Farmers Group, Inc. 401(k) Savings Plan Summary Description Effective January 1, 2009
Table of Contents Introduction...1 Enrolling in the Plan...2 Contributions to the Plan...2 Accounts and Investment Funds...4 Making Investment Elections...6 Vesting...6 Plan Loans...6 Withdrawals...7 Death Benefit...9 Benefit Payments...10 Distributions...11 Processing Requests for Benefits...12 Other Things You Should Know...13 Your Rights Under ERISA...14 Plan Information...15 1
Introduction This Summary Plan Description of the Farmers Group, Inc. 401(k) Savings Plan (the Plan ) was written to help you understand the Plan and what it can do for you. The Plan has been established by Farmers Group, Inc. (the Company or the Plan Sponsor ). The Plan constitutes an amendment and restatement of the Farmers Group, Inc. Employees Profit Sharing Savings Plan Trust (references in this summary plan description to the Profit Sharing Plan refer to the prior version of the Plan, before its January 1, 2009 Amendment and Restatement). The Plan is effective as of January 1, 2009. Unless otherwise noted, this summary plan description describes the terms of the Plan as they apply to deferrals and contributions (including transfers into the Plan) made beginning January 1, 2009. Contributions made under (or other transfers of funds into) the Plan prior to January 1, 2009, will continue to be governed by the terms of the Profit Sharing Plan as in effect on December 31, 2008. Because the Plan is qualified under Section 401(k) of the Internal Revenue Code (the Code ), it sometimes is referred to as a 401(k) plan. The information provided here summarizes the material provisions of the Plan. It does not contain all of the details described in the official Plan document, copies of which are available from Vanguard. If there is a discrepancy between what is summarized here and the official Plan document, the Plan document will govern. The Plan Sponsor reserves the right to modify, amend, suspend, or terminate the Plan at any time and for any reason in its sole discretion. If the Plan or any part of the Plan should end, you will receive the benefit due to you to the extent provided contractually under the terms defined in the official Plan document. Benefits under the Plan will be paid only if the Plan Administrator decides in its discretion that you are entitled to them. This description is not a contract, and participation in the Plan does not guarantee or change the terms or conditions of your employment. 1
Enrolling In The Plan Participation in the Plan Upon your completion of enrollment and furnishing of any information required by the Plan Administrator, if you are an eligible employee, you may participate in the Plan as of your first date of employment with the Company or any other affiliate that has adopted the Plan with the Company s consent (the Adopting Employers, and together each of their subsidiaries and the Company and each of its subsidiaries, the Employer or Employers ). As of January 1, 2009, Farmers Services LLC, Truck Underwriters Association, Fire Underwriters Association, Farmers Insurance Exchange, Truck Insurance Exchange, Fire Insurance Exchange, Farmers New World Life Insurance Company, Foremost Corporation of America, Kemper Investors Life Insurance Company and Bristol West Holdings, Inc. are Adopting Employers. Commencing January 1, 2010, the companies listed on Appendix A, will be Adopting Employers. Eligible Employee All employees of the Employers are eligible to participate in the Plan, with the exception of the following groups of employees: (i) temporary contract employees, (ii) employees covered under a collective bargaining agreement, (iii) interns, and (iv) leased employees. Persons employed by the companies listed on Appendix A as of June 30, 2009 are not eligible to participate in the Plan until January 1, 2010. Contributions To The Plan Types of Contributions. The Plan provides for the following types of contributions: Pre-Tax Contributions (by employees); Roth 401(k) Contributions (by employees); Catch-Up Contributions (by employees); Rollover Contributions; and Matching Contributions (by the Employer); A description of each type of contribution is given below. Pay Contributions to the Plan (other than Rollover Contributions) are based on the amount of Pay you receive from your Employer. Pay generally refers to the amounts actually paid to you during a Plan Year, namely your wages or salary, including before-tax contributions for benefits under the Plan and other company sponsored benefit plans, while you are a participant in the Plan. Pay also includes amounts paid to participants through the Plan Sponsor s Employee Incentive Plan, also known as the Short Term Incentive Plan ( STIP ). Pay does not include amounts in excess of the IRS compensation limit, currently $245,000, as adjusted for increases in the cost of living, nor does it include overtime pay or commissions. For further information regarding what is considered Pay for purposes of the Plan, please refer to the Plan document. 2
