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FARMERS® AGENCY FORCE DEFERRED COMPENSATION PLAN Exclusively for agents and district managers

2017 Summary & Highlights

THE FARMERS® AGENCY FORCE DEFERRED COMPENSATION PLAN

This summary highlights the features of the Farmers Agency Force Deferred Compensation Plan. In case of a conflict between this summary and the Plan Document, the Plan Document will be the final authority.

This information is designed to help you understand the potential advantages of tax-deferred Plans and the specifics of how this Plan works. We suggest that you and your personal financial and/or tax advisor carefully review this information to decide how this Deferred Compensation Plan may fit into your financial planning strategies.

This Plan is administered by the Deferred Compensation Committee, which has discretionary authority to interpret and apply the Plan provisions, and make the rules necessary for its day-to-day operation. Prudential is the Plan Recordkeeper responsible for maintaining and reporting participant elections and account balances.

Your deferrals are credited to your account on the first business day of each month during the Plan year. The deferrals for the 2017 Plan year will be on your March 2017 folio through your January 2018 folio (there will be no deferral from your February folio).

Elections for participants who deferred commissions

Please note that this Plan has been redesigned to

comply with the deferred compensation provisions

of the American Jobs Creation Act of October 2004

that went into effect the beginning of 2005 – adding

Section 409A to the Internal Revenue Code. The

description of this Plan in this and other materials,

including enrollment materials, reflects the

redesign and our current understanding of the new

provisions. The Internal Revenue Service may issue

additional clarification in the future. Thus, we must

reserve the right to modify the Plan as necessary to

comply with the Act, and we will promptly notify you

of any changes.

for the 2016 Plan year will automatically be carried forward to the 2017 Plan year, except for Scheduled In-Service Withdrawals, which must be elected each year.

Under Rule 505 of Regulation D (SEC regulations) a company must be registered under federal securities laws unless it qualifies for an exemption. The exemption applies to public offerings that do not exceed $5 million per company in any 12 month period. Deferrals to the Plan would cease upon reaching the $5 million limit. Each participant will be asked personal financial questions (Regulation D questions) to determine whether he/she qualifies as an “Accredited Investor.”

TABLE OF CONTENTS

Introduction ................................................................................... 1

Advantages of this Plan ................................................................... 2

What you can contribute ................................................................. 3

How your account grows ................................................................. 5

When you can get payouts .............................................................. 6

Election change summary ............................................................... 9

Summary of enrollment ..................................................................10

Asset allocation ............................................................................. 11

Tax aspects ....................................................................................13

Risks of a deferred compensation plan ............................................14

Calculating deferrals ......................................................................16

©2016 MullinTBG, A Prudential Financial company. No part of these materials may be reproduced or transmitted in any form or by any means, electronic

or mechanical, including photocopy, recording or any information storage and retrieval system, except in conjunction with the Farmers Agency Force

Deferred Compensation Plan. The information contained herein is based on our understanding of tax, legal, accounting and investment issues. It is not

intended and must not be used as a basis for tax, legal, accounting or investment advice. Please consult your advisor(s) for how the issues addressed

apply to your particular situation.

Questions? Call the Farmers Deferred Compensation Helpline, 800. 487.0042 M – F, 6 am – 6 pm, Pacific Time1

INTRODUCTIONIntroductionOur agents and district managers are the bedrock of the Farmers Insurance Group of Companies® (“Farmers”). This is why we created an exciting deferral opportunity for you: the Farmers Agency Force Deferred Compensation Plan (the “Plan”).

The Farmers Agency Force Deferred Compensation Plan is a non-qualified plan that was developed to provide you with an additional way to plan for your financial future. This Plan allows you to:

Plan for short-term and long-term goals tax-efficiently

Supplement your other savings efforts

Utilize tax-advantaged investment options

Reduce your income tax liability

How this Plan worksThe Plan is completely voluntary. You may contribute 10% to 50% of your Auto new business commissions, 5% of your Commercial new business commissions, or 10% to 100% of your Profitable Growth Bonus. When you do so, you are deferring receipt of this portion of your commissions until a later date that you choose - as early as three years from the beginning of the Plan year or as late as your contract termination.

Once you choose to defer, Farmers creates a bookkeeping account in your name and promises to pay you your balance at a future date that you select. Returns are credited to your account based on your selection from a wide variety of investment choices.

Each month during the Plan year, you can view your deferral amount in the Schedule of Deductions on e-Folio (See example on page 17).

What’s so special about this Plan? You can defer more pre-tax dollars than

other plans

Pre-tax deferrals grow faster than after-tax savings

You select the deemed investments for your account

You don’t have to wait until you leave Farmers to get a payout

Your contributions are automatically deducted from your folio

Flexibility to contribute from multiple lines of business and your Profitable Growth Bonus

Who is eligible?Full-time agents, district managers, and career agents who were appointed on or before June 30, 2016 are eligible to enroll in the 2017 Plan year. Not eligible: Agency Business Consultants, District Life Specialists, District Commercial Specialists, District Manager Training Administrative Assistants, Agency Producers, Reserve Agents and employees of agents or district managers.

Note: If you are a career agent who is receiving subsidy, the amount of your monthly match subsidy may be reduced by what you contribute to the Deferred Compensation Plan.

Why enroll?You sell Auto insurance to protect your customers against things they hope won’t happen. Will your savings be enough to prepare you for something you know will happen… like retirement?

With people living longer and retiring earlier to more active lives, Social Security and other sources of retirement income are not likely to cover your future financial needs. The Plan can help you fill the retirement savings gap, and is flexible enough to help cover your short-term needs as well, such as building your business, or to pay for your child’s education.

Assumptions for above illustration:

47 year-old, with 20 years of retirement starting at age 65

Compensation increased 4% annually

Social Security increased using a 2% annual cost-of-living

adjustment

7% annual return

100

90

80

70

60

50

40

30

20

10

$75,000 $150,000 $300,000

Additional Income That May Be

Needed During Retirement

Social Security

Current Compensation

Perc

enta

ge o

f Fin

al C

ompe

nsat

ion

Estimated Contract Value

Questions? Call the Farmers Deferred Compensation Helpline, 800.487.0042 M – F, 6 am – 6 pm, Pacific Time 2

INTRODUCTION ADVANTAGESPre-tax deferrals can help reduce your riskReturns on your deferral account are not taxable until distributed, unlike traditional after-tax savings. To achieve a return equivalent to tax-deferred Plans, traditional after-tax savings would have to generate more than 50% higher returns, which means they would generally have to be invested more aggressively in higher risk instruments.

If your tax-deferred rate of

return is:

You’d need this rate of return without

tax deferral:

5% 7.5%

7% 10.5%

9% 13.6%

Addresses your future financial needs

“From a tiny acorn, a mighty oak tree grows”You assist your customers in planning for their financial future. This Plan is a way to help you plan for your financial future. Even with a modest deferral each month, the Plan can help your account grow to a tidy sum over time.

Monthly

DeferralAfter

5 yearsAfter

10 yearsAfter

15 yearsAfter

20 years

$100 $7,384 $17,740 $32,266 $52,638

$250 $18,460 $44,351 $80,664 $131,596

$500 $36,920 $88,702 $161,328 $263,191

Advantages of this Plan

This Plan is tax-effective Taxes are not due on the money in your Plan account until balances are distributed in the future. Whatever you contribute to your account is not diluted by taxes. Whatever your account earns is not diluted by taxes, either. Over time, this tax advantage can make a significant difference.

Puts more money to work pre-tax

Pre-tax deferrals put your entire dollar to work, not just 60 cents, like after-tax savings (assuming 40% taxes). After-tax savings have less earning power, because they are taxed before you invest.

Defers taxes on investment returns, too

Your contributions plus all returns are tax-deferred and not eroded by taxes while in your account. Your net account earnings are not taxed until balances are paid out.

Gain an opportunity to generate more

Your pre-tax deferrals grow faster than after-tax savings invested at the same rate, and yield more even after paying taxes at the time of distribution. Because your account grows tax-deferred until distributed, the advantage of tax-deferral increases over time.

* Based on distribution after 20 years of contributions

Financial assumptions for illustrations on this page:

Pre-tax returns of 7% annually Ordinary federal income tax rate of 39.6%; state

income tax is not factored in analysis due to variations among states; if it were, the benefits of deferring compensation would be even higher

Investment Returns are taxed at 33.6% ( 1/2 taxed at capital gains rate of 20%; 1/2 taxed at ordinary income tax rate of 39.6% plus a Medicare surtax of 3.8% in investment gains)

Increased Benefit of Tax-Deferred Plans*

Single lump sum

5 annual installments

10 annual installments

Payout method

+44%+37%

+32%


What you can contributeEach year, you may defer from 10% to 50% of your Auto new business commissions, 5% of your Commercial new business commissions, or 10% to 100% of your Profitable Growth Bonus. Annual enrollment for the 2017 Plan year will be from October 17, 2016 through November 6, 2016.

How long your deferral elections stay in effectIf you made a deferral election for the 2016 Plan year, it will carry forward to the 2017 Plan year, unless you make a new deferral election during annual enrollment. New participants must make a deferral election during annual enrollment.

Note: If your deferrals have stopped due to a hardship withdrawal, your elections will not automatically carry forward to the next plan year.

For dual agents who write business under both

SSN and tax ID number (operating as a sole

proprietorship under one agent number and as a

corporation under another agent number):

You may defer to the Plan under either or both

identification numbers. If you choose to defer

under both numbers, each deferral will be

placed in a separate account. You may make

different elections for each account during annual

enrollment.

