Indianapolis Life Insurance Company

Balanced ScorecardDevelopment Template

Version 1.0

September 20th, 1999

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2

Developing a Scorecard

Conduct Interviews,

Review Business Plans, etc.

Develop Draft

Scorecard

Confirm Strategy

IdentifyPerformance

Measures

Refine Measures &

EstablishTargets

DevelopImplementation

Plan

Pre-Workshop

Confirm Critical

Success Factors

Post-Workshop

Workshop(s)

A scorecard is typically developed in a 3-phased approach

Facilitated Session with future “Scorecard Owner” and his/her direct reports or team

3

Cascading & Aligning Scorecards

EnterpriseStrategies

Enterprise Critical Success Factors (CSF’s)

EnterpriseMeasures

Tier II Objectives

Tier II CSF’s

Linkage

Alignment

Enterprise

Tier II

Tier III

Tier II Measures

Tier IIIGoals

Tier III CSF’s

Tier IIIMeasures

Scorecards are cascaded and aligned through the critical success factors

4

Establishing Tier II Objectives

Tier II Objectives:

1) Objectives adopted from enterprise critical success factors

2) Newly developed objectives

Draft

Enterprise critical success factors that are “highly influencable” become “Tier II” objectives… additionally, there may be other objectives which are aligned with the enterprise scorecard

Tier II Balanced Scorecard

Enterprise Critical Success Factor Product Market Portfolio BPO Customer Care Shared Services

Wealth Accumulation Financial Protection Distribution Operations Financial

Financial

Quality Earnings Growth Consistent with Plan

Quality ROE Consistent with Plan

Capital & Risk Management

Balanced Portfolio of Business

CustomerExpand Customer Base & Penetration of Existing CustomersDevelop Products that Deliver True Value to the Customer & Enterprise

Provide Quality Service Meeting Customer Needs

Maintain Appropriate Rating

ProcessAlignment of Products, Services & Delivery to Target Customer Segments

Optimize Technology & Infrastructure

Efficient & Effective Business Fundamentals

Learning & Growth

Employee Satisfaction

Developing Current Leadership & Leadership of the Future

Recruiting & Retention

Education & Training

Well-Aligned Incentives

High Level of InfluenceLower Level of Influence

*

* New market development & increasing value to existing customers** Customer refers to internal customers: operations & distribution

*

** **

5

Tier II Balanced Scorecard

Identify Tier II critical success factors and key performance indicators for the objectives

Tier II Objectives:

1) Enter Tier II Objectives

Critical Success Factor Measure

Financial

Profitable growth Portfolio earnings & ROE

Plan for and ensure adequate capital Capital plan in place

ALM Indicator

Customer

Develop timely, innovative, flexible products Product approval to launch cycle time

Maintain close relationship with Customer Care for new products and market opportunities

Sales growth versus plan

Keep existing products competitive Retention (FP), Lapse Rate (WA)

ProcessEnsure alignment of technology (development to administration)

Average software turnaround time (to be detemined)

Efficient and effective business fundamentals Average filing turnaround time

Build products that meet expenses Allowables to expenses*

Learning & Growth

Employee satisfaction Employee satisfaction index

Retention (To be determined)

* or Budget vs. Actual Expense

6

Critical Success Factor Measure Current Results Target

Financial

Profitable growth Portfolio earnings & ROE

Plan for and ensure adequate capital Capital plan in place

ALM Indicator

Customer

Develop timely, innovative, flexible products Product approval to launch cycle time

Maintain close relationship with Customer Care for new products and market opportunities

Sales growth versus plan

Keep existing products competitive Retention (FP), Lapse Rate (WA)

ProcessEnsure alignment of technology (development to administration)

Average software turnaround time (to be detemined)

Efficient and effective business fundamentals Average filing turnaround time

Build products that meet expenses Allowables to expenses*

Learning & Growth

Employee satisfaction Employee satisfaction index

Retention (To be determined)

Next Steps - Set Targets and Identify Tactics to Reach Targets

Each measure should have a target (short term and long term) and an identified initiative/tactic to bridge the performance gap (current performance - target performance)

Initiative Alignment

Measure: ROEPerformance Gap: 5%Tactic/Inititiative: Rationalize Portfolio Owner TBDTactic Steps: 1) Determine product profitability 2) Identify distribution implications of rationalization 3) Identify operational implications of rationalization 4) Develop phase out plan 5) Initiative phase out plan

7

Tier II Critical Success Factor Term Whole Life Un. Life VUL Annuity

Financial

Profitable growth

Plan and ensure for adequate capital

Balanced portfolio

Customer

Develop timely, innovative products

Maintain close relationship with Customer Care for new products

Process

Optimize product-market selection

Efficient and effective business fundamentals

Learning & Growth

Employee satisfaction

Tier III Mapping

Ability to Influence

Tier III Objectives:

1) 2)3)

Tier III Balanced Scorecard

EnterpriseStrategies

EnterpriseCritical SuccessFactors (CSF’s)

EnterpriseMeasures

Portfolio &Process

Objectives

Portfolio &ProcessCSF’s

Enterprise

Tier II

Tier III

Portfolio &Process

Measures

Tier IIIGoals

Tier III CSF’s

Tier IIIMeasures

A similar process may be undertaken to develop Tier III objectives and scorecards aligned with Tier II

8

Horizontal Alignment

The same process may be used to identify objectives, critical success factors and performance indicators for the other Tier II areas. Additionally, the scorecards should be aligned “horizontally” to ensure internal requirements are met

� Distribution

– Cross-selling

– # of appointed reps (WA)

– Sales per appointed rep (WA)

– # of B/D selling agreements / distribution outlets (WA)

� Investments

– Risk/Reward profile, earned rate (WA)

� Shared Services

– Timeliness and accuracy of projects (WA)

– E-Commerce (WA)

Sample Tier III “requirements”

Enterprise

Tier IIArea 1

Tier II Area 2

Customer Care

Operations Distribution

Horizontal Alignment

Ver

tical

Alig

nmen

t

9

New Scorecard Area Responsibilities

� Responsibilities– Responsibility

Summarization of key responsibilities for scorecard area

10

Enterprise -- Tier II MappingTier I

Tier II Goals

Tier II Critical Success Factors Tier II MeasuresEnterprise Scorecard

MeasuresFinancial

Quality Earnings Growth Consistent with Plan

Earnings Growth

Quality ROE Consistent with Plan GAAP Return on Equity (ROE)

Capital & Risk ManagementRisk-Based Capital (RBC), Capital Plan

Balanced Portfolio of Business Product & Distribution MixCustomer

Expand Customer Base & Penetration of Existing Customers

Policies Under Administration, Insureds with Multiple Policies, Sales vs. Plan

Develop Products that Deliver True Value to the Customer & Enterprise

Product Profitability

Provide Quality Service Meeting Customer Needs

Producer Retention , Customer Satisfaction

Maintain Appropriate Rating RatingProcess

Alignment of Products, Services & Delivery to Target Customer Segments

Growth in Target Market Segments

Optimize Technology & Infrastructure

Technology ROI, Productivity Ratios (proposed)

Efficient & Effective Business Fundamentals

Expense to Premium Ratios, Operating Expense Margin (proposed)

Learning & GrowthEmployee Satisfaction Employee SatisfactionDeveloping Current Leadership & Leadership of the Future

Leadership Strength Index

Recruiting & Retention Personal Development Plans

Education & TrainingEmployee Return on Investment (ROI)

Well-Aligned Incentives Incentive Alignment

High Level of Influence Lower Level of Influence