Pre-Tax and Roth 401(k) Contributions You may choose to have your Employer contribute a portion of your Pay to the Plan, without paying federal, and in some instances, state income tax in the year of contribution on the amount you contribute. We call these contributions Pre-Tax Contributions. You will, however, have to pay tax on these contributions when you receive benefits from the Plan. You may also contribute a portion of your after-tax Pay to the Plan. We call these contributions Roth 401(k) Contributions. You will not have to pay tax on these contributions when you receive benefits from the Plan. There are limits as to how much you can defer:...you may choose to defer 1% to 50% of your Pay (in 1% increments) from your paycheck each pay period for your Pre-Tax and Roth 401(k) Contributions....The IRS limits your annual Pre-Tax and Roth 401(k) Contributions. This limit, which is changed from time to time by the IRS, is $16,500 for 2009. Catch-Up-Contributions If you are an active participant and are at least age 50 by the close of the Plan Year, you may make Catch-Up Contributions. Your Catch-Up Contributions will not count against the limits on Pre-Tax and Roth 401(k) Contributions. The IRS limits your annual Catch-Up Contributions. For 2009, the limit on Catch-Up Contributions is $5,500. Rollover Contributions You may transfer funds to the Plan from another tax-qualified retirement plan if certain requirements are met. Such transfers are called Rollover Contributions, and may be made from the following types of plans: Another 401(k) plan A 403(b) or 457(b) governmental plan An individual retirement account (IRA) Both pre-tax and Roth contributions can be rolled over to the extent permitted by the Plan Administrator. Please contact Vanguard at www.vanguard.com or call Vanguard Participant Services at 1-800-523-1188 if you want to make a Rollover Contribution. You will need to provide documentation to confirm that your transfer is eligible for treatment as a Rollover Contribution. Matching Contributions Your Employer will make a Matching Contribution to the Plan on your behalf. The amount of any Matching Contribution will be equal to 100% of the first 6% of your eligible Pay you elect to contribute as a Pre-Tax and/or Roth 401(k) Contribution.Catch-Up Contributions are not subject to Matching Contributions. 3
Contribution Limits The total annual amount that may be contributed to the Plan on your behalf both by you and by your Employer, but excluding any Catch-Up or Rollover Contributions is limited to the lesser of: 100% of your Pay; or $49,000 (for 2009), indexed on an annual basis. Moreover, the amount of your Pay that may be used to calculate any contribution is limited to $245,000 (for 2009). These dollar limits are set by the IRS and are adjusted by the IRS from time to time to reflect changes in the cost of living. Qualified Military Service You have certain rights if you are absent from work on account of qualified military service and then timely return to employment.... Qualified military service is defined as service in any of the uniformed services of the United States, so long as you are entitled under the law to reemployment rights with your Employer....Upon your return to employment, you may make Pre-Tax, Roth 401(k) and Catch-Up Contributions (if applicable) for the period that you were absent from work on account of the qualified military service....these contributions will be limited to the amount you could have made if you were not in qualified military service, but were instead still in the employ of the Employer....You have a limited time in which you may make these contributions. The contributions must be made within the lesser of (a) 3 times the period of military service, or (b) 5 years....if you choose to make Pre-Tax or Roth 401(k) Contributions, your Employer will then make any Matching Contributions that you would have been eligible to receive if not for your qualified military service....if you think you may be entitled to make or receive any contributions under this provision, please contact Vanguard for further information. Accounts and Investment Funds Accounts Once you become a participant in the Plan, the Plan Administrator will establish one or more of the following accounts (the Accounts ) in your name:...pre-tax Contribution Account: This account will hold any Pre-Tax Contributions you elect to make(including your Catch-Up Contributions)....Matching Employer Contribution Account: This account will hold any Matching Contributions made by your Employer. 4