When deferrals are credited to your accountYour deferrals are credited to your account on the first business day of each month during the Plan year. The deferrals for the 2017 Plan year will begin with your March 2017 folio and end with your January 2018 folio (there will be no deferral for the February folio).

Note: No deferral will be taken for monthly contributions of less than $10.00 per company (individually for Farmers, TCM, and Truck, or collectively for MCA and Bristol West).

CONTRIBUTIONS


How much can you afford to defer? You should consider all of your sources of income and your assets, and ask yourself if you have a savings account or other liquid assets to cover unanticipated expenses. You should get into the habit of “paying yourself” first each month. The Plan is a great way to do that because amounts deferred are automatically deducted from your folio.

Can you live with your deferral election?

Whatever you decide to contribute, you cannot make changes to the deferral percentage you elected after annual enrollment ends. Your contribution election remains the same for the entire year. If you deferred for the 2016 Plan year, your deferral percentage will automatically carry forward to the 2017 Plan year, unless you go online to change it during annual enrollment.

What is the cost of waiting?

The sooner you start deferring, the more you accumulate. The longer you wait, the more you will have to defer. See below.

Deferring $7,500 per year until 2037 can grow to…

Starting 2016 $328,989

Waiting 3 years $247,493


To accumulate $328,989 by 2037, you’d have to defer this much each year:

Starting 2016 $7,500



SAVING ENOUGH FOR RETIREMENT?

MullinTBG’s online Retirement Gap

Assessment tool can help you find out.

Before you make a deferral election, you should consider the following:

Financial assumptions for illustrations on this page: Pre-tax returns of 7% annually Ordinary federal income tax rate of 39.6%; state income tax is not factored in

analysis due to variations among states; if it were, the benefits of deferring compensation would be even higher

Investment Returns are taxed at 33.6% ( 1/2 taxed at capital gains rate of 20%; 1/2 taxed at ordinary income tax rate of 39.6% plus a Medicare surtax of 3.8% in investment gains)

Questions? Call the Farmers Deferred Compensation Helpline, 800.487.0042 M – F, 6 am – 6 pm, Pacific Time5

How your account grows

Making investment elections You may make a separate investment election for each Plan year. This feature is helpful if you have different goals (and investment risks) for each year’s balance. For example, this year you may defer compensation to build for retirement — a long-term goal. Next year, you may want to defer compensation for your child’s education beginning three years from now — a short-term goal.

WANT HELP SELECTING INVESTMENTS?

MullinTBG’s online Asset Allocation tool can help you choose a mix that matches your investment risk profile, or call 800.487.0042 and ask to speak with an investment advisor.

Available investment crediting choicesA variety of investment options are available in an array of asset classes, offering the opportunity for diversification. The investment crediting choices are not publicly traded mutual funds and are only available through variable insurance products. Before making an investment allocation, please review the description of each investment choice.

Changing your investment elections You may change your investment allocations monthly. There’s no fee, but changes must be made by the 25th of the month to be effective the first business day of the following month.

Note: Changes apply only to the Plan year(s) you indicate.

Each fund description is online, and you can make investment election changes online at www.farmersagentsbenefits.com - for specific instructions, see page 15.

About your “investments” To preserve the Plan’s tax-deferred status, federal law requires that its available investment alternatives be “deemed investments.” That means that you have no ownership interest in the funds you select; the funds are only used to measure the gains or losses that will be attributed to your deferral account over time. Your deferrals and any earnings attributed to those deferrals will be reflected on Farmers’ books, and your deferral balance remains a general obligation of Farmers.

Your account can grow in two ways:

1. Your account is credited with the percentage of Auto new business commissions and/or Commercial new business commissions and/or Profitable Growth Bonus that you elected to defer at enrollment from your March through January folios.

2. In addition, your account will be credited with the earnings of the investment options that you select. (Note, the investment options you select could experience losses, which could decrease your account value.)

The Plan allows you to:

more Plan years

Monthly account statementsOnce you have activated your online account, you may access your account details and print statements via: www.farmersagentsbenefits.com.

Right to change the investment crediting optionsFrom time to time, Farmers may change the available investment crediting options. If there is such a change, every attempt would be made to notify you in advance to allow you to reallocate your deferrals as necessary.

INVESTMENTS

Diversify your deferrals among a variety of investment crediting options with differing risks and returns

Choose asset allocations that align with the specific goals you have for a Plan year

Make changes as often as monthly

Apply investment changes only to the Plan year you indicate – or apply changes to two or more Plan years

http://www.farmersagentsbenefits.com/



When you can get payoutsThe Plan is flexible enough to accommodate both your short-term and long-term financial goals. Unlike other pre-tax plans, the Plan allows you to schedule penalty-free withdrawals from your account while still under contract with Farmers. As such, the DCP can be an excellent way to plan for such goals as growing your business, a child’s education or your retirement. Also, remember that your deferrals grow on a pre-tax basis and that you are not taxed until the account balance is paid out.

