2007 annual report - aarp...new york life was certified as a “cen-ter of excellence” by purdue...

2 0 07 a n n u a l r e p o r t

1

AARP Services Inc. Annual Report 2007

2 0 0 7 i n R e v i e w

Page Section

3 Accomplishments of 2007

3 New Directions in Health Benefits

4 New Option for Members: Insurance Agents

4 The Portfolio of Products and Services

5 Health Offers

6 Lifestyle Offers

6 AARP Financial Inc.

8 Member Relationship Management

9 Supporting the AARP Brand

9 Media Sales

9 Adding to AARP’s Alliances

11 AARP.org

11 Looking Forward

For a conversation with AARP Services Board Chair Raul Yzaguirre and President and CEO Larry Renfro, as well as financials, please go to www.aarp.org.

2


3


Accomplishments of 2007

AARP Services and its subsidiary, AARP Financial, had another

strong year in 2007. It was also a year of change—notably, a shift

in strategy for health products and services—that brought us

even closer to fulfilling the mission put forth by AARP’s founder,

Dr. Ethel Percy Andrus, in 1958.

Our workforce remains deeply com-mitted to pursuing Dr. Andrus’s vision and the goals of increasing the value of AARP membership, driving positive social change and delivering financial results to AARP so it can more suc-cessfully achieve its mission.

New Directions in Health Benefits

AARP has been advocating for many years to strengthen the United States’ health care system to better meet the needs of our members and all Americans. AARP Services has been supporting that effort, and in 2007 set the stage for achieving significant improvements to health care delivery through new contracts with United-Healthcare, Genworth and Aetna.

Working closely with our innovative service providers, we are aiming to change the way individuals, medical professionals and insurance provid-ers view and utilize the health care system. Our goal is to help people keep as active and healthy as possible. We are also dedicated to ensuring they receive useful information, in whatev-er format they prefer, that will clearly answer their questions and help them make informed decisions based upon their individual situation. We under-

stand that health care is not a “one size fits all” product, and we expect the health care industry and consumers to work together to fit the services to each participant.

In 2007, we entered into new agree-ments with insurance companies to provide access to a range of health products that carry the AARP name:

UnitedHealthcare

Medicare Supplemental/ °Indemnity insurance, Medicare Advantage plans and Medicare Part D prescription drug coverage

Aetna

Comprehensive Preferred Provider °Organization (PPO) coverage for people age 50-64

Genworth Financial

Long-Term Care Insurance °

We are about to launch new ways for these service providers to work with AARP, AARP Services and our mem-bers in promoting care management and healthy lifestyles. In 2008, we will undertake a series of health improve-ment projects and pilots for members with the UnitedHealthcare and Aetna products that carry the AARP name.

4


These will build on current best prac-tices in commercial insurance and add an important focus on the special health care needs of older adults—such as managing multiple chronic conditions and multiple medications while seeking care in a fragmented health care delivery environment.

We are also establishing health met-rics to measure health outcomes and effectiveness of care. It’s a different way of doing business, and our goal is to develop and extend innovative health programs to our members while encouraging healthier, more active lives.

We are at the beginning of a multi-year effort. As these new programs gain momentum and we build awareness among consumers and professionals alike, we expect these new products from our service provid-ers and AARP’s continuing drive to educate members will begin making a difference in the health care industry.

New Option for Members: Insurance Agents

Another improvement designed to meet the needs of AARP members is allowing the providers’ insurance agents to sell the products that carry the AARP name to members face-to-face. Research shows that many people prefer to speak directly with an agent when making decisions about insurance. Now Genworth, our long-term care insurance pro-vider, and health insurance providers UnitedHealthcare and Aetna are using heightened screening criteria to select agents to sell to our members. For

instance, agents must agree to abide by a Code of Ethics that requires them to put our members’ interests first and to communicate the benefits and fea-tures of products clearly so members can make informed choices when they select an insurance policy.

This new delivery channel will be integrated with the existing channels of mail, phone and web, giving current and future AARP members choice on how they wish to gather information, purchase products and ultimately be serviced. Products carrying the AARP name have never been offered through this particular avenue be-fore. The goal is to improve member value and experience while poten-tially changing how other carriers do business.

The Portfolio of Products and Services

The established health products and financial services for AARP members have performed well throughout 2007. AARP members continue to look to AARP providers for branded property and life insurance, a no-gimmicks credit card, dental and vision cover-age, and access to a variety of health insurance policies.

Use of discount products, retail discounts, home security, auto pro-gram, legal services and many travel-related offers selected specifically for AARP members have also been strong throughout 2007. More than 11 million members annually use the discount offers. In fact, they are widely quoted as the primary reasons for joining the Association.

5


Health Offers

2007 was a successful year for the AARP Medicare Supplement program from UnitedHealthcare. While there were no new additions to the program in 2007, it continued to grow in par-ticipation — achieving a 27 percent share of the overall Medicare supple-ment market. Online enrollment for the program is now offered in 43 states and territories, and UnitedHealthcare program continues to return the most value compared to its competition when measured by benefits paid versus premiums collected.