Roth 401(k) Contribution Account: This account will hold any Roth 401(k) Contributions you elect to make....pre-tax Rollover Contribution Account: This account will hold any pre-tax Rollover Contributions you elect to make....roth Rollover Contribution Account: This account will hold any Roth 401(k) Rollover Contributions you elect to make....dpsp Regular Account: This account will hold amounts held in your Regular Account under the Profit Sharing Plan....DPSP Accumulation Account: This account will hold amounts held in your Accumulation Account under the Profit Sharing Plan....After-Tax Rollover Contribution Account: Starting January 1, 2010, this account will hold any after-tax Rollover Contributions you elect to make. Additional accounts may be established under the Plan from time to time if the Plan Administrator determines such accounts are necessary. Investment Funds You may direct the investment of your Accounts in one or more of the investment funds offered under the Plan by contacting Vanguard online at www.vanguard.com or by calling 1-800-523-1188. Please contact Vanguard for information about these funds. Selection of Investment Funds The Farmers Investment Committee is responsible for determining the selection of investment funds. From time to time, the Committee may change the investment funds, if it determines that a change would be in the best interests of Plan participants. ERISA Section 404(c) The Plan is intended to qualify under Section 404(c) of the Employee Retirement Income Security Act ( ERISA ) and Title 29 C.F.R. Section 2550.404c-1. This means that the fiduciaries of the Plan may be relived of liability for any losses you incur that are the direct and necessary result of your investment instructions. In other words, since you select how your Plan accounts are invested among the available options, you are responsible for losses which are the result of your investment instructions. Valuation Dates The Plan s assets will be valued as of each day on which the New York Stock Exchange is open for trading. Gains and Losses As of each valuation date, the trustee of the Plan will determine the net worth of the assets of the trust fund associated with the Plan. The trustee of the Plan will add to your Accounts your share of the gains, and subtract from your Accounts your share of any losses and expenses, for each investment fund in which your Accounts are invested. 5
Account Statements At least quarterly, the trustee of the Plan will give you a statement showing the value of your Accounts. That statement will also detail the activity in your Accounts, such as the amount of contributions and earnings added since the prior statement. Making Investment Elections Initial Election Upon your initial enrollment in the Plan, you will designate how to allocate your assets among the available investment fund choices. The Farmers Investment Committee has selected a diverse mix of funds including a fixed income fund, bond fund, balanced fund and domestic and international equity funds. Complete information for each fund including fund fact sheets and prospectuses are available for your review by contacting Vanguard online at www.vanguard.com or by calling 1-800-523-1188. You will receive a prospectus by mail at your home address for each fund in which you invest. If You Do Not Indicate How To Invest Your Accounts If you do not elect how you would like your deposits to be invested, your deposits will be invested automatically in the Farmers Fund B Balanced Fund. The Plan Administrator may change this designated default investment alternative from time to time. Changing Your Election After you have enrolled, you may freely change your future contributions and existing balances among the investment fund choices by contacting Vanguard. Transfers among investment fund choices can be made on a daily basis. (certain restrictions may apply) Any fund changes that you make for your Plan account balance will be effective on the next business day after you give completed directions to Vanguard. Currently, changes must be made by 4:00 p.m. Eastern time to be effective on the next business day, but this timing rule could change in the future. You may change your investment fund elections at any time by contacting Vanguard online at www.vanguard.com or by calling 1-800-523-1188. Vesting Vesting in a retirement plan generally refers to the portion of your account that is yours and cannot be forfeited. You are always 100% vested in your Accounts. Plan Loans In General If you are an active employee of the Employer, you may apply for a loan from your Accounts. The Plan Administrator will approve your loan application if the amount of the loan does not exceed permissible loan limitations, and the loan is adequately secured. No loan will be approved if you have failed to comply with these rules with respect to other outstanding loans from the Plan. To apply for a loan, go online to www.vanguard.com 6