Each year, during annual enrollment, you can make two distribution elections for the upcoming Plan year’s balance – one is optional, the other is mandatory:

1. Scheduled In-Service Withdrawal – Optional Election You may elect to have the upcoming Plan year paid to you as early as three years from the start of the Plan year (e.g., as early as 2020 for the 2017 Plan year), as long as you are under contract at the time payment is scheduled to occur. You may choose to receive this distribution while under contract in a lump sum or annual installments over two to four years, however, this election must be made each year during annual enrollment, as it does not roll over from year-to-year. Note: In both instances, to receive annual installments you must meet certain requirements – see Payout Options section for details.

2. After Contract Termination – Mandatory Election This election designates how you would like your Plan year balance paid out to you at contract termination. You may choose to receive it as a lump sum or annual installments over two to ten years. This election does roll over from year-to-year, and if you would like to change it for the upcoming Plan year, you must do so during annual enrollment.

When do you need the money and for what?In making your election, you will want to consider when you will need the money and what you will need it for. Your financial goals (a child’s education, retirement, etc.) will help you decide the type of distribution you elect. The chart below gives some examples of the flexibility of the Plan’s distribution options.

What if I need my account balance before a scheduled distribution date or I have an unexpected emergency?

In the event of an “unforeseeable emergency,” you can apply to the Deferred Compensation Committee for a Hardship Distribution. See Hardship Distribution (page 8) for details. However, apart from these three distribution methods (Scheduled In-Service, After Contract Termination and Hardship), there are no other provisions to withdraw from your account.

Flexible Options: Elect a different distribution for each Plan year, depending on your goals

Plan years Goals

20202017

2018

To use your 2019 balance to pay for a child’s education beginning in 2024…Elect a Scheduled In-Service Withdrawal to be paid in 2024 in 4 annual installments

2019 2024

Contract Termination

DISTRIBUTIONS

If you wish to use your 2017 balance to pay for a dream vacation…Elect a Scheduled In-Service Withdrawal to be paid in 2020 as a lump sum

If you wish to use your 2018 balance to plan for retirement…Elect a Contract Termination distribution in a lump sum or 2–10 annual installments


Payout optionsScheduled In-Service Withdrawals (while under contract - optional)By planning ahead, you may elect to receive a specific Plan year’s deferral balance as early as three years from the start of the Plan year, as long as you are under contract at the time payment is scheduled to occur. This is called a Scheduled In-Service Withdrawal. You must decide each year during annual enrollment whether you want to receive that specific upcoming Plan year’s balance as a Scheduled In-Service Withdrawal.

For instance, you may elect to receive your 2017 Plan year balance as early as 2020. You may choose the payment method – a lump sum or 2–4 annual installments. If you elect installments and your Plan year balance is less than $20,000 at the time of distribution, your payment will be in a lump sum.

For dual agents who write business under both SSN

and tax ID:

If during annual enrollment you defer under both,

and want to elect a Scheduled In-Service Withdrawal

for both, you will need to make this election for each

account, and the two elections could be the same or

different. These elections need to be made during

Annual Enrollment for the upcoming Plan year.

Balances that are $5,000 or less at the time of an annual installment distribution will be paid in a lump sum, regardless of the number of installments that are remaining.

When are Scheduled In-Service Withdrawals

paid? Distributions are paid in a lump sum (or installments commence) in March of the year you elected, as long as you are still under contract with Farmers at the time of payment.

If you separate from Farmers prior to a Scheduled In-Service Withdrawal, your account balance will be paid according to your Contract Termination election(s) (See page 8 for details).

If you separate from Farmers while receiving Scheduled In-Service annual installments, the balance of the distribution will be paid as scheduled provided you have been under contract with Farmers for at least 5 full years; otherwise, it will be paid as a lump sum.

Are changes allowed? Yes, you may postpone payment of each Scheduled In-Service Withdrawal or change the payment method (from lump sum to installments or vice versa), as long as you submit the change at least 12 months prior to the payment date you previously elected.

Note: The new payment date must be at least 5 years later than the one you previously scheduled.

How? Submit a Scheduled In-Service Withdrawal Election Change online at least 12 months prior to the payment date you previously elected.

Example: If your original election is to take

the Scheduled In-Service distribution in

March 2018, and if you want to change it, you

must submit your request by February 28,

2017 and the new date of the distribution has

to be 2023 or later.


For dual agents who write business under both SSN and tax ID:

If you defer under both, you will need to make Contract Termination distribution elections for each account, and the elections can be the same or different.

