PRODUCT LINESSTATE FARM PRODUCT LINES

Auto

Health

Fire

Life

Financial ServicesSF BankMutual Funds

STATE FARM DATASTATE FARM DATA• 20 Affiliated Companies• Mutually owned company• 74 million policies and accounts

in force• $136 billion in

Assets (12/31/03)• State Farm Associates

– 17,00 Agents– 72,000 Total Employees

• About 2,000 Accounting Employees

Source 2003 Annual Report

STATE FARM’S INDUSTRY POSITION • Ranked #18 within Fortune 500

•#1 U.S. Auto insurer since 1942•19% Market Share at end of 2003•Almost 40 million Auto policies

•#1 U.S. Home insurer since 1964•22% Market Share at end of 2003•Currently almost 25 million Fire policies•Top U.S. insurer of pleasure boats

CAREER PATHSCAREER PATHS

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

• Mobility

WWW.STATEFARM.COM