With the auto finance unit of the Ally Financial hitting its stride, F&I and Showroom magazine decided to find out how GMAC Insurance is faring these days. Gregory Arroyo, the magazine’s executive editor, went one-on-one recently with Tom Callahan, the executive heading up the company’s global insurance operations. As you’ll read, the business unit has evolved, but its dealer strategy remains intact.

Arroyo: Talk about the changes at GMAC Insurance so far.

Callahan: Well, back in 2008, we sold our reinsurance operations to Maiden Holdings Inc. In February, we finalized the sale of our personal-lines group to America Capital [Acquisition Corp.]. So, now we’re left with dealer products and services and the international space. And just recently, we consolidated both [units] under me, so I’ll have responsibility for all of our insurance products worldwide.

Arroyo: Has the strategy changed?

Callahan: I think our focus moving forward will continue to be on auto and the auto finance experience, as well as the products that support those. And 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.

We also remain closely integrated with the auto finance side, which allows us to leverage dealer relationships to really try and build across all the products and services that we offer a dealer, not just in the insurance space, but in the finance space and the remarketing space with our SmartAuction product.

Arroyo: So, will GMAC Insurance be adopting the Ally name?

Callahan: The long-term strategy is to convert that at some point, but we have some other things we need to get done before we’re able to get that accomplished. Not sure if you know this, but the GMAC Insurance name is really just a label for the insurance organization. Basically, it’s the name of the holding company that supports the insurance operations. So, changes will be coming down the road.

Arroyo: With GM looking to create a captive out of AmeriCredit, how do you see that impacting your operation?

Callahan: The reality is that, today, a majority of our insurance products are either financed by somebody other than Ally or they’re not financed at all. So, if someone chooses to finance through AmeriCredit, the dealer will still have the option to sell our products and finance them through AmeriCredit.

Our belief is that our structure allows us to bring our products to a broader spectrum of finance sources. If someone wants to pay cash and they don’t want to use their credit card, we can accommodate that as well.

We think we will continue to have a strong relationship with GM. As for AmeriCredit, we think, from an insurance standpoint, we’re well positioned to work with them or any other source.


Arroyo: Do you see a day when AmeriCredit could be a competitor to your operation?

Callahan: We’re not privy to any conversations or any strategies on that. What I will tell you is that the insurance business is an extremely competitive marketplace. It’s an easy business to get into, but you better understand how to operate, how the losses emerge and how your premiums should be earned.

Arroyo: So, will you be supporting other brands, such as Chrysler?

Callahan: Today, we actually have a dealer inventory program that we provide to Chrysler dealers who finance through Ally. It is very similar in nature to what we do in the GM space. We also offer underwriting products for Chrysler, a GAP product and a lease wear-and-tear product. We also sell service contracts under our Repair Advantage Vehicle One brand names.

Currently, we do not underwrite Chrysler’s service-contract program. They handle that in house, so we partner with them on some products and compete with them for the dealer business and in the service-contract space.

Arroyo: I remember talking to GMAC Insurance back in 2008. The message then was that GMACI was looking to serve dealerships outside of the GM brand. Does that still stand?

Callahan: Yes. In some environments, you’ll find that we can form relationships with the OEM, which was the case with the service-contract programs for Suzuki and Subaru in Canada. The U.S. market 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. And we’re trying to do that by leveraging our relationship with dealers who may have multiple franchises.

Arroyo: Are you exploring any other products categories?

Callahan: Based on our research, I think the primary products that the dealers want are service contracts, GAP, tire-and-wheel and probably the lease wear-and-tear products. Beyond that, the demand for other products is so diffused. So, it’s probably not worth the effort to try and bring one of those off products into the marketplace.

Arroyo: Talk about your relationship with the auto finance unit at Ally and how that might help dealers get advances on F&I products?

Callahan: The first thing we did ― and this goes back over a year ago ― was establish four teams to service dealers. That team was made up of an auto finance account executive and an insurance account executive. Together, they’re charged with developing the business in specific marketplace. What that means is we have a much closer integration with the auto finance side, which gives us a big advantage. And we’re replicating that in the Chrysler space as well.

Additionally, it’s been 10 or 11 months since we introduced the dealer rewards program with Ally. It looks at the dealer’s performance across the entire organization and provides incentives based on that performance. So, the more integrated the dealer is with us across the broad Ally footprint, the more incentives they’ll be eligible for.

Arroyo: Now, you’re doing this without having the captive tag attached. Talk about how that works?

Callahan: The insurance organization has a long history of profitable operation and that continues today. We’ve seen good results around the globe. Each area has its own specific challenges, but we feel good about our position today and we’re looking forward to growing the business globally. This is a new opportunity for me and I look forward to working with our international teams.