UnitedHealthcare’s AARP MedicareRx Plan (Part D) portfolio was expanded to include two additional options: the AARP MedicareRx Saver plan and AARP MedicareRx Enhanced plan. The AARP MedicareRx Plans formu-laries include every brand name pre-scription drug or its generic version covered by Part D. This translates into

greater access and choice for AARP members. The AARP MedicareRx En-hanced plan offers coverage in the gap for Tier 1 drugs, a preferred mail ser-vice pharmacy that provides deeper savings for members and customer care associates available to members 24 hours a day, 7 days a week.

All three options of the AARP Medi-careRx Plans are available in all 50 states, Washington, DC, and the five U.S. territories. The Enhanced Ex-planation of Benefits (EOB) enables members to better understand how the benefit works for them, and the AARP MedicareRx Plans feature a four-star customer service rating (out of five stars in Centers for Medicare and Medicaid Services study results). UnitedHealthcare is one of just three plan sponsors with four-star ratings in most regions.

The AARP Vision Discount Program from Lexicon demonstrated sustained

6


member utilization and member savings in 2007. Since the addition of LensCrafters to the network of retail brands (joining Sears Optical, JC Penney Optical, Pearle Vision and Target Optical) in 2006, the program has shown sustained growth and popularity. In fact, member discount-ed savings have increased nearly 10 percent over 2006, to nearly $36 million in actual savings for AARP members.

Delta Dental, the AARP Dental Insur-ance Plan provider, expanded cover-age to Puerto Rico, making AARP Dental Insurance available in all 50 states, Puerto Rico and the District of Columbia.

Lifestyle Offers

AARP members have looked to the Association for special discounts and travel offers since the Association’s early days. We continue to focus efforts on enhancing offers to appeal to AARP’s diverse members.

The number of members using AARP Travel offers increased 18 percent in 2007. This is due in part to the addi-tion of five new travel service provid-ers: Enterprise, Alamo, MedjetAssist, Amadeus Waterways and Brendan Vacations.

The AARP Fitness program was launched, featuring three new pro-viders (Gold’s Gym, Curves and the American Council on Exercise). This offer directly engages members to stay healthier and stronger as they age. We expect further enhancements to AARP Fitness throughout 2008.

In 2007, the AARP Legal Services Network from GE Benefit Solutions increased attorney participation by 42 percent and received over 99,000 unique website visitors. It is available in all 50 states and offers discounted rates on various legal services includ-ing simple wills and powers of attorney to AARP members.

The AARP Motoring Plan from GE introduced two new plan versions and saw an increase in member engage-ment year-over-year by 2 percent.

AARP Financial Inc.

AARP Financial’s mutual funds provide straightforward solutions for meeting mid- to long-term objectives. Each of these funds offers a clear, easy-to-understand investment strategy backed by the AARP five principles of investing. We believe the simplicity and design of the funds and the avail-ability of investment counselors at no additional charge represents a new vision for American investors, who are often overwhelmed by the number of fund choices available today.

The AARP Funds received Star Awards in the small company category from the Mutual Fund Education Alliance as “Best Annual Report to Sharehold-ers” for the 2007 semi-annual report to shareholders, as well as “Best Special Communication” for the 2007 IRA Do More Than Dream Campaign.

The call volume for the Financial Center at AARP Financial more than doubled over 2006, indicating that people find value in speaking with the salaried, non-commissioned profes-

7


sionals who offer guidance on invest-ing or taking income in retirement.

The Financial Center also began to develop Retirement Income Solutions to assist retirees in managing their incomes. These solutions include per-sonalized service and state-of-the-art, easy-to-use technology tools, as well as a suite of value-added products. To support this effort, all Financial Center representatives completed an 18-month Certified Financial Planner training program.

AARP’s relationship with The Hartford goes back over two decades. In 2007, AARP and AARP Financial Inc. ex-ecuted a multi-year contract extension with The Hartford, which provides AARP-branded property insurance. This enabled The Hartford to intro-duce two new auto insurance prod-ucts: Advantage and Advantage Plus. We were also pleased to distribute the Hartford Gerontology group’s new

guidebook, “It Could Happen to Us: Family Conversations about Disaster Planning,” which was completed in partnership with MIT AgeLab.

The AARP-branded Life Insurance Program from New York Life was expanded with the launch of two fixed immediate annuity products, cash refund and 20-year guarantee. Both plans offer Joint Life and Cost of Living Adjustment options. Also, New York Life developed term riders, which al-low current insureds to increase their coverage to $100,000 using simplified underwriting.

For the fourth consecutive year, the AARP Life Insurance Program from New York Life was certified as a “Cen-ter of Excellence” by Purdue University Center. Additionally, it received a “Best in Class” Contact Center Award from the International Quality and Produc-tivity Center.

8


The AARP Property and Casualty Program from Real Legacy Assurance began offering auto insurance cover-age for the U.S. Virgin Islands. Now, both Puerto Rico and Virgin Islands have available auto and home protec-tion plans.