When are distributions paid? Your Contract Termination distribution will be paid (or installments will commence) as soon as administratively feasible following the month you terminate your contract with Farmers (typically two to three months after termination). Any subsequent installments will be paid annually each March thereafter.

Note: Balances that are $5,000 or less at the time of an annual installment distribution will be paid in a lump sum, regardless of the number of installments remaining.

A change in status does not constitute a contract termination. Your participation in the Farmers Agency Force Deferred Compensation Plan will continue in your new status: You will not be able to stop deferrals, and you will not be able to change the deferral percentage. Examples of status changes include an Agent becoming a DM, or a DM becoming an Agent. Although the contract that you will be under will be different, you will still be under contract with Farmers, and therefore your contract will not be considered terminated, and you will not be eligible for a contract termination distribution under the Plan provisions.

Are changes allowed? Yes, you may change your Contract Termination distribution election one time for each Plan year. However, the change will delay the commencement of payment for 5 years after your contract termination. If you have more than one account under this Plan, you will need to submit separate changes for each Plan year you wish to change.

How? Submit a contract termination distribution election change online at least 12 months prior to contract termination. If the contract termination occurs less than 12 months after the change is submitted, the prior distribution election will apply.

Change your contract termination distribution online at www.farmersagentsbenefits.com.

Payments after contract termination (Mandatory)Even if you elected a Scheduled In-Service Withdrawal for a Plan year, you must also elect a distribution for Contract Termination, because it can govern how the Plan year balance is paid in the event you leave Farmers prior to your Scheduled In-Service Withdrawal.

For each Plan year balance, you may choose a different payment method, either lump sum or 2–10 annual installments. To be eligible for installments, your contract termination must be voluntary, you must have been under contract with Farmers for at least 5 years and you must have a balance of at least $20,000.

Hardship distributionYou cannot withdraw your balance prior to a Scheduled In-Service Withdrawal or prior to contract termination, except for an “unforeseeable emergency.” An “unforeseeable emergency” is defined as a severe financial hardship resulting from an illness, accident or casualty loss to you, your spouse or dependent (as described in the Plan document) that is due to circumstances beyond your control. Examples of an “unforeseeable emergency” could be hospital bills for a sick loved one, disability due to a motor vehicle accident, property damage caused by a natural disaster, or unforeseen legal bills.

To receive a hardship distribution, you must apply to and receive approval from the Deferred Compensation Committee. The hardship distribution is limited to the amount necessary to satisfy the emergency, and supporting documentation must be submitted to justify the requested amount. After receiving a hardship distribution, you will be ineligible to defer for the remainder of the Plan year, and your elections will not roll over to the next Plan year.

DeathIn the event of your death prior to the distribution of your entire account balance, the beneficiary(ies) you designate will receive your account balance as a lump sum. You may change your beneficiary at any time.

Change your beneficiary designation online at www.farmersagentsbenefits.com. See specific instructions on page 15.

Use a Scheduled In-Service Withdrawal to plan for shorter-term goals like a child’s education.




Election Type Description

ONLINE ELECTIONS AVAILABLE DURING ANNUAL ENROLLMENT (for the upcoming Plan year)

Deferral Percent

Select percent to defer or to cancel “evergreen election” (a deferral election that remains in place

year-to-year) however the deferral percentage cannot be changed during the Plan year after

annual enrollment has closed. - Page 3

Investment Select percent of deferrals to allocate to various investment options - Page 5

Distribution Choose Scheduled In-Service Distribution (optional election) and/or

Contract Termination Distribution (mandatory election) - Pages 6 through 8

Beneficiary Designate Primary Beneficiary(ies)

Contingent Beneficiary(ies) (optional)

- Page 8

ONLINE CHANGES ALLOWED OUTSIDE OF THE ANNUAL ENROLLMENT PERIOD

Investment You can make monthly investment changes online. Changes submitted by the 25th of any month

will be made effective the 1st of the following month

If you have more than one account in the Plan, a separate change would need to be filed for each

account you wish to change

Select the Plan year(s) that you wish to reallocate, or select “All”

- Page 5

Scheduled In-Service Withdrawal

You can postpone the timing and/or change the form of payment as long as you do so by the last

day of February one year prior to the scheduled distribution start date

The change does not take effect for at least 12 months, and any change will require that the

payment start date be delayed at least 5 years from when it previously would have commenced

Each Plan year’s Scheduled In-Service Withdrawal election is independent of each other; separate

changes need to be submitted for each Plan year election you wish to change


account/Plan year you wish to change

- Page 6 , 7

Contract Termination Distribution

You can change the form of payment of your Contract Termination distribution one time for each

Plan year as long as you do so at least one year prior to your date of contract termination

A change does not take effect for 12 months, and will require that the payment start date be

delayed 5 years after contract termination

Each Plan year’s Contract Termination distribution is independent of each other; a separate

change would need to be submitted for each Plan year election you wish to change


account/Plan year you wish to change

- Page 8

Beneficiary Add, change or update your beneficiary(ies) at any time - Page 8

Election change summary

CHANGES


CHANGES

How do I enroll?

