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Indiana University POOP Session – Financial Opportunities January 28, 2003. DEFINITION. Promise Transfer of Risk Indemnity Principle Social Device. REGULATION. Highly Regulated By the States. FINANCIAL STATEMENTS. GAAP vs. Statutory Accounting. Operating Statement
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Indiana University POOP Session – Financial Opportunities January 28, 2003
DEFINITION • Promise • Transfer of Risk • Indemnity Principle • Social Device
REGULATION • Highly Regulated By the States
FINANCIAL STATEMENTS GAAP vs. Statutory Accounting • Operating Statement • Statement of Assets and Liabilities
OPERATING STATEMENTS Earned Premiums (Sales) - Losses (Cost of Goods Sold) - Operating Expenses --------------------------------------------- = Underwriting Profit/Loss +/- Investment Income --------------------------------------------- = Operating Net Income
STATEMENT OF ASSETS AND LIABILITIESAdmitted vs. Non-Admitted Premium Receivables + Investment Assets - Loss Reserves - Unearned Premiums - Operating Liabilities --------------------------------------------- = Policyholder Protection Fund
TYPES OF INSURANCE • Life • Health • Property • Casualty
STATE FARM PRODUCT LINES Auto Health Fire Life Financial Services SF Bank Mutual Funds
INDUSTRY SCOPE • 7,200 domestic insurance companies • 2.3 million jobs • $3.4 trillion assets • $900 billion premiums Source Insurance Information Institute 2000 Fact book
STATE FARM’S INDUSTRY POSITION • Ranked #25 within Fortune 500 • #1 U.S. Auto insurer since 1942 • Insure 1 of every 5 automobiles • Met goal - 40 million Auto policies by 2003 • #1 U.S. Home insurer since 1964 • Insure 1 of every 4 homes • Top U.S. insurer of pleasure boats
ACCOUNTING STRUCTURE • Centralized vs. De-centralized • Corporate • Zone Offices • Insurance Support Centers (ISC’s) • Supervisory vs. Analytical
CORPORATE FUNCTIONS • Financial Reporting & Analysis • Tax • Investment Accounting
CORPORATE FUNCTIONS • Accounting Benefits • Loss Reserves • Data Management Services
CORPORATE FUNCTIONS • Auditing • Treasury Services • General Accounting Services
CORPORATE FUNCTIONS • Financial Shared Services • Accounts Payable • Agency Compensation • Employee Compensation • Travel & Expense • Shared Services Process Analysis
CORPORATE FUNCTIONS • Compliance • Change Management
SYSTEMS • Financial Business Analyst • Current Systems Support • New Systems Development • Create and maintain detailed operating procedures
ZONE OFFICE FUNCTIONS • Premium Payment Processing • Cash Disbursements / Claims Support • Agency Compensation • Self Audits • Transformational / Expense Analysis
GENERAL DUTIES • People Skills • Organization & Planning • Problem Solving • Time Management • Communication • Coordination
SPECIFIC DUTIES Analysts • Project Development • Operational Assistance • Functional Area of Expertise Supervisors • Performance Management
TECHNICAL TRAINING • On-Line Operating Procedures • Hardware and Software • PeopleSoft Application • Microsoft • Numerous proprietary applications • Supervisory Skills • CD-ROM Leadership Development Series
PROFESSIONAL DEVELOPMENT • In-House Courses • Insurance Education • ChFC, CLU, CPCU • Professional Designations • CPA, CMA, MBA
CAREER PATHS Stability Diversity Opportunity Mobility
IDEAL 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
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 IMPORTANT TRAITS
BENEFITS • Medical and Life Insurance • Defined-Benefit Retirement Plan • Profit Sharing (401K match) • Education Costs • Flexible Work Hours
STATE FARM DATA • 19 Affiliated Companies • Mutually owned company • 71.6 million policies in force • $117 billion in Assets (12/31/01) • State Farm Associates • 16,500 Agents • 78,155 Total Employees • About 2,000 Accounting Employees Source August 2002 People Counts