Data and information are becoming the most valuable asset that treasury and finance teams can use to make better decisions and deliver more advanced recommendations to drive value across the organization. In this session, HCSC and Sempra Energy will talk about what treasury data means for their organizations, why information is so valuable, what they are doing to capture and analyze treasury information, and what technology tools they are deploying to support these business intelligence initiatives.

1. Harnessing Treasury Data to Drive Financial Performance

2. 2
Panelists
PRESENTERS
David Deranek, CTP
Director Enterprise Treasury Operations
Health Care Service Corporation
Lance Gartner
Cash Management, Manager
Sempra Energy

3. • HCSC is the 4th largest healthcare insurer in the U.S. operates
Blue Cross Blue Shield in Illinois, Texas, Montana, Oklahoma, and
New Mexico in addition to 30+ operating subsidiaries.
• With 16 million health plan members and 20,000 employees,
Health Care Service often flies below the radar as a mutually-
owned company because it’s not publicly traded and included in
the so-called “Big 5” public firms that trade on the New York
Stock Exchange.
HCSC Overview:
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4. HCSC Treasury Metric
Company Revenue $62 Billion
Scope of Operations Number of Bank Relationships
Number of Bank Accounts
Number of Investment Accounts
Size of HCSC Treasury Team Treasury Operations:
Treasury Investments, Acct & Fin Rpt:
Treasury Systems:
Insurance & Risk:
HCSC/Planites Credit Union:
Corp Cash Management & Investment Assets $14 Billion
Cash Transaction Throughput $120 Billion Annually
14
200+
100+
16
20
3
3
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5. Treasury Operations
 Cash management and cash forecasting
 Balance sheet forecasting
 Corporate insurance
 Treasury IT
 Investment accounting
Investments
 Parent Company investment portfolio
 Subsidiary investment portfolio
 Pension investment portfolio
 Ratings agencies
 Credit unions
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HCSC Treasury has responsibility for several corporate finance functions

6. Treasury’s Opportunity
Drivers for change
1) Affordable Care Act
• Passed in 2010
• Significant effects on liquidity and cash planning
• Created need to re-engineer treasury
2) Centralization of HCSC treasury function
• Brought together treasury functions across 30+ member organizations
3) Treasury as a Strategic Consultant
• High Performance Culture, Strategy, and FP&A
• Seat at the table with the CFO and Business Leaders
4) Corporate Drive for Increased Efficiency
• Do more with less
• Leverage Systems & Automated Processes

7. Challenges
• Managing Leadership Expectations
• Loss of Reporting Flexibility
• Training Required to Support Maintenance
• Data Integrity
• Highly Technical – Advanced Skill Set
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8. The Solutions
Treasury Systems developed a platform to centralize all Treasury data
• Bring multiple treasury systems and data together in one data hub
• Negotiated to receive data files from banks & vendors
• Transformed data to develop reports and analytics
• Business Intelligence Reporting
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9. Treasury Enterprise Reporting (TER) Hub
• Database creation, governance, and maintenance
• Extract, Transform and Load (ETL) information tools and
techniques
• Data manipulation and report writing tools and techniques
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10. Data Transmission
Negotiated to receive data files from banks and vendors
• Operating cash accounts
• Investment accounts
• Money managers
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11. Developed Tableau Automated Reporting For …
• Cash Positions
• Daily Treasury Dashboards
• Strategic Investment Allocation
• Reconciliations
• Treasury Financials
• Compliance
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Reports & Analytics for Business Intelligence Solutions