or call Vanguard s automated VOICE network at 1-800-523-1188. You may also call Vanguard Participant Services at 1-800-523-1188 for assistance, but keep in mind there is an extra fee to apply for a loan using the help of a Vanguard Participant Services associate. NOTE: Special rules may apply to qualified Heartland Disaster Tax Relief Act of 2008 loans. Contact Vanguard for further details. If you are on a leave of absence, you are not eligible to take a loan. Repayment of Loan Loans generally are made for a period of up to five years, except that a loan used to acquire your principal residence may extend for up to 15 years. Loan payments are generally made by after-tax payroll deduction, except when paying a loan in full in advance. If you are on an unpaid leave of absence, or if you no longer are employed, payments must be made by a certified check or money order delivered to the trustee of the Plan. Maximum Number of Loans You may not have more than two loans outstanding at any time. Maximum Loan Amount The maximum amount you may borrow is 50% of your Account balance, but no more than $50,000. This amount is subject to further restriction if, during the 12 months preceding the new loan, you had a loan outstanding from the Plan. Participant Loan Policy Further information concerning loans from the Plan, including information pertaining to interest rate, loan defaults, and applicable fees, is set forth in the Plan s written Participant Loan Policy. Before seeking a loan from the Plan, you should read the Participant Loan Policy carefully. You can view the Policy by going online to www.vanguard.com by calling Vanguard Participant Services at 1-800-523-1188. Withdrawals Hardship Withdrawals Under the conditions described below, while you are still in active employment, and once you have completed at least two Years of Service (as defined in the Plan), you may withdraw all or a portion of your Accounts excluding any income credited to the Accounts. Such a hardship withdrawal must be made on account of financial hardship. Upon receipt of a hardship withdrawal, and subject to certain exceptions, your ability to make contributions under any retirement plan of the Employer will be suspended for a period of six months. NOTE: Special rules may apply to qualified Heartland Disaster Tax Relief Act of 2008 withdrawals. Contact Vanguard for further details. 7
Conditions Applicable to Hardship Withdrawals Two conditions must be satisfied in order for you to obtain a hardship withdrawal. First, you must experience an immediate and heavy financial need (as described below). Second, you may withdraw no more than the amount necessary to satisfy that need (as described below). Immediate and Heavy Financial Need You may be entitled to a hardship withdrawal before your termination of employment if you experience one of the following types of financial need. These types of financial need qualify as an immediate and heavy financial need under IRS rules:...expenses incurred by you, your spouse, your dependents, or your designated beneficiary for medical care, or that will be necessary for any of you to obtain medical care. Costs directly related to the purchase of your principal residence (not including mortgage payments)....tuition and related educational fees, including room and board, for the next 12 months of your, your spouse s, your dependent s, or your designated beneficiary s post-secondary education....payments necessary to prevent you from being evicted from your principal residence, or to prevent a foreclosure on the mortgage on your principal residence. Burial or funeral expenses for your parent, spouse, child or dependent, or designated beneficiary....costs for repairs to your principal residence for damage that would qualify for a casualty loss deduction on your income tax return (without regard to income limitations). Amount Necessary to Satisfy the Need A withdrawal will be considered necessary to satisfy an immediate and heavy financial need only if the following conditions are met:...the amount withdrawn does not exceed the amount of the immediate and heavy financial need, including any amounts necessary to pay any federal, state or local income taxes or penalties reasonably anticipated to result from the withdrawal; and...your financial need cannot be satisfied through any of the following: Reimbursement or compensation by insurance or otherwise; Liquidation of your assets; Stopping your contributions to the Plan; or...other in-service withdrawals from the Plan (as described below), nontaxable loans from the Plan (determined at the time a loan is made), or loans from commercial sources on reasonable commercial terms. 8