Annual enrollment is from October 10, 2016 through October 30, 2016 for the 2017 Plan year; deferrals begin with your March 2017 folio

To enroll, go to www.farmersagentsbenefits.com - See instructions on page 15

Who needs to enroll?

New participants (not currently deferring for the 2016 Plan year) Current participants who want to:

• Elect a Scheduled In-Service Withdrawal for their 2017 Plan year• Change their current elections• Cancel participation in the 2017 Plan year

Enrollment elections

1. Contribution (Deferral) election – What you want to contribute to the Plan for the 2017 Plan yearYou may contribute from 10–50% of your Auto new business commissions and/or 5% of your Commercial new business commissions and/or 10-100% of your Profitable Growth Bonus

No changes are allowed to this election after annual enrollment closes

2. Investment election – Where you want to “invest” your 2017 Plan year balance The Plan offers a variety of investment options in an array of asset classes

You may change your investment allocations monthly

3. Distribution election – When and how you’d like your 2017 Plan year balance paid

WHEN

While under contract with Farmers (Scheduled In-Service Withdrawals) – Optional election; does not roll over – as early as three years after the start of the Plan year

After Contract Termination – Mandatory Election; rolls over from year-to-year

HOW

Choose between receiving a lump sum or annual installments (see pages 6 – 8 for details)

To receive a Scheduled In-Service Withdrawal for the 2017 Plan Year (distribution in 2020 or later) you must elect it during the 2016 annual enrollment, even if you are a current participant

4. Beneficiary election – Who receives your balance in the event of your death The first time you enroll in the Plan, you must designate your beneficiary(ies)

You may change or update your beneficiary(ies) at any time

Plan administration and recordkeeping

This Plan is administered by the Farmers Deferred Compensation Committee, which has discretionary authority to interpret and apply the Plan provisions, and make the rules necessary for its day-to-day operation. MullinTBG, a Prudential Financial company is the Plan Recordkeeper, responsible for maintaining and reporting your elections and account balances.

Farmers has the right to amend or terminate the Plan, in whole or in part, at any time. No amendment or termination of the Plan will retroactively reduce any amounts allocated to your account.

Summary of enrollment

SUMMARY



Asset allocationWhat is asset allocation?Asset allocation refers to the strategy of diversifying your balance among different asset classes, such as fixed income (money market and bonds), small-, mid-, large-cap, or international equities. Because different asset classes historically respond differently to market conditions, diversifying can help manage overall risk, while still targeting an acceptable return.

Why is asset allocation important?Over time, more than 90% of portfolio performance is due to the allocation among asset classes, not market timing or individual fund selection.* Asset allocation can help insulate you from the ups and downs of a particular market sector.

Which asset allocation is right for you?The answer depends on your personal situation, your financial goals, how soon you need the funds and your risk tolerance.

A service incorporated into the Plan to assist you with your fund selection and asset allocation is the investment expertise of Global Portfolio Strategies, Inc. (GPSI), a Registered Investment Adviser and a subsidiary of Prudential Financial.

Speak directly with a GPSI investment professional by calling 800.487.0042 and asking for an advisor.

Do you… Pick the same investment options each

year?

Choose the same funds for your short- and long-term goals?

Select investments based on recent performance?

Try to time the market?

If you answered “yes” to any of these questions… asset allocation may help.

Short-term goals are likely to generate a different

asset allocation than long-term goals – your account

may need more than one asset allocation.

ASSET ALLOCATION ASSISTANCE IS AVAILABLE ONLINE

MullinTBG’s online Asset Allocation tool can help you choose a mix that matches

your investment risk profile.

Call 800.487.0042 and ask to speak to a GPSI

Investment Advisor to help finalize your decision

ASSETS

* Source: “Determinants of Portfolio Performance II,” Brinson, Beebower & Singer, Financial Analysts Journal, May 1991


CURRENT DEEMED INVESTMENTS

• 10% Fixed Income 90% Equity Allocation Fund Managed Portfolio





• Deutsche Small Cap Index VIP - Class A Shares Small Cap Blend

• DFA VA Global Bond World Bond

• DFA VIT Inflation-Protection Securities Inflation-Protected Bond

• Fidelity VIP Govt Money Market - Initial Class Money Market

• Fidelity VIP Index 500 - Initial Class Large Cap Blend

• LVIP SSgA Bond Index - Standard Class Intermediate-Term Bond

• LVIP SSgA International Index - Standard Class Foreign Large Blend


Tax aspectsDeferralsNo taxes are withheld from deferrals. Whatever you contribute to the Plan will not appear on your 1099. Taxes are not assessed until there is a distribution from your account.