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Example BI Solutions

13. Example BI Solutions
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14. Treasury Operations Seat At The CFO Table
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15. Treasury Operations Seat At The CFO Table
Benefits of Treasury’s Business Intelligence Tools
• HCSC Ventures
• Investment Portfolio
• Subsidiaries
• Mergers & Acquisitions
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16. HCSC Ventures
• Venture investing is relatively new for HCSC
• At the end of 2015, our venture portfolio was about $40 million; over the last 2.5 years, we’ve invested
another $140 million
• Since inception, we’ve put $155 million in venture investments, and received $175 million of value,
including $10 million of distributions in the first half of 2018
• We’re targeting a total venture portfolio of $300 million
• From a return perspective, we are seeking to at least double our investment over 5 years, which
translates to an internal rate of return (IRR) of 15%
• 60% of the venture investments are in funds, while 40% is invested directly in companies
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17. Investment Portfolio
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• As of June 30, 2018,
total corporate
enterprise invested
assets rose to an all-
time high
• Since 2010, the
corporate investment
portfolio has grown
37%, an increase of
more than $3.6
billion
HCSC Working Capital
HCSC Capital & Surplus
Other health insurance
subsidiaries
Dearborn National
Enterprise
HCSC Pension Trust
$0
$2,000
$4,000
$6,000
$8,000
$10,000
$12,000
$14,000
$16,000
Dec-08 Dec-09 Dec-10 Dec-11 Dec-12 Dec-13 Dec-14 Dec-15 Dec-16 Dec-17 Dec-18
Thousands
Subsidiary
Capital and Surplus
Working Capital

18. Investment Portfolio
18
• Between 2015
and 2018,
underlying
investment
income at HCSC
has nearly
doubled.
• Due to…portfolio
has grown,
interest rates are
up, and change in
asset allocation
of the portfolio
$128 $141
$167
$188
$254
$323
$355
$423
$-
$50
$100
$150
$200
$250
$300
$350
$400
$450
2013 2014 2015 2016 2017 2018E 2019E 2020E
Net Investment Income Excluding Realized GainsInvestment Allocation Changes Have Increased Portfolio Size +45%

19. Investment Portfolio
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HCSC Corporate Portfolio Investment Allocation
• Between 2014 and today, we’ve added several new asset classes to the portfolio, meaningfully
improving its diversification
• As our cash forecasting process has improved, we’ve been able to significantly reduce our cash
holdings
• We’ve also added to higher risk asset classes, but the overall riskiness of our portfolio remains well
below our peers

20. Subsidiaries
• Subsidiary investments have actually created a significant amount of value for HCSC
• We’ve invested about $500 million in our existing subsidiaries, including both the initial purchase price
and subsequent contributions
• Those subsidiaries are now worth an estimated $3.3 billion
• That’s a return of 4.4x our investment, and an internal rate of return (IRR) of 12%
• However, there’s a big difference in return between our wholly-owned subsidiaries and our partially-
owned subsidiaries
 Wholly-owned subsidiaries: 2x investment, 6% internal rate of return
 Partially-owned subsidiaries: 12x investment, 30% internal rate of return
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21. Mergers & Acquisitions
• We have the ability to deploy approximately $6 billion of capital over the next few years
• Includes about $3.5 billion in available cash, along with $2.5 billion in debt
 The $3.5 billion in available cash is after technology systems upgrades, pension contributions, and
statutory capital required to fund our organic growth
 Assumes an 800% risk based capital (RBC) ratio
• Approximately half of the cash available for acquisitions is dependent on tax reform
 We’re hesitant to spend this money before it’s in the bank
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22. Key Take-Aways
• Communicate candidly and “manage-up”
• Build strong internal and external relationships
• Get the basics right.
• Think holistic
• Continuously assess risks
• Cross-train
• Automate and streamline
• Network with peers.
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23. THANK YOUDavid Deranek, CTP
Director Enterprise Treasury Operations
David_Deranek@BCBSIL.com
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25. 25
On the Road to Harnessing Treasury Data
Sempra’s Story

26. Sempra Treasury Technology Evolution
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27. 27
Expanding Our Treasury Data Footprint
BEFORE
AFTER
LEGACY TMS

28. Drive the Conversation…
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29. Our Experience with Kyriba BI Module
(Beta / Proof Of Concept)
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• Report Automation Efforts • Building Insightful Reports

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Have a Known Vision and Evolving Strategy
>Treasury Technology Focus, Find Operational Efficiencies, Enhance Controls
Build System Connectivity
>Bank Reporting and ERP Connectivity for Payments and Reconciliation
Create Efficient Processes / Look for Automation Opportunities
>Manual Payment Workflows Versus ERP Workflows, Automating GL's for Accounting
Understand Where Treasury Data Fits into the Big Picture
>Talk with your IT Groups, Understand Relevant System Interfaces, Look for Data Opportunities
Work with Internal Leadership, Corporate Peers, Kyriba
> Seek Feedback, Share What You Have Built, Look for Opportunities to Add Value
Be The Catalyst for Change!
In Summary

31. THANK YOU
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