In-Service Withdrawals You may withdraw amounts at any time from your Pre-Tax or Roth Rollover Contribution Accounts (and, starting January 1, 2010, your After-Tax Rollover Contribution Account) while still employed by the Employer. Additionally, once you have attained age 59½, you may make a withdrawal from any of your Accounts. You need not experience a financial hardship in order to take advantage of these in-service withdrawal options. Administrative Procedures The Plan Administrator has established procedures for obtaining a hardship or in-service withdrawal. The minimum amount you may withdraw is $1,000. To initiate the withdrawal process, please go online to www.vanguard.com or call 1-800-523-1188 for Vanguard s automated VOICE Network or Vanguard Participant Services. Death Benefit Death Benefit If you die before beginning to receive payment of your vested benefit, the Plan will pay the value of your Accounts to your beneficiary. This is referred to as a Death Benefit. Payment of any Death Benefit will be made in a single lump-sum payment or a series of installment payments for a number of years not to exceed the life expectancy of the beneficiary. Beneficiary Designation If you are not married, you may designate a beneficiary to receive your Plan benefits in the event of your death. If you are married at the time of your death, your Death Benefit will be paid to your spouse. However, you may name someone other than your spouse as your beneficiary if:...your spouse consents to that beneficiary designation in writing, with his or her signature witnessed by a Plan representative or notary public; or You certify to the Plan Administrator that you cannot locate your spouse; or Your spouse is legally incompetent, in which case you must have the consent of your spouse s legal guardian Changing Your Beneficiary The following rules apply if you are married and want to change the person who is designated as the beneficiary of your Death Benefit:...You may change your beneficiary designation at any time. If you want to name someone other than your spouse as your beneficiary, however, either your spouse must consent to the new designation (unless he or she has previously granted a blanket consent to any future changes in your beneficiary), or one of the exceptions to spousal consent (listed above) must apply....if you divorce and remarry, your new spouse automatically will become your designated beneficiary. If you want to designate a different beneficiary, your new spouse must give his or her consent....once your spouse consents to your designation of a different beneficiary, your spouse cannot revoke that consent unless you change the designated beneficiary. 9
No Designated Beneficiary If you do not designate a beneficiary, if none of your designated beneficiaries survives you, or if no designated beneficiary can be located after a reasonable search to the Plan Administrator s satisfaction, any remaining portion of your vested benefit will be paid, in the following order, to: your spouse, your children (including adopted children), your parents (including adopting parents), your brothers and sisters (including half-brothers and half-sisters); or your estate. You may designate or change your beneficiary by going online to www.vanguard.com or by calling 1-800-523-1188 for Vanguard s VOICE Network or Vanguard Participant Services. Benefit Payments When Benefits are Payable Benefits are payable from the Plan if: You retire or otherwise terminate employment with your Employer; You incur a Permanent Disability; or You die. Disability You incur a Permanent Disability under the Plan if you become eligible to receive disability pension benefits under the Farmers Group, Inc. Employees Pension Plan, or, if you are disabled and not eligible to receive a disability pension, then you will be considered to have incurred a Permanent Disability if you have a medically certified physical or mental condition that totally prevents you from performing your normal occupation or any similar occupation based on a medical examination by a doctor or clinic appointed by the Plan Administrator. Form of Payment Your vested benefit will be paid to you or, in the event of your death, your beneficiary in a single lump-sum payment or in installment payments for a number of years not to exceed the life expectancy of the beneficiary. Cash-Out of Small Benefits If the value of your vested benefit is $1,000 or less, and you do not request a distribution within 90 days, the trustee of the Plan will make a lump-sum payment of your vested benefit as soon as administratively practicable after your termination of employment with the Employer. If the value of your vested benefit is greater than $1,000, but not 10
greater than $5,000 and you do not request a distribution within 90 days, the trustee of the Plan automatically will roll over your account balance to an individual retirement account (IRA). IRA Provider. The Plan Administrator has selected Vanguard as the IRA custodian for cash-out distributions that automatically are rolled over. Vanguard will be the trustee of any such IRA and will be solely responsible for the maintenance and administration of the IRA. The Employers will not have any control over or responsibility for the IRA. You may contact the Plan Administrator for more information about the Plan s automatic rollover procedures. You may contact Vanguard for information about your IRA by calling Participant Services at 1-800-523-1188. IRA