Enterprise ScorecardWorkshop Results

12/17/98

Review Document

Enterprise Scorecard

Objectives: Win through people, Grow profitably, Create value

Financial Perspective

Learning & Growth

Customer Perspective

Internal Process Perspective

• Growth in target market segments vs. plan• Alignment - Included in plan• Technology ROI• Expense measures (e.g.Ttl general expenses

as % of Ttl prem.; Investment expense ratio)

• Employee survey results• PDP’s completed for all leadership & %

employees• Bench strength• ROI (employee)• Incentive alignment

• Earnings growth • Unleveraged GAAP ROE• RBC • Capital plan• ALM• Product & distribution mix

• Policies under administration• Sales (Premium) vs. plan• ROI (static & dynamic), Product GAAP ROE• Retention (Policyholders, Agents, “Partners”)• Customer Satisfaction Index• Rating within peer group

Qualityearnings growthconsistent with

plan

Quality ROEConsistent with

plan

EnhanceEconomic

Value

Develop products thatdeliver true value tothe customer and

enterprise

Maintainappropriate

rating

Recruiting& retention

Education& training

EmployeeSatisfaction

Well-alignedincentives

Expand customer base &penetration of existing

customers

Alignment ofproducts, services &

delivery to targetcustomer segments

Efficient & effectivebusiness

fundamentals

Optimizetechnology &infrastructure

Provide qualityservice meetingcustomer needs

Developing currentleadership &

leadership of the future

Capital & Riskmanagement

BalancedPortfolio ofBusiness

To be an innovative, growing, high performance, public financial services enterprise that makes the future better for all our stakeholders.

Enterprise Scorecard - Next Steps

Objectives: Win through people, Grow profitably, Create value

To be an innovative, growing, high performance, public financial services enterprise that makes the future better for all our stakeholders.

Financial Perspective

Learning & Growth

Customer Perspective

Internal Process Perspective

Current Results

Target Tactics

Current Results

Target Tactics

Current Results

Target Tactics

Current Results

Target Tactics

• Growth in target market segments vs. plan

• Alignment - Included in plan

• Technology ROI

• Expense measures (e.g.Ttl general expensesas % of Ttl prem.; Investment expense ratio)

• Employee survey results• PDP’s completed for all leadership & %

employees• Bench strength• ROI (employee)• Incentive alignment

• Earnings growth• Unleveraged GAAP ROE• RBC• Capital plan• ALM• Product & distribution mix

• Policies under administration• Sales (Premium) vs. plan• ROI (static & dynamic), Product GAAP ROE• Retention (Policyholders, Agents, “Partners”)• Customer Satisfaction Index• Rating within peer group

Financial Perspective

Enhanced Economic ValueQuality Earnings Consistent with Plan

Quality ROE Consistent with Plan

Capital & Risk Management

Balanced Portfolio of Business

• Earnings growth

• Unleveraged GAAP ROE

• RBC • Capital plan• ALM

• Product mix, distribution mix (vs. industry)

Critical Success Factors Proposed Measures

Customer Perspective

Expand Customer Base & Penetration of Existing Customers

Develop Products that Deliver True Value to the Customer and Enterprise

Provide Quality Service Meeting Customer Needs

Maintain Minimum Rating

• Policies under administration• Sales (Premium) vs. plan

• ROI (Static & Dynamic)• Product GAAP ROE

• Retention (Policyowners, Agents, Partners)• Customer Satisfaction Index

• Rating within peer group

Critical Success Factors Proposed Measures

Process Perspective

Alignment of Products, Services and Delivery to Target Market Segments

Optimize Technology and Infrastructure

Efficient and Effective Business Fundamentals

Critical Success Factors Proposed Measures

• Growth in target market segments vs. plan• Alignment - Included in plan

• Technology ROI

• Expense measures (e.g. Total general expenses as % of total premiums, Investment expense ratio, Total expenses as % of assets)

Learning & Growth Perspective

Employee Satisfaction

Plan for Developing Current Leadership & Leadership of the Future

Education and Training

Recruiting & Retention

Well-Aligned Incentives

Critical Success Factors Proposed Measures• Employee survey results

• PDP’s completed for all leadership• Bench strength

• ROI (Employees)

• % PDP’s completed for all employees• Incentive alignment

Recommendations for “Beta” Version

� Measures and CSFs– Reduce # of measures for Capital & Risk Management CSF to 1

– Consider moving Balanced Portfolio CSF to Financial Perspective

– Consider moving Expand Customer Base & Penetration of Existing Customers to Financial

– Narrow measures of Develop Products that Deliver True Value to the Customer and Enterprise to 1

� Assign Owners– Ask for current results where applicable

– Begin target setting (short term and long term)

– Determine length of targets (1/4, 1 year, 2 years?)

Changes to “Alpha” Version

� Expense/Capital Management changed to Capital & Risk Management, Moved to Financial Perspective, 3 measures proposed

� Additional Learning & Growth Measures provided

Measurement Dictionary

Critical Success Factor MeasureProposed

OwnerDefinition Formula Current Results

Quality Earnings Growth Consistent with Plan

Earnings Growth Jack

Quality ROE Consistent with Plan Unleveraged GAAP ROE Jack

Capital & Risk Management RBC Jack

Capital & Risk Management Capital Plan Jack

Capital & Risk Management ALM Jon

Balanced Portfolio of Business Product & Distribution Mix Gary

Expand Customer Base & Penetration of Existing Customers

Policies Under Administration Gary

Expand Customer Base & Penetration of Existing Customers

Sales (Premium) vs. Plan Gary

Develop Products that Deliver True Value to the Customer & Enterprise

ROI (Static & Dynamic) Jon

Develop Products that Deliver True Value to the Customer & Enterprise

Product GAAP ROE Jon

Provide Quality Service Meeting Customer Needs

Retention (Policyholders, Agents, Partners)

Provide Quality Service Meeting Customer Needs

Customer Satisfaction Index

Maintain Appropriate Rating Rating within Peer Group Jack

Alignment of Products, Services & Delivery to Target Customer Segments

Growth in target market segments vs. plan

Alignment of Products, Services & Delivery to Target Customer Segments

"Alignment" included in plan

Optimize Technology & Infrastructure Technology ROI Larry H.

Efficient & Effective Business Fundamentals

Expense Measures Jack

Employee Satisfaction Employee Survey Results Karla

Developing Current Leadership & Leadership of the Future

PDP's Completed for all Leadership Karla

Developing Current Leadership & Leadership of the Future

Bench Strength Karla

Recruiting & Retention % PDP's Completed for All Employees Karla

Education & Training ROI (Employee) Karla

Well-Aligned Incentives Incentive Alignment Karla

Measurement Dictionary Template (1 of 2)

Measure: ________________________________________ Owner: _____________________________

Perspective: ______________________________________ Availability: Yes No

Critical Success Factor: _____________________________ Data Source: _________________________

Definition: ________________________________________

________________________________________

________________________________________

Formula: ______________________________

______________________________

______________________________

Frequency:

Daily Quarterly Weekly Annually Monthly Other:___________

Graphical DepictionCurrent Results: ________________________

Target Results:Short Term: ___________________Long Term: ___________________

Alternative Measure(s): __________________ __________________

Comments: ________________________________________________________________________________________________________________________

Benchmark Internal External

Source: _______________________________

Measurement Dictionary (2 of 2)

Measure: ________________________________________ Owner: _____________________________

Other Characteristics: