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JUNE 2012 Protect Your Members in a Difficult Economy THE GLOBAL LEADER IN LOYALTY & CUSTOMER ENGAGEMENT Proprietary & Confidential www.affinion.com 1 THE GLOBAL LEADER IN LOYALTY & CUSTOMER ENGAGEMENT www.affinion.com What Ill

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THE GLOBAL LEADER IN LOYALTY & CUSTOMER ENGAGEMENT www.affinion.com

www.affinion.com

Proprietary & Confidential THE GLOBAL LEADER IN LOYALTY & CUSTOMER ENGAGEMENT JUNE 2012

Protect Your Members in a Difficult Economy

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THE GLOBAL LEADER IN LOYALTY & CUSTOMER ENGAGEMENT www.affinion.com

What I’ll cover. . .

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State of the Economy

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State of the Economy

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Insurance Research

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State of the Economy

2

Insurance Research

3

Member Opportunity

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1

State of the Economy

2

Insurance Research

3

Member Opportunity

4

Conclusion

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State of the Economy

1

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Consumer confidence is slowly improving

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Self-Reported Spending “Yesterday” is in line with the 2011 holiday season

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8.2% unemployment rate in May, 2012. Almost half of those unemployed were considered “long term” unemployed (out of work for more than 27 weeks). 23.7 million Americans are either unemployed or underemployed.

Sources: Bureau of Labor Statistics, June 2012 Reuters

The unemployment rate continues to be elevated

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State of the Economy

2

Insurance Research

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Question: If you were to lose your job, how long would you have access to affordable insurance?

10% 8% 8% 19% 22% 33% Less than one month One to two months two to six months more than 6 months I would not have access to afforable insurance I don't know *the numbers above represent the results of more than 1,000 self-selected participants for a nonscientific survey commissioned by the Affinion Group and conducted by Greenfield Online

More than 50% of respondents believe that they could be at risk for losing their health benefits and life insurance should they ultimately lose their job

All survey participants

11% 7% 13% 14% 25% 30%

Less than one month One to two months two to six months more than 6 months I would not have access to afforable insurance I don't know

Survey participants under age 34

Only 14% of those surveyed under age 34 believed they would have access to insurance for more than 6 months

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Question: If you were in an accident or killed, how concerned are you that your loved ones would be financially vulnerable?

25% 27% 22% 26%

Extremely Concerned Concerned Slightly Concerned Not at all concerned

*The numbers above represent the results of more than 1,000 self-selected participants for a survey commissioned by the Affinion Group and conducted by Greenfield Online

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Question: Over the past 12 months, how often would you have considered yourself to be living “paycheck-to-paycheck”?

37% 25% 17% 21%

Always Often Infrequently Never

*the numbers above represent the results of more than 1,000 self-selected participants for a nonscientific survey commissioned by the Affinion Group and conducted by Greenfield Online

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Question: If you were to have an accident that required hospitalization and the cost was more than your insurance would cover, which of these ranges of uninsured loss (out of pocket cost) would represent a severe impact to your financial stability?

18% 14% 13% 18% 37% Under $100 $100-$250 $250-$500 $500-$1,000 $1,000 and greater

*the numbers above represent the results of more than 1,000 self-selected participants for a nonscientific survey commissioned by the Affinion Group and conducted by Greenfield Online

45% of respondents believed that an out-of-pocket cost of as little as $500 would have a severe impact on their financial stability

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1

State of the Economy

2

Insurance Research

3

Member Opportunity

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How does the average consumer spend money?

Average U.S. Consumer

11%

Insurance

34% Housing 16%

Transportation

13% Food

Source: Consumer Expenditure Survey, U.S. Bureau of Labor Statistics, 2011

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Opportunity for credit unions to fill in the insurance gap

Service Industry Increases Insurance is the 4th largest consumer expenditure

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Question: How much more would you expect to pay for $100,000 of annual term life insurance coverage vs. $100,000 of group Accidental Death and Dismemberment insurance?

28% 30% 17% 25%

Less than $25 Between $25 and $50 Between $50 and $75 More than $75

*the numbers above represent the results of more than 1,000 self-selected participants for a nonscientific survey commissioned by the Affinion Group and conducted by Greenfield Online

Only 25% of respondents understood the cost savings that can be

  • ffered by having a

less costly alternative group Accidental Death and Dismemberment plan

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Since 2005, Affinion’s credit union insurance block has grown by over 26% - from $132 million in billable premium in 2005 to over $167 million in 2011

Insurance continues to have marketplace relevance with credit union members.

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Credit Unions can provide hope for members in a time of reduced access In the group market, the spike in unemployment diminished the number of individuals who qualify for life and disability benefits through their employers. Over the next five years, per capita consumer disposable income is expected to rise at a 2.3% average annual rate, which should generally boost the purchasing of AD&D insurance.

Source: AD&D Insurance Industry Report, IBISWorld

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AD&D-Credit Union: Program Description

  • Program Description
  • Covers insured for loss of life, limb, sight, speech or
  • hearing due to covered accident

– $1,000 no-cost offer Standard “non-expiring” Basic – $25,000 to $300,000 supplemental coverage – Individual and Family coverage available – Underwritten by The Hartford

  • Customer Benefits
  • Affordable supplemental coverage
  • Guaranteed Acceptance coverage: no medical exam or
  • questionnaire
  • Core Supplemental Offering: Common Carrier, Anti-
  • inflation, Educational Assistance, Day Care, and
  • Hospital Indemnity.
  • Marketing Considerations
  • Guaranteed issue
  • Bilingual Marketing Available1
  • Underwritten by The Hartford
  • Two Marketing segments

– Uninsured – Insured – Benefit Statement Mailing

  • Account Types
  • Share and Share Draft Accounts
  • State Restrictions
  • Marketing is unavailable in ND and VT.
  • 1Bilingual Marketing is unavailable in AK, CA, FL, PR, VT,
  • and ND.

Monthly Pricing* Individual Plan: $1.00/ $10,000 Family Plan: $1.50/ $10,000 * Rates may vary by state

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AD&D Summary - Minnesota Life

Accidental Death and Dismemberment (AD&D) Guaranteed insurance, also known as the Customer Appreciation Program (CAP) The program offers consumers a gift of $1,000 insurance at no cost to them; the premium is paid by the client Consumer also have the option of purchasing additional insurance in the amount of $25,000 to $300,000 supplemental coverage Underwritten by Minnesota Life The AD&D program touches approximately 60 million consumers by mail each year, and we currently insure more than 35 million people with this product alone

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Competitor Affinion

Client Case Study: Insurance Head-to-Head Test

Client Need: To ensure that it was providing its customers with the best possible program, and to maximize its own return on investment, this client wanted Affinion to compete in a head-to-head test with another insurance marketer using comparable AD&D programs Business Results: … and our premium purchase response rates were nearly 5x

greater than the

competitor’s… Client: One of the largest financial institutions in the U.S. … which generated nearly

10x more in annualized

premium for the client Despite getting approximately

half the gross leads as the

competitor, we selected 74%

more names to mail…

Competitor Affinion

Leads Received Amount Mailed

54% penetration 16% penetration # of Names $s

Competitor Affinion

%

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Competitor Affinion

Client Case Study: Insurance Head-to-Head Test

Client Need: To ensure that it was providing its customers with the best possible program, and to maximize its own return on investment, this client wanted Affinion to compete in a head-to-head test with another insurance marketer using comparable AD&D programs Business Results: … and our response rates were nearly 4x greater than the competitor’s, despite offering a lower complimentary coverage level… Client: One of the largest financial institutions in the U.S. … which generated more

than 16x the annualized

premium for the client Despite getting less than half

the gross leads as the

competitor, we selected 3x the

names to mail…

Competitor Affinion

Leads Received Amount Mailed

92% penetration 15% penetration # of Names $s

Competitor Affinion

% $3,000 Comp Offer $1,000 Comp Offer

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1

State of the Economy

2

Insurance Research

3

Member Opportunity

4

Conclusion

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Why Affinion?

