Ally Financial Inc. · NYSE:ALLY
Ally Financial — General Motors Acceptance — Investor Presentation (October 2004)
34 slides from Ally Financial's investor presentation, Oct 19, 2004
Slide 1: GIL Management Meeting Directors & Officers Underwriters Seminar Update
Jerome B. Van Orman, Jr. Vice President - Finance & October 19, 2004 CFO - NA Auto Operations Hamilton, Bermuda GIL Management Meeting Directors & Officers Underwriters Seminar UPDATE
Slide 2: Safe Harbor
Safe Harbor In the presentation that follows and in related comments by management of GM, our use of the words "expect", "anticipate", "estimate", "forecast", "objective", "plan", "goal", "project", "priorities/targets", and similar expressions is intended to identify forward- looking statements. Wh
Slide 3: Mission
Mission Assist in marketing of GM vehicles by providing financial products and services to dealers and their customers Provide GM with a superior return on investment on GMAC's auto financing activities as well as diversification from expansion into non-auto financing activities
Slide 4: Lines of Business
Lines of Business Financing Indirect lender to automotive retail and lease customers Inventory financing to automotive dealers Real estate and working capital loans to dealers Full-service leasing Asset-based lending Insurance Extended warranty contracts Personal auto insurance Commercial insurance
Slide 5: Lines of Business (Cont.)
Lines of Business (Cont.) Mortgage Residential and commercial mortgages Relocation and real estate services Securitization of mortgages
Slide 6: Global Customer Base
Global Customer Base 8.6 million retail automotive accounts 9,500 automotive dealer relationships 2.6 million mortgage customers 6.7 million insurance policy holders
Slide 7: GMAC Year-End Serviced Assets
GMAC $ Billions 300.0 Year-End Serviced Assets 2783 246.4 | 218.2 184.41 160.8 1378 1199 | oe3 1062 107.5 1994 1995 1996 1997 1998 1999 2000 2001 2002 2008 930/04
Slide 8: GMAC Consolidated Earnings
GMAC Consolidated Earnings = $ Millions 3,000 2,793 2,302 2,000 1,796 1.870 4,827 1,602 1,500 4241 1,301 1,325 4,031 1,000 920 500 | 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 9 Mos.
Slide 9: GMAC Return on Equity
GMAC Return on Equity = 18.0% 16.0% 14.8% 19.3% 14 50) 14.7% 14.4% 14.2% 14.0% 12.5% 12A% 07, 125% 12.0% 42.0% {07% 11.0% 10.0% 8.0% 6.0% 4.0% 2.0% 0.0% 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 9 Mos
Slide 10: GMAC Earnings
GMAC Earnings 2004 9Mos YTD OKU) 2004 2003 2003 weeee ($ Millions) -- --- Financing Operations 1,153 1,018 135 Insurance Operations 261 106 155 Mortgage Operations 888 1,039 (151) Consolidated 2,302 2,163 139
Slide 11: Key Issues for Next Months
Key Issues for Next 12 Months Interest Rate Environment Changing Mortgage Environment Off-Lease Performance Credit Losses Funding Outlook Insurance Underwriting Income
Slide 12: Key Issues for Next Months
Key Issues For Next 12 Months Interest Rate Environment Changing Mortgage Environment Off-Lease Performance Credit Losses Funding Outlook Insurance Underwriting Income
Slide 13: Interest Rate Environment
Interest Rate Environment Interest rates have increased and are anticipated to trend higher Will constrain net interest margins Will lead to decline in mortgage volume Nevertheless, GMAC is expected to continue to generate strong returns through 2004 and beyond
Slide 14: Interest Rate Environment Mitigating Factors
Interest Rate Environment Mitigating Factors Finance and Insurance Significant floating rate debt swapped into fixed rate during 2003 at attractive rates Insurance underwriting and investment income are likely to remain strong in rising rate environment Mortgage Mortgage servicing asset generally in
Slide 15: Key Issues for Next Months
Key Issues For Next 12 Months Interest Rate Environment Changing Mortgage Environment Off-Lease Performance Credit Losses Funding Outlook Insurance Underwriting Income
Slide 16: U.S. Residential Mortgage Industry Volume
U.S. Residential Mortgage Industry Volume Source: Fannie Mae/Freddie Mac estimates