Account and Fees. Any such IRA shall be an individual retirement account described in Section 408 of the Code. If a participant s account balance under the Plan automatically is rolled over, the IRA will be charged a standard IRA service fee. You may contact Vanguard at 1-800-523-1188 to ask for current fee information. This fee will be charged to the participant annually. These fees will not be paid by the Employer or the Plan. IRA Account Investments. Any cash-out distributions from the Plan that automatically are rolled over to an IRA with Vanguard will be invested in a Vanguard fund designed to preserve principal and provide a reasonable rate of return. Special Rules at Age 70½ Payment of your vested benefit must begin no later than April 1 of the calendar year following the calendar year in which you retire or attain age 70½, whichever occurs later. Special Rules Relating to the Profit Sharing Plan If you were a participant of the Profit Sharing Plan, within 120 days after each Plan year ending December 31, 2008, 2009 and 2010, respectively, you may elect, within a time specified by the Plan Administrator, to have the trustee of the Plan distribute to you an amount not to exceed 33 1/3%, 50% and 100%, respectively, of your DPSP Regular Account. Any amounts remaining in your DPSP Regular Account after April 2011, automatically will be transferred to your DPSP Accumulation Account. Distributions Timing of Distribution If your employment with the Employer ends, you or your executor may initiate a distribution of your vested benefit by contacting Vanguard. Tax Notice The trustee of the Plan will give you a tax notice before your benefits are paid. This tax notice will explain some of the important tax rules that apply to distributions from the Plan. It also will tell you that you have the right to elect to have your benefit (other than a hardship withdrawal) either (1) paid to you, (2) paid in a direct rollover, or (3) split between payment to you and payment in a direct rollover. The taxable portion of any distribution that is not rolled over will be subject to federal income taxes and a 10% penalty tax. The 10% penalty tax generally does not apply if a distribution is made from the Plan: After age 59 ½; 11
Because of your death or Permanent Disability; If you terminate after age 55; In compliance with a qualified domestic relations order (QDRO); or For deductible medical expenses. Direct Rollover A direct rollover is a payment of your benefit, or a portion of your benefit, to an IRA or another tax-qualified plan. To initiate a direct rollover, contact Vanguard by going online to www.vanguard.com or by calling 1-800-523-1188 for Vanguard s automated VOICE Network or Vanguard Participant Services. Processing Requests For Benefits Plan Administration The Plan Administrator has the authority, in its sole discretion, to administer the Plan, to interpret the terms of the Plan, and to make all determinations relating to eligibility, participation, and entitlement to benefits. Any determination by the Plan Administrator shall be final, binding, and conclusive on all impacted parties. Claims Procedure The Plan Administrator will notify you of your right to receive benefit payments. If you disagree with the amount of your benefit, or wish an explanation of your benefit, you should send a written claim for review to the Plan Administrator. The Plan Administrator will send you a written decision within 90 days after receiving your claim. If the Plan Administrator needs additional time to process the claim, you will receive a notice extending the claims review period for up to 180 days from the date the claim was received and indicating the additional material, if any, necessary to process the claim. If a claim is denied, a full explanation of the reason will be provided. In addition, the explanation will describe Plan provisions that apply to the denial, additional material or information needed to complete the claim, why this material is needed, and the Plan s formal claim procedure. Within 60 days after receiving notice of a claim denial, you may send the Plan Administrator a written request for a formal review of your claim. Your request should contain specific information which will be described in the initial claim denial notice described above. In connection with a request for review, you will be provided, upon request and free of charge, all documents, records and other information relevant to your claim. Within 60 days after receiving your request, the Plan Administrator will make a final decision, unless special circumstances require an extension of time for processing the appeal. In this case, the Plan Administrator will notify you of the extension. In no event will the Plan Administrator delay a decision beyond 120 days after receipt of your request. In making a final decision, the Plan Administrator will take into account all comments, documents, records and other information submitted by you relating to your claim, without regard to whether the information was submitted or considered in connection with a denial of your initial claim. A written copy of the decision will be mailed to you. Then, if you still feel your claim has been unjustly denied, you have the right to file suit under Section 502(a) of ERISA. You should be aware that failure to follow the claims procedure described above will indicate your acceptance of any benefit denial. For more details on the claims procedure, contact the Plan Administrator. 12
