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Finding GMAC Insurance

October 4, 2010

I don’t typically center my editorials on a specific company, but I thought the company I wanted to write about this month would be worth the space. I’m talking about GMAC Insurance.

Let’s face it, a lot of the attention has centered on the auto finance side of Ally Financial, which, given the spot the former captive was in last year, I can understand. Heck, if I owned such a company and we more than doubled the amount of finance and lease contracts made to consumers in the first half of this year, I don’t think I’d be able to contain myself either.

And just look at Experian Automotive’s second quarter data. Ally Financial ranked as the No. 1 finance provider for new vehicles and No. 2 for new and used combined. I don’t know about you, but it’s nice to see what had always been a major player in our market find its stride once again.

So, what about GMAC Insurance? Well, as if on cue, Tom Callahan, the executive who headed up the dealer products and services (DP&S) insurance team in the U.S. and Canadian markets, reached out to me in September. You can find the full interview at www.fi-magazine.com/webexclusive/gmacinsurance, but let me give you some of the highlights.

First off, after selling its reinsurance operations back in 2008 and finalizing in February the sale of its personal-lines group to American Capital Acquisition Corp., the company has consolidated its DP&S unit with its international organization. Callahan will be at the helm, serving as president of this new global insurance operation.

“We feel good about our position today and we’re looking forward to growing the business globally,” he said. “This is a new opportunity for me and I look forward to working with our international teams.”

As for whether the strategy at GMACI has changed, Callahan said: “We’ve said very clearly that the dealer will remain our top customer in terms of providing the products and services to help them be more successful.”

Callahan touted the close relationship his business unit has maintained with Ally’s finance unit, and said both organizations intend to leverage their dealer relationships under the dealer rewards program Ally created nearly a year ago.

I asked Callahan whether GMACI would adopt the Ally name. He said that is part of the long-term plan, but noted that the GMAC Insurance name must remain for now because it’s the name of the holding company that supports the insurance operations.

He also responded to my questions about AmeriCredit becoming GM’s captive finance company, which looks likely after the nonprime lender’s shareholders approved its sale to the automaker in September. “We think we will continue to have a strong relationship with GM,” Callahan said. “As for AmeriCredit, we think, from an insurance standpoint, we’re well-positioned to work with them or any other source.”

As to whether he thinks AmeriCredit will ever be a competitor to his division, Callahan said: “It’s an easy business to get into, but you’d better understand how to operate, how the losses emerge and how your premiums should be earned.”

The executive also talked about the company’s support for other brands. He touted the dealer inventory program Ally created for Chrysler dealers. He also talked about the GAP and lease wear-and-tear products GMACI underwrites for Chrysler.

Callahan added that the company continues to seek out relationships at the OEM level to expand its footprint to other brands, but said dealers also will be part of that expansion.

“The U.S. marketplace is big enough that most OEMs can run their own program, so, here in the United States, what we’re finding is that we’re competing on a dealer-by-dealer basis,” he said. “And we’re trying to do that by leveraging our relationships with dealers who may have multiple franchises.”

As for whether the company plans on entering any new F&I product categories, well, you’ll just have to read the full interview on our Website. Why should the GMACI story be important to you, you ask? Well, because it’s just another sign that our industry is on the comeback trail.

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