Indiana University Corporate Accounting POOP SessionSeptember 19, 2000

DEFINITIONDEFINITION• Promise

• Transfer of Risk

• Indemnity Principle

• Social Device

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---------------------------------------------= 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

TYPES OF INSURANCETYPES OF INSURANCE

• Life

• Health

• Property

• Casualty

• Personal– Auto– Home– Liability

• Commercial– Workers Comp– Malpractice– Aviation– Toxic Waste

PROPERTY AND CASUALTY LINES

PROPERTY AND CASUALTY LINES

STATE FARM COMPANIESSTATE FARM COMPANIES

Auto (Health)

Fire

Life

Bank

STATE FARM IN THE FORTUNE 500

INDUSTRY POSITIONS

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

INDUSTRY SCOPEINDUSTRY SCOPE

• 7,900 domestic insurance companies

• 2.3 million jobs

• $3.4 trillion assets

• $900 billion premiums

Source Insurance Information Institute 1999 Fact book

ACCOUNTING STRUCTUREACCOUNTING STRUCTURE

• Centralized vs. De-centralized– Corporate

– Regional Offices

– Insurance Support Centers (ISC’s)

• Supervisory vs. Analytical

CORPORATE FUNCTIONSCORPORATE FUNCTIONS

• Financial Reporting & Analysis

• Tax

• Investment Accounting

CORPORATE FUNCTIONSCORPORATE FUNCTIONS

• Mutual Funds/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

SYSTEMSSYSTEMS

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

procedures• 30 Month Accounting Business

Analyst Trainee

REGIONAL OFFICE FUNCTIONS

REGIONAL OFFICE FUNCTIONS

• Premium Payment Processing

• Cash Disbursements / Claims Support

• Agency Compensation

• Self Audits

• Transformational / Expense Analysis

TECHNICAL TRAININGTECHNICAL TRAINING

• Operating Procedures

• Hardware and Software

• Supervisory Skills

PROFESSIONAL DEVELOPMENT

PROFESSIONAL DEVELOPMENT

• In-House Courses

• Insurance Education

–ChFC, CLU, CPCU

• Professional Designations

–CPA, CMA, MBA

• People Skills

• Performance Management

• Organization & Planning

• Problem Solving

• Time Management

• Communication

DAILY DUTIES - SUPERVISIONDAILY DUTIES - SUPERVISION

DAILY DUTIES - ANALYSTDAILY DUTIES - ANALYST

• Problem Solving

• Project Development

• Operational Assistance

• Coordination

• Communication

• Functional Area of Expertise

BENEFITSBENEFITS

• Medical and Life Insurance

• Defined-Benefit Retirement Plan

• Profit Sharing (401K match)

• Education Costs

• Flexible Work Hours

CAREER PATHSCAREER PATHS

StabilityStability

DiversityDiversity

OpportunityOpportunity

MobilityMobility

STATE FARM DATASTATE FARM DATA

STATE FARM DATASTATE FARM DATA• 16 Affiliated Companies

• 66.7 Million State Farm policies in force

• Approximately 150,000State Farm Associates– 16,200 Agents– 79,300 Employees– 1,900 Accounting Employees

WWW.STATEFARM.COM