Ally Financial Inc. · NYSE:ALLY
Ally Financial — General Motors Acceptance — Investor Presentation (June 2006)
44 slides from Ally Financial's investor presentation, Jun 26, 2006
Slide 1: Outline for Discussion
Overview of GMAC Sale of Controlling Interest in GMAC GMAC Business Update Q & A Outline for Discussion
Slide 2: GMAC -- Today
GMAC -- Today GMAC is one of the premier financial services company in the world GMAC financed its first automobile in 1919 GMAC has been a wholly-owned subsidiary of General Motors since 1919 GMAC is a global franchise spanning nearly 40 countries GMAC is a leading player in automotive financing, c
Slide 3: GMAC Financial Services Organization Structure
GMAC Financial Services Financing Operations (Total Assets of $172 Billion) Insurance Operations (Total Assets of $13 Billion) U.S. & Int’l Auto Finance - Consumer - Commercial Asset Based Lending Business Residential Capital Extended Auto Warranty Auto Dealer Insurance Personal Auto Insurance U.S.
Slide 4: GMAC Business Strengths
GMAC Business Strengths Leadership positions across all major sectors #1 in Auto Finance Top 10 player in Mortgage #1 provider of Extended Auto Warranty #1 provider of Dealer Inventory Insurance Tremendous global asset origination capability World-class servicing Well-managed risk profile Global Fra
Slide 5: Global Origination Volume
(thousand of units) Global Automotive Financing Volume Consumer 2,641 2,348 2,493 2,157 Wholesale 6,348 6,312 6,558 6,440 Consumer Financing ($ billions) $71 $68 $69 $63 Wholesale Assets Outstanding ($ billions) $39 $47 $49 $42 ($ billions) Mortgage Loan Origination & Acquisition $143 $203 $170 $206
Slide 6: GMAC Managed Assets
GMAC Managed Assets $ billions
Slide 7: GMAC Consolidated Earnings Trend
GMAC Consolidated Earnings Trend $ millions - 1,000 1,500 2,000 2,500 3,000 3,500 2,793 1,870 1,786 1,602 2,913 2,833 * This is a non-GAAP financial measure. Consolidated earnings on a GAAP basis were $2,394 million, which includes a one-time goodwill impairment charge of $439 million. * RoE 12.4% 1
Slide 8: Current Ratings Linkage
Current Ratings Linkage GMAC ratings linked to GM thru 100% ownership Positives of GM relationship Stable strategic ownership Steady flow of business GM subvented GM dealers GM family Prestigious brand name Perceived issues with GM relationship GM 100% Ownership of GMAC Long-term adequacy of capital
Slide 9: Objectives of GMAC Majority Sale – Best of Both Worlds
Objectives of GMAC Majority Sale – “Best of Both Worlds” No Change Steady flow of GM “linked” business Diversified business model Adequate capital for growth Use of GMAC brand name Changes De-linkage of ratings Minority GM Ownership Stable “strategic” majority ownership Independent BoD governance Re
Slide 10: Transaction Overview
Transaction Overview Investor Consortium
Slide 11: Components of Transaction
GM has agreed to sell a 51% controlling interest in GMAC to a Consortium led by Cerberus Cerberus will control all of the Consortium’s 51% voting shares Cerberus has a strong track record of performance One of the largest private investment firms in North America, with $18 billion under management E
Slide 12: Components of Transaction (cont'd)
GM will receive dividends from GMAC equal to its earnings prior to closing, which will largely fund GM repayment of inter- company debt GMAC and most of its U.S. operations (excluding the Insurance Group) will be converted to Limited Liability Company (LLC) form Beneficial for shareholders’ tax plan
Slide 13: Assets retained by GM
Assets retained by GM At closing, GM will retain approximately $20 billion of assets Predominantly U.S. lease assets and associated funding Net book value estimated at about $4 billion Retained lease assets reduce GMAC’s credit exposure to GM Going forward, GMAC will continue to originate and retain
Slide 14: Strong Independent Corporate Governance
Strong Independent Corporate Governance Cerberus will be the managing owner of GMAC LLC and control the Consortium’s 51% voting shares Board Composition: 13 Board members Consortium: 6 GM: 4 Independent: 3 Audit Committee to consist of all three Independent Directors Consortium has the ability to ra
Slide 15: Mutually Beneficial Services Agreements
Mutually Beneficial Services Agreements Services agreements will preserve GM / GMAC mutually-beneficial relationship for the long-term Support global $60+ billion a year auto loan origination platform Services Agreements support key GM-GMAC objectives: GM : Strategic support for GM vehicle sales wor
Slide 16: GM/GMAC Rating Delinkage
51% 49% Cerberus-Led Consortium GM/GMAC Rating Delinkage
Slide 17: GMAC Credit Profile
GMAC Credit Profile Under terms of transaction, GMAC’s unsecured credit exposure to GM will be capped at $1.5 billion on a global basis Cap will include receivables from GM and any implicit “out of the money” risk sharing or residual value support due to loss in residual values Estimate that GMAC’s
Slide 18