Slide 17: Changing Mortgage Environment
Changing Mortgage Environment Mortgage Group profitability projected to decline but disproportionately less than industry volume downturn Increase in Residential and RFC market share partially offsetting decline in industry volume Mortgage servicing asset will appreciate in rising interest rate envi
Slide 18: Key Issues for Next Months
Key Issues For Next 12 Months Interest Rate Environment Changing Mortgage Environment Off-Lease Performance Credit Losses Funding Outlook Insurance Underwriting Income
Slide 19: U.S. SmartLease Book Gain per Unit
U.S. SmartLease Book Gain per Unit
Slide 20: U.S. SmartLease Terminations Outlook
U.S. SmartLease Terminations Outlook
Slide 21: Off-Lease Performance
Off-Lease Performance Fundamentals are improving and sustainable Terminations decreasing to a reasonable range Remarketing efficiencies growing SmartAuction is leading-edge internet technology Enables GMAC to remarket off-lease vehicles faster Result is cost savings and fee income Recently sold one-
Slide 22: SmartAuction -- Background
SmartAuction -- Background GMAC's proprietary internet-based auction system established in 2000 to remarket off-lease and GM rental and company vehicles Enables GMAC to: Maximize sales proceeds by broadening number of prospective buyers and selling vehicles sooner Reduce expenses by: Eliminating tra
Slide 23: Key Issues for Next Months
Key Issues For Next 12 Months Interest Rate Environment Changing Mortgage Environment Off-Lease Performance Credit Losses Funding Outlook Insurance Underwriting Income
Slide 24: U.S. Auto Retail Loans Severity of Loss
U.S. Auto New and Used Retail Loans Severity of Loss Average Gross Loss per Unit with a Loss
Slide 25: U.S. Auto Retail Loans Frequency of Loss
% of Units Outstanding U.S. Auto New and Used Retail Loans Frequency of Loss
Slide 26: Key Issues for Next Months
Key Issues For Next 12 Months Interest Rate Environment Changing Mortgage Environment Off-Lease Performance Credit Losses Funding Outlook Insurance Underwriting Income
Slide 27: Balance Sheet Strength
Balance Sheet Strength Avg. Funding* To Equity (:1) 10.7 11.0 11.8 10.9 10.4 10.2 10.4 9.6 * Funding represents debt net of cash and adjusted for certain securitization transactions
Slide 28: Growing Cash Balances
Growing Cash Balances Strong liquidity to support short-term needs
Slide 29: Diversified Funding Strategy
Diversified Funding Strategy Grow access to institutional and retail bond markets in the U.S. and globally Diversified secured funding programs Public asset-backed securitizations in global markets Bank conduit asset-backed securitizations Sale of whole loans to financial / retail institutions Lease
Slide 30: Diversification of Funding Sources
Diversification of Funding Sources U.S. Term Funding Program 2003 2004 9 Mos Funding completed $47B $35B Funding Sources: Institutional 30% 35% Retail 18% 18% Securitization 52% 47% Total 100% 100%
Slide 31: U.S. Liquidity Position Short-Term vs. Long-Term Funding
U.S. Liquidity Position Short-Term vs. Long-Term Funding Short-term as % of Total 36% 40% 33% 35% 13% 9% 10%
Slide 32: Key Issues for Next Months
Key Issues For Next 12 Months Interest Rate Environment Changing Mortgage Environment Off-Lease Performance Credit Losses Funding Outlook Insurance Underwriting Income
Slide 33: Underwriting Income
Underwriting Income Sustainable underwriting performance Multi-year focus on fundamental underwriting and pricing discipline across all business lines Increasing share Cost reductions and improved efficiency Improved loss performance, particularly in extended automotive warranty product line
Slide 34: Summary
Summary In 2004, target net income expected to be in line with 2003 record earnings Financing Net margin pressure offset by improved credit losses and off-lease vehicle performance Insurance Strengthened underwriting performance Mortgage Market share gains and focus on servicing/fee based income
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