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