1 Auto Club Group ACG Direct Mail Program September 21, 2009

2 Agenda 1.RPM Direct Overview 2.Auto Club Group Overview 3.Auto Club Group Case Study

3 RPM Direct – your key to direct success ResponseProfitabilityMarketing Revenue Risk Retention RPM leverages the drivers of customer profitability through highly sophisticated targeting and a data driven creative development process. RPM Direct Overview

4 Our Solution The Turnkey, Outsourced Solution for Highly Targeted, Profitable, Direct Market Auto Insurance Customer Acquisition. RPM targeting techniques have driven in over $1.5 billion of profitable direct auto insurance premium. RPM Direct Overview

5 Proprietary Methodology Methodology developed over the past 12 years. Employs a measure of Policyholder Lifetime Value to target each marketing prospect. RPM builds discrete multivariate scoring models on the key drivers of insurance profitability: Response, Conversion, Revenue, Risk, and Retention. Proprietary methodology integrates multi-dimensional scoring models into a measure of Policyholder Lifetime Value for each prospect. Customized for each client. RPM Direct Overview

6 Insurance Drivers of Profitability +Policy Premium -Claims -Operating Expense - Acquisition Cost =Annual Profit xLife of Product =Lifetime Value of Policy Revenue Model Risk Model Response and Conversion Models Retention Model RPM Direct Overview

7 RPM Direct Capabilities Database Marketing Model RPM Direct Overview

8 Monthly Targeting Cycle RPM Direct Overview

9 Auto Club Group Began operations as Chicago Motor Club in 1906 Currently operates 6 AAA clubs in 8 Midwest states 4 million members 5,000 associates Home office in Dearborn, MI ACG Overview

10 ACG-Major Businesses Road Service –North American network of 42,000 towing providers Travel –Full service agency –$300 million annual sales Insurance –Auto/Home/Life –Sales through ACIA and joint ventures with other AAA clubs ACG Overview

11 Auto Club Insurance Association Insurance sales in 12 states Distribution through captive and independent agents, partner clubs and call centers 1 million policies in force $1.8 billion in assets A Rating (excellent) from A.M. Best. ACG Overview

12 Auto Club Group Case Study RPM has been working with ACG since Direct mail is a major lead generation channel for ACG. Direct mail targeting selections based on fixed allowable through June Tiered allowables implemented in July ACG Case Study

13 Tiered Allowables ACG developed separate allowables for each risk tier. Allowables reflect differences in lifetime value by risk tier. Differences in lifetime value are driven by differences in losses, persistency, premium and other related expenses. Targeting for each tier is done on the basis of index to allowable (CPS/Allowable). ACG Case Study

14 Claims by Credit Tier ACG Case Study

15 Persistency by Credit Tier ACG Case Study

16 Targeting Using Fixed Allowable Fixed Allowable ACG Case Study

17 Targeting Using Fixed Allowable Fixed Allowable ACG Case Study Untargeted segment tends to be high credit

18 Targeting Using Tiered Allowables Tiered allowables reflect customer value Fixed Allowable Tiered Allowable ACG Case Study

19 Targeting Using Tiered Allowables Fewer low-credit prospects targeted ACG Case Study

20 Targeting Using Tiered Allowables Additional high-credit prospects targeted ACG Case Study

21 Targeting Using Tiered Allowables Net effect is to produce a better credit mix ACG Case Study

22 Results-Change in Marketing Metrics Change Associated with the Use of Tiered Allowables ACG Case Study But…

23 Results-Change in Business Mix ACG Case Study

24 Results-Change in Business Mix ClaimsPersistency Remember these… ACG Case Study

25 Results-Change in Business Mix ACG Case Study

26 Results Tiered allowables produce: Higher credit mix of business. Higher persistency. Lower claims risk. Higher overall Net Present Value. Higher cost per sale. ACG Case Study

27 Lessons Learned Working closely with Risk and Product people leads to better decisions. The use of tiered allowables lets you focus on your market niche. Dont rely on traditional marketing statistics alone. Tie targeting to profitability. ACG Case Study

28 RPM Direct, LLC 24 Arnett Avenue, Suite 100, Lambertville, NJ Ph | Fx