Investment returnsInvestment returns credited to your account are not subject to income taxes (federal and state) or self-employment taxes, until distribution.

DistributionsAll distributions from the Plan (including investment returns) are treated as ordinary income, subject to income taxes (federal and state) and self-employment taxes at the time of distribution, including the 3.8% Medicare tax on net investment income applicable to certain taxpayers.

Changes in filing status (from SSN to tax ID, or vice versa):

When you change your filing status, a new deferral account will automatically be created for the new entity. All of your current elections (deferral, distribution and investment) will carry over to the new account. All future deferrals will be credited to the new account, while prior balances will remain in the initial account.

Tax consequences of interstate residency

Under current rules, retirement benefits paid in installments for 10 years or more will be subject to income taxes in your state of residence at the time payments are received, but not in the state where you originally earned the compensation (if different). For example, assume you worked in California (which has a state income tax) and then retired to Nevada (which does not have a state income tax).

If you elected to receive payments for 10 years or more, you would pay no state income tax to either Nevada or California.

If you took your payment in a lump sum, California might subject your lump sum to income tax even though you lived in Nevada when you received your benefit payments.

On the other hand, assume you worked in California and retired to North Carolina (which also has a state income tax). If you took your payment in a lump sum, in addition to the income tax you owe to your state of residence (North Carolina), California might also subject your lump sum to income tax.

In this event, you could receive a credit against the California state tax for the tax you paid to North Carolina. In other words, assuming you received the credit, your combined state income tax rate would equal the higher rate of the two states.

Check with your tax advisor regarding the various state tax implications of your receipt of retirement benefits.

Questions for your tax advisor about incorporationIf you have incorporated your agency or your district, or are planning to do so at a later date, participation in the Plan may pose special tax and retirement planning issues. Before participating, you should consult your tax advisor and discuss the following:

How does participation in the Plan fit within the retirement planning framework already established by your corporation, including any qualified retirement plans that you may have established?

Does the method of accounting utilized by your corporation allow income to be deferred?

Upon the termination or sale of your corporation (or the retirement of the principal agent), would there be any special tax impacts to your account balance?

What effect will your commission deferral have if an agency producer associated with your corporation is entitled to a share of your commissions?

Are there any tax considerations that impact your current year participation in the Plan if you incorporate the agency mid-year (see Restrictions below)?

If you later choose to incorporate, are there any tax impacts to your account balance that you accumulated prior to incorporation (see Restrictions below)?

Restrictions on incorporated Plan accounts

To ensure consistent treatment of Plan accounts, we have instituted the following restrictions on the transfer of account balances with respect to incorporated entities.

If an individual agent did not elect to defer any commission, the “waiver” will continue in effect, and a new election will not be allowed.

If you have an individual Plan balance at the time of incorporation, you will not be allowed to transfer it to the corporation. A separate account will be created for future deferrals made by the corporation.

TAXES


Investment risksThe value of your Plan account will vary depending on the performance of the investment crediting option or options you select. There are risks associated with each of the investment crediting options.

Fund performances can fluctuate. Past performance of a particular investment crediting option may not be predictive of future performance. Depending on market conditions and other factors, it is possible that at distribution you could receive less money than you deferred. You must be willing to bear this risk. Neither Farmers nor MullinTBG guarantees investment returns.

A special note about fundingTo preserve the tax-deferred advantages of a deferred compensation plan, federal law requires that it be an unfunded or informally funded future promise to pay. Otherwise, the deferred compensation will be treated as if it were received at the same time it was deferred, and be subject to income tax at that time, rather than at some future date when it actually is distributed. At this time, the Farmers Agency Force Deferred Compensation Plan satisfies these federal law requirements.

Your deferrals and any earnings attributable to those deferrals will be reflected on Farmers’ books, and your deferral balance remains a general unsecured obligation of Farmers.

Changes in tax or other applicable lawsChanges in tax statutes and regulations may require changes to Plan features or the termination of the Plan. The Plan will be administered consistent with applicable regulations in order to allow deferral of income. Should tax or other legal regulations change, certain Plan features may no longer be available. Farmers makes no representation or guarantee concerning future tax treatment or the availability of any Plan feature.

No right to continued contractual relationshipNeither your participation in the Plan, nor your rights to the Plan account, guarantees your continued contractual relationship with Farmers. Participation in the Plan does not modify the terms of your appointment agreement.

Changes in contract statusPlease be aware that some changes in contract status, such as termination for cause, or transferring from an agent to an agency producer, may result in your account being distributed earlier than you planned. This could result in a significant tax liability. You should consult your tax advisor.

Irrevocable trustThe deferred compensation and investment earnings thereon are held as an asset of Farmers within an irrevocable trust. This trust provides you a measure of protection.