Other Things You Should Know Protection of Benefits You may not assign or transfer any part of your Accounts, or any interest you may have in the assets of the trust relating to the Plan, to satisfy a debt. Furthermore, in no event may your Accounts or interest in the assets of the trust relating to the Plan be subject to assignment, garnishment or other legal process, except as may be permitted by law as in the case of payment to children or a former spouse under a QDRO. Domestic Relations Order If you are a party to a divorce, separation, or other domestic relations matter, a court may issue an order telling the Plan to pay all or a portion of your Accounts to your former spouse, your children, or some other person....the Plan will follow such a court order only if it meets the requirements of the Code and the Plan s Domestic Relations Orders Procedures. You may request a copy of the Plan s Domestic Relations Orders Procedures from the Plan Administrator....If the Plan receives a domestic relations order telling it to pay part or all of your Accounts to some other person, the Plan Administrator will send you a copy of the order and a copy of the Plan s Domestic Relations Orders Procedures. Top-Heavy Rules The Plan contains special rules that would apply if it were to become top-heavy, an event that is highly unlikely. Generally, a plan is top-heavy if more than 60% of its assets benefit certain officers and owners of the Employer. If a plan is top-heavy, certain minimum contribution and special vesting rules apply. However, these rules do not apply to employees who are members of a unit of employees covered by a collective bargaining agreement under which retirement benefits were the subject of good faith bargaining. Amendment or Termination of Plan The Plan Sponsor reserves the right to modify, amend, suspend, or terminate the Plan at any time and for any reason in its sole discretion. Benefit Limitations There are certain circumstances that may lead to your losing part or all of your Accounts. Among these are the following:...your Accounts may be reduced by adverse investment experience. Also, your Accounts may be reduced by administrative costs incurred by the Plan and trustee of the Plan to the extent those costs are not paid directly by the Employer....The Plan is operated under certain assumptions. These assumptions are that it is a qualified plan under the Code, Employer contributions are tax deductible and no amounts are contributed or allocated by error. If any of these assumptions is incorrect, your benefit may be affected and Employer contributions may be returned to the Employer. 13
...Certain contribution, benefit and earnings limits set by the IRS may reduce, eliminate or otherwise affect your benefit....generally, your benefits may not be assigned, sold, transferred, garnished or pledged as collateral. However, your benefit may be attached to satisfy a federal tax levy or a qualified domestic relations order ( QDRO ). A QDRO, issued by a state court, provides that a part of your benefit be paid for child support, alimony or marital property rights....there are IRS limits on all types of Plan contributions. If you ve exceeded limits on your savings and these excess savings are returned to you, the corresponding Matching Contributions will be forfeited. Your Rights Under ERISA As a participant in the Plan, you are entitled to certain rights and protections under the Employee Retirement Income Security Act of 1974 ( ERISA ). The Plan is subject to ERISA s eligibility, vesting, fiduciary, and reporting and disclosure requirements. ERISA provides that all participants are entitled to:...examine, without charge, at the Plan Administrator s office and at other specified locations, such as worksites and union halls, all Plan documents, including copies of all documents filed by the Plan with the U.S. Department of Labor, such as annual reports and Plan descriptions....obtain copies of all Plan documents and other Plan information, upon written request to the Plan Administrator. The Plan Administrator may make a reasonable charge for the copies....receive a summary of the Plan s annual financial report. The Plan Administrator is required by law to furnish each participant with a copy of this summary annual financial report....obtain a statement telling you whether you have a right to receive payments from the Plan