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Lisa Hronek Archive for March, 2010
American General targets new customers despite losses
AIG recently reported a 4th quarter 2009 loss of $8.9 billion. Though this is substantial, it is a significant improvement from the $61.7 billion loss reported at the end of 2008.
American General Financial Services (AGF), the company’s lending operation, reported a 4th quarter 2009 operating loss of $309 million compared to an operating loss of $248 million in 2008, resulting from “a decline in finance charge revenues reflecting lower average net receivables and a higher provision for loan losses.”
In its quarterly earnings report the company goes on to state that AGF anticipates that its primary source of funds to “support its operations and repay it’s obligations” will be customer receivable collections and additional on-balance sheet securitizations and portfolio sales.
As a result, AGF has stepped up its efforts to acquire new customers. In January, US consumers received more than 8 million mailings for new personal loans from AGF, up from less than 1 million a year ago. This accounted for 26% of all personal loan mail volume during the month. In contrast, Discover, the second largest mailer in January mailed 5 million mailings and Citibank mailed 3 million.
AGF faces an uncertain future. The AIG earnings report states that the company is exploring “strategic restructuring opportunities” for AGF. However, indications from the mailbox in January suggest that AGF is determined to build up its loan portfolio and strengthen its position in the marketplace.
More health savings account direct mail for consumers and producers
In February 2010, a press release from JP Morgan Healthcare Solutions announced that Chase has seen a 30% increase in health savings accounts (HSA). The increase was partly due to their partnerships with national and regional health plans.
But as these accounts grow in number, so does a concern about the lack of regulation on HSAs. This issue was raised in an NPR story about Lon and Wendy Nestrud: a self-employed Denver couple who lost $2,000 in their HSA in an apparent fraud scheme.
Why all this activity surrounding HSAs? One reason may be pending Healthcare Reform…
President Obama is attempting to reinvigorate efforts to pass major healthcare legislation, which has many hot-button issues now within its debate. Most of them have been in front of the public since the beginning of the reform effort including health insurance portability, a public option, and mandatory consumer participation.
But just as industry innovates, so does political discourse. A new debate is developing around whether HSAs will survive or thrive if new healthcare legislation is implemented. Opponents to healthcare reform say HSAs will immediately disappear, while supporters say they are integral to reform’s success. This debate is causing insurance companies and consumers alike to pay more attention to HSAs.
I searched Mintel Comperemedia’s database of direct mail, and saw that last year, there was an almost doubling of the amount of mail sent to consumers, and a more than 50% increase in the number of pieces going to insurance producers.
Health savings accounts are an easily understood product that deserves more attention. The Department of the Treasury has estimated between 25 to 30 million people will be covered by an HSA policy in 2010. Even though direct mail for HSA products grew last year, there is plenty of room for mail to increase to reach a larger portion of that estimated market size.
Travel warnings for Mexico
In mid-February, the US Department of State extended a travel alert to certain parts of Mexico. This was due to increased violence within specific states of the country. Originally, a travel warning was issued on August 20, 2009; this is an extension of that first warning.
The alert asks US citizens “to delay travel to parts of Michoacan, Durango, Coahuila and Chihuahua” and it advises citizens traveling in those areas “to exercise extreme caution.”
The US Department of State made this decision in response to escalated violence connected with drug cartels and an increased number of deaths in those areas.
On my most recent trip to Mexico, I witnessed road blocks close to the Belize border. They seemed designed to stop the transportation of drugs within the country. Although the cars were thoroughly searched, are road blocks enough to stop fighting within the country? Is a more proactive approach needed to stop Mexico from being used as a transportation route for drugs coming to the US? Will the travel alert be enough to protect or dissuade American citizens traveling in Mexico?
These are the questions I ask, as it seems like a warning isn’t enough to stop the drug trafficking situation, nor stop individuals from visiting our southern neighbor.