The irrevocable trust protects the assets against a change of control in the ownership or management of Farmers, and provides that the assets may only be used to pay the promised benefit to Plan participants, except in the event of the Farmers’ bankruptcy or insolvency.

In the event of the Farmers’ bankruptcy or insolvency, trust assets are treated like all other corporate assets and are subject to the claims of all general creditors of Farmers. You will be considered a general creditor, and you will have no greater rights to your balance than another general creditor.

You should consider the unsecured nature of this Deferred Compensation Plan prior to electing to participate.

Risks of a deferred compensation plan

RISKS


Log into www.farmersagentsbenefits.com

(if you need your participant ID, click on Forgot PID)

1. Click on “Resources”

2. Click on “Deferred Compensation”

This is the Deferred Compensation Page:

15Questions? Call the Farmers Deferred Compensation Helpline, 800.487.0042 M – F, 6 am – 6 pm, Pacific Time

ONLINE ACCESS



ONLINE ACCESS

Calculating DeferralsCalculating the monthly deferral amount from your folio is fairly straightforward. Page 17 of this booklet

takes you through the process of tracking your deferrals step by step. The text includes an illustration of how

deferrals would be calculated for two different months.

On page 18 are screen shots of an e-Folio Commission Statement as well as a Schedule of Deductions. We have

added circles on the screen shots to highlight the pertinent information.

We recommend that you spend a few moments to familiarize yourself with the calculations on the next two

pages. While no booklet can cover every situation, the Farmers Deferred Compensation Helpline is available

to answer any additional questions you may have. Please direct any folio questions to the Farmers Agents’

Benefits Department at 800.432.6761.

CALCULATIONS


Calculating DeferralsTracking deferrals on e-FolioTo calculate the monthly deferral amount from your folio, you must first determine your Auto new business commissions for the month from each company [Farmers Insurance (Farmers), Mid-Century Insurance (MCA), Bristol West or Farmers Texas County Mutual (TCM)]. These are listed on separate lines at the top of your e-Folio Commission Statement under the column labeled “NB” (as illustrated in the red circle on the screen shot at right). To compute the amount you are deferring for each company, multiply each company’s monthly Auto new business commissions by the deferral percentage that you elected. Then, add together the deferrals from each company. These calculations are done each month, and as a participant in the Plan, the resulting deferral will appear on line 195 of your e-Folio Schedule of Deductions (see red circles on lower screen shot at right).

ExampleFor illustration purposes, we will look at both September and August folios for this non-Texas agent who elected to defer 50% of Auto new business commissions for the Plan year.

First, multiply the Farmers Auto new business commissions (shown in column NB) by 50%; next, add the MCA Auto new business commissions to the Bristol West Auto new business commissions; then, multiply the sum of the MCA and Bristol West Auto new business commissions by 50%. Finally, add these two amounts together to determine the total deferral. For Texas agents, the deferred amount for TCM would be calculated the same way (multiply the TCM Auto new business commissions by 50%).

Note: The last section on this page describes instances where no deferral will be recorded.

Aug NB Deferral – 50% Sept NB Deferral – 50%

Farmers $773.94 $386.97 $1,746.82 $873.41

MCA* $591.72 $295.86 $215.67 $107.84

Bristol West* $0.00 $0.00 $0.00 $23.10

Aug NB Deferral – 5% Sept NB Deferral – 5%

Business Ins.** $637.70 $31.59 $1,356.95 $67.85

Workers Comp. $0.00 $0.00 $0.00 $0.00

Total*** $714.42 $1,060.64

Sept Deferral – 15%

Agt PGB Gross 204 $10,512.06 $1,576.81

Agt PGB Deferral 205 $1,576.81*MCA & BW are combined / **Business Insurance, minus any Kraft Lake premium / ***Dual agent numbers are included in the deferral amount We can look at the e-Folio Schedule of Deductions (at bottom right, on page 18) to verify our deferral calculation. The same process would be used for a Texas agent, and for Commercial new business commissions.

When no deferral is recorded:The following are possible circumstances that could cause you to have no deferral in a given month:

Your monthly deferral is less than $10.00 for Farmers / TCM or the combined total of MCA and Bristol West

When added together, your Auto new business commissions from all companies are zero or negative

Your Sub-Total for one month is negative (row indicated by red circle on Commission Statement at right)

Your Total Compensation for a month is negative (row indicated by red circle on Commission Statement at right)

Your agent number has recently changed (any missed deferral will be made up in the next month’s folio)

You have taken a hardship withdrawal and your deferrals have been stopped for the rest of the Plan year

You will not have a deferral taken from your February folio

Although this list is not exhaustive, it covers the most common situations for missing a deferral.


EXAMPLES

Questions? Call the Farmers Deferred Compensation Helpline, 800.487.0042 M – F, 6 am – 6 pm, Pacific Time

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