The AARP Motorcycle Insurance Program from Foremost featured enhancements, including a 5 percent discount for motorcycles equipped with anti-lock brakes and/or air bags, the removal of a requirement that storage be locked, and elimination of a surcharge for Joint Ownership Coverage.

Chase launched a member-centric Clear and Simple program for The AARP Credit Card Services, which provides AARP members with infor-mation and tools to help them better manage their personal finances.

AARP Financial is also working to develop a Workplace/Small Business

Channel for traditionally underserved small business owners and the self-employed.

Member Relationship Management

To gain a better understanding of just what members want and expect from AARP, and where and how to access service providers’ offers, we’ve been working, at the request of AARP, on the AARP Member Relationship Manage-ment (MRM) initiative. MRM will ulti-mately create a more coordinated and relevant member experience. AARP Services has also been working with our providers to support major im-provements in our data infrastructure and to build a greater understanding of our members’ needs and wants. By year-end we:

Made great strides towards stream- °lining, expanding and updating the data that we maintain on our members.

9


Created state-of-the-art email °guidelines that will give providers the ability to send relevant prod-uct and service messages to those members who want them.

Worked with AARP membership °colleagues to plan improvements in how we communicate with members when they first join the Association.

Supporting the AARP Brand

In support of AARP’s 2007 brand revitalization, we positioned AARP’s service providers as critical stakehold-ers in support of the AARP brand. Several strategies and tools have been developed to help providers carry the brand promise to AARP members suc-cessfully. Shaped through fielded re-search and member insights, our new brand portfolio strategy consolidates product/service offerings under five key categories to increase awareness of all the products and services offered to AARP members: Health, Finances, Connecting, Giving and Enjoying.

Media Sales

Media Sales had a record-breaking year. AARP The Magazine and the AARP Bulletin each carried more advertising revenue than ever before, despite an increasingly competitive environment. Advertiser revenue for AARP.org nearly doubled from the previous year. Both Life@50+ | AARP’s National Event & Expo, held in Boston, and Feria de la Segunda Juventud, the first AARP national event entirely in Spanish, held in San Juan, Puerto

Rico, were major successes. Life@50+ attracted an all-time record of nearly 500 exhibitors.

Adding to AARP’s Alliances

As 2007 drew to a close, we added an exciting new relationship with Borders Group Inc., the nation’s sec-ond largest book retailer. Borders will help communicate AARP’s social im-pact agenda and help increase AARP’s educational efforts to members and non-members alike. Borders will also extend compelling value offers to our membership. Our relationship with Borders represents an emerging strategy by AARP and AARP Services to work with a network of world-class retailers to expand the Association’s reach.

10


10

11


AARP.org

With well over 40 million visits to the site in 2007, AARP.org serves as an open, one-stop shop for all of AARP. The Association has had a public web-site for over a decade, but we are not resting on our cyber-laurels.

AARP.org is poised to become the most vital and compelling site avail-able for those over 50 — and for anyone else interested in the issues affecting this age group. Keeping this goal in mind, we spent much of 2007 redesigning the website to be more responsive and interactive for users.

The early-2008 launch of the new AARP.org will bring together best-in-class content to entertain, empower and serve the 50+ in a community of their own making. This online com-munity will connect families and friends with shared videos, photos and memories in a safe and trusted environment. New website features and third-party providers of premium content and services will bring visitors free interactive content, including games and music. From advocacy to membership discounts, in health, finances, connections, giving and en-joying, the site will continue to show-case AARP and all we have to offer.

Looking Forward

As we move into 2008, when AARP cel-ebrates its 50th Anniversary, we renew our commitment to make available services that truly improve the lives of AARP members and the entire 50+ population. We remain dedicated to helping people stay stronger, both fi-nancially and physically. We believe in enriching lives through expanding ac-cess to needed services and develop-ing easier ways to achieve life’s goals.

Sometimes it’s a cruise, sometimes it’s an exercise program — sometimes it’s much more serious than that. Wheth-er it involves writing a will, disease management or handling a caregiving crisis, we are committed to ensuring our members’ needs are met.

That’s what Dr. Andrus foresaw, an or-ganization that was responsive to the varied needs of those 50+. To quote our visionary founder, “What we do, we do for all.”

12


AARP Services Inc.

AARP Services Inc., founded in 1999, is a wholly owned subsidiary of AARP. AARP Services manages the wide range of products and services that are offered as benefits to AARP’s 39 million members. The offers span health products, travel and leisure products, and life event ser-vices. Specific products include Medi-care supplemental insurance; member discounts on rental cars, cruises, vaca-tion packages and lodging; special offers on technology and gifts; pharmacy ser-vices; legal services; and long-term care insurance. AARP Services founded AARP Financial Incorporated, a subsidiary that manages AARP-endorsed financial products including AARP Funds; AARP Services develops new products, man-ages and markets products and services, creates and maintains partnership and sponsorship relationships, and develops and manages AARP’s award-winning website.

2007 annual report - aarp...new york life was certified as a “cen-ter of excellence” by purdue...

Documents