Additional benefits of working with the largest TPA in the industry: – No financial risk

  • We absorb all the marketing expenses of the direct response effort

– Complete turnkey operations including:

  • List Management
  • Creative Development & Production
  • Mailing
  • Enrollment
  • Fulfillment
  • Customer service and facilitation of claims

– Absolute ease of implementation

  • You provide the list of customers — we do the rest

– Toll-free customer service gives your customers answers to all their questions – Affinion has implemented a GLB and SB1 compliant privacy solution to protect non-public information of your customers

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Summary of Insurance Services

Custom Capabilities

  • Complete Creative

Brand Integration

  • Print/Product

Delivery Flexibility

  • Benefit Selection &

Servicing

  • Over 5,200 Custom

Product Versions

Print Production

  • 500MM+ Pieces Of Direct Mail
  • 56MM+ Communication Materials
  • State-Of-The-Art Owned &

Operated Production Facilities

  • Over 5,500 Creative Versions

Annually

Graphic Services

  • High Output Production Environment
  • Strict Client Brand & Quality Control

Standards

  • 30M+ Rounds Of Mechanical

Revisions Annually

Servicing

  • 20 Call Centers

World-Wide

  • 20MM In-Language

Customer Contacts

  • Highest Service

Levels In The Industry

Modeling & Analytics

  • Database Modeling
  • 21 PhD’s, Programmers and

Analysts

  • 1.5B Unique Records
  • Comprehensive Reporting

Training & Support

  • 40 Trainers
  • On-Site/Virtual Training,

Webinar

  • Sales Scripting
  • Team Newsletters
  • Incentive Communications

Multi-Channel Campaign Support

  • 101K Campaigns

Through Multiple Media in Last Decade

  • Investment Of $2B In

Marketing In The Last 10 Years

Telemedia

  • Inbound/Outbound,

Partner Upsells, & VRU

  • 40MM+ Calls
  • 100% Compliance

With All State & FTC Regulations

  • 100% Of Calls Are

Scripted

  • 100% Verification
  • f Sales

Online

  • Tens Of Billions Of

Online Impressions

  • 20MM+ Customer Service

Emails

  • 10+ Years Interactive

Experience

  • 18 Interactive Online Products &

Multiple Branded Versions

  • Versign Certificate of Authority

Creative Development

  • 33 Marketing Professionals
  • Specialized In Direct Response &

Customer/Subscriber Acquisition Marketing

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Insurance Industry Leader

Your members will have the reassurance that their Insurance products and services are brought to them by the largest Third Party Administration (T.P.A.) in the Industry.

  • AD&D Success
  • Over $378 million annual premium
  • 26.5 Million insureds

–Over 22 million basic policyholders (basic coverage is paid by the Financial Institution) –Over 4 million supplemental policyholders

  • Claims paid across carriers in excess of $100 million annually
  • Total premiums collected in excess of $430 million annually
  • Mail over 94 million pieces annually
  • Recurring “benefit reminder” mailings to review and upgrade supplemental coverage
  • We market to 46% of Financial Institution’s greater than $500 million in assets
  • Carriers with name recognition and financial stability
  • Partner feedback ranks Affinion with the strongest retention rates in the industry
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Insurance Program Endorsements

  • Awarded the prestigious ISO 27001, the highest international standard for information

security management and one of the 100 designees in the US carrying this leading-edge credential

  • Awarded the World Class Payment Card Industry (PCI) Data Security Standards (DSS) Level 1

compliance certification – the highest level of secure standard of billing transactions in North America and the United Kingdom

  • Affinion is the only preferred AD&D solution for the National Association of Federal Credit

Unions (NAFCU)

  • Affinion Insurance programs are endorsed by 16 state associations
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http://www.linkedin.com/pub/wayne-conte/a/117/915

Wayne Conte

EVP, Affinion Group 400 Duke Drive Franklin, TN 37067 615-764-2537 wconte@affiniongroup.com

For more information about Affinion Group, please visit: http://www.nafcu.org/affinion