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Farmers Insurance Exchange 2024 Update

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Dear Fellow Farmers Insurance Exchange Member:

As we close the books on 2023, Farmers Insurance Group® continues to provide its customers with coverage options to help them manage risk and meet their insurance needs. We strive to deliver the best value and experience to every customer we're privileged to serve. Farmers appreciates your business and looks forward to continuing to earn your confidence formany years to come.

Farmers Insurance Exchange is one of the insurers comprising Farmers Insurance Group®. Farmers Insurance Exchange along with Fire Insurance Exchange and Truck Insurance Exchange, and their subsidiaries and affiliates, provide automobile, homeowners, personal umbrella, and business owners insurance. Formore information, please visit farmers.com.


Recent Developments

  • A cross-functional team from across the enterprise was established to develop a clear and compelling three-year strategy for Farmers. In June, our new strategy was announced, and implementation is now underway.
  • We introduced a new opportunity for Farmers agency owners and their health-licensed agency staff to sellMedicare to eligible customers.
  • The Exchanges sold three brokerage entities and the servicing arm of its flood program to a subsidiary of Farmers Group Inc. for $760 million. The transaction significantly contributed to strengthening the surplus of the Exchanges, while also positioning Farmers agency owners for future growth and improved customer retention
  • We delivered when itmatteredmost in a year full of catastrophes. In fact, this year alone, we handled nearly 50 large CAT events, including severe storms, a hurricane, wildfires, and winter storms..

Better Together

  • Farmers contributed $5,368,985.83 in charitable giving with 68% of those funds supporting disaster resilience efforts.
  • Our employees continue tomake a difference in communities across the country, completing 36,908 hours of service across 1,599 causes in 807 communities in 2023.
  • Our employees also positively impacted 903 Junior Achievement students in October through exposure to financial literacy and career readiness training. Exceptional feedback has led to an exciting new partnership with Junior Achievement, launching in 2024.

Your Voting Rights

As a member of Farmers Insurance Exchange, you have the important right to vote for representatives of the Exchange Board of Governors. To ensure that all our customers have an opportunity to exercise their voting rights, we now have three ways in which you can cast your votes. Youmay vote in person at the Annual Meeting of Members of Farmers Insurance Exchange, appoint a proxy to act on your behalf by requesting and returning a completed proxy form, or conveniently cast your votes online through your Farmers.com account. Additional information on Farmers Insurance Exchange and your voting options can be found in the FAQs on the other side of this page.

Thank you for your ongoing support and participation.


The Board of Governors of Farmers Insurance Exchange


As a member of Farmers Insurance Exchange, we want you to understand the basics of the operation of an Exchange because, as you will see below, you are an owner of the Exchange.

What is an Exchange?

An Exchange is an insurance organization, which operates in most ways like any other insurance company, but with a few key differences. Farmers Insurance Exchange was organized under a provision in the California Insurance Code, which allows insureds to "exchange" policies with other insureds. Because the insureds cannot practically be involved in actually issuing policies, collecting premium, paying commissions to agents, etc., they appoint a third party - called an "attorney-in-fact" (AIF) - to perform those duties on their behalf for a fee. That appointment is made through a document called a "Subscription Agreement." You were asked to sign a Subscription Agreement at the time you applied for insurance with Farmers Insurance Exchange and that is how you became amember (aka subscriber).

Who owns the Exchange?

You do. Subscribers of the Exchange are owners until such time as they no longer have insurance from the Exchange. Subscribers elect a Board of Governors which supervises the financial affairs of the Exchange and the performance of the AIF in conformity with the Subscription Agreement terms.

Why is an AIF fee paid to Farmers Underwriters Association (FUA)?

Under the Subscription Agreementmentioned above, members appoint FUA to perform certain of the tasks, such as policy issuance and collection of premium, which are involved in running an insurance operation. The Subscription Agreement specifies an AIF fee of 20 percent of premium, although FUA has taken less than that amount.

What is FUA?

FUA is the business name utilized by Farmers Group, Inc. (FGI) to describe its functions as the AIF for Farmers Insurance Exchange. FGI is part of the Zurich Insurance Group, Ltd (ZIG), a Swiss company. Neither FUA, FGI nor ZIG has any ownership interest in Farmers Insurance Exchange, which is owned by its subscribers (insureds).

How was your premiumdollar spent by Farmers Insurance Exchange in 2023?

Your premium dollar covers Exchange costs including losses incurred, acquisition costs, taxes, license fees, the AIF fee, and any contributions to surplus. For 2023, the AIF fee was 13% of the premium dollar, which included the AIF profit of 7.00% of the premium dollar for that year.

Can the Exchange lose money?

If premiums collected exceed claims payments and other expenses (including the fee for the AIF), then the Exchange retains those net premium earnings (as contributions to surplus). If premiums are not sufficient to cover claims and expenses, the Exchange will lose money. That's one reason it is important to build surplus to pay future losses. The AIF does not participate in claims losses and does not enjoy any net premium earnings. Importantly, subscribers are not responsible for any losses the Exchange might suffer.

How can I exercise my right to vote?

You may exercise your voting rights in any of the following ways:

  1. By attending the annual members' meeting inWoodland Hills, CA on March 17, 2025, at 2 PM,
  2. Electronically through your Farmers.com account (voting will be available from January 1, 2025, to March 7, 2025, and you will be required to create a Farmers.com account if you do not already have one), or
  3. Through mail by requesting a paper proxy from the Subscriber Relations Office (completed proxies must be received by March 7, 2025).

Where can I get more information about the Exchange, or obtain a paper proxy?

You can go to www.farmers.com/about -us formost questions. If you have additional questions or want to obtain a paper proxy along with a postage paid envelope to confidentially return your proxy, please contact:

Subscriber Relations Office
Farmers Insurance Exchange
Attn: Corporate Secretary
P.O. Box 4461
Woodland Hills, CA 91365