and, if so, what your benefits would be if you stop working under the Plan now. If you do not have a right to payments, the statement will tell you how many more years you have to work to get such a right. This statement must be requested in writing and is not required to be given more than once a year. The Plan Administrator must provide the statement free of charge. In addition to creating rights for Plan participants, ERISA imposes duties upon the people who are responsible for the operation of the Plan. The people who operate your Plan, called fiduciaries of the Plan, have a duty to do so prudently and in the interest of you and other Plan participants and beneficiaries. No one, including your employer, your union, or any other person, may fire you or otherwise discriminate against you in any way to prevent you from obtaining a Plan benefit or exercising your rights under ERISA. If your claim for a Plan benefit is denied, in whole or in part, you must receive a written explanation of the reason for the denial. You have the right to have the Plan review and reconsider your claim. Under ERISA, there are steps you can take to enforce the above rights. For instance, if you request materials from the Plan and do not receive them within 30 days, you may file suit in a federal court. In such a case, the court may require the Plan Administrator to provide the materials and pay you up to $110 per day until you receive the materials, unless the materials were not sent because of reasons beyond the control of the Plan Administrator. If you have a claim for benefits which is denied or ignored, in whole or in part, you may file suit in a state or federal court. If it should happen that Plan fiduciaries misuse the Plan s money, or if you are discriminated against for asserting your rights, you may seek assistance from the U.S. Department of Labor, or you may file suit in a federal court. The 14
court will decide who should pay court costs and legal fees. If you are successful, the court may order the person you have sued to pay these costs and fees. If you lose, the court may order you to pay these costs and fees for example, if it finds that your claim is frivolous. If you have any questions about your Plan, you should contact the Plan Administrator. If you have any questions about this statement or about your rights under ERISA, you should contact the nearest office of the Employee Benefits Security Administration, U.S. Department of Labor, listed in your telephone directory, or the Division of Technical Assistance and Inquiries, Employee Benefits Security Administration, U.S. Department of Labor, 200 Constitution Avenue N.W., Washington, D.C. 20210. You may obtain certain publications about your rights and responsibilities under ERISA by calling the publications hotline of the Employee Benefits Security Administration. Plan Information Name of Plan: Farmers Group, Inc. 401(k) Savings Plan Name and Address of Plan Administrator: Farmers Group, Inc. 4680 Wilshire Blvd. Los Angeles, CA 90010 323-932-3200 Employer Identification Number (EIN): 95-0725935 Plan Number: 002 Agent for Service of Legal Process: Service of Legal Process may be made upon the Plan Administrator. Plan Year: The Plan year begins January 1 and ends on December 31. Type of Plan: The Plan is a defined contribution 401(k) plan, formerly a profit-sharing plan. Name and Address of Trustee: Vanguard Fiduciary Trust Co. 100 Vanguard Blvd., ERISA Legal Malvern, PA 19355 15
Name and Address of Plan Sponsor: Farmers Group, Inc. 4680 Wilshire Blvd. Los Angeles, CA 90010 Names of Participating Companies: Farmers Services LLC Truck Underwriters Association Fire Underwriters Association Farmers Insurance Exchange Truck Insurance Exchange Fire Insurance Exchange Farmers New World Life Insurance Company Foremost Corporation of America Kemper Investors Life Insurance Company Bristol West Holdings, Inc. 16
Appendix A American International Insurance Company AIG Hawaii Insurance Company, Inc. AIG Centennial Insurance Company American International Pacific Insurance Company New Hampshire Indemnity Company, Inc. American International Insurance Company of Delaware 21st Century Insurance Group AIG Marketing, Inc. Hawaii Insurance Consultants, Ltd. AIG Advantage Insurance Company American International Insurance Company of California, Inc. American International Insurance Company of New Jersey American Pacific Insurance Company AIG Preferred Insurance Company AIG Auto Insurance Company of New Jersey AIG Premier Insurance Company AIG Indemnity Insurance Company 21st Century Casualty Company 21st Century Insurance Company 21st Century Insurance Company of the Southwest AIG National Insurance Company, Inc. 20th Century Insurance Services, Inc. AIG Hawaii Pacific Technologies, Inc. AIG Hawaii LTC Solutions, LLC AIG Hawaii Technologies, Inc. AIG Hawaii Technology Solutions, LLC i21 Insurance Services 50th State Risk Management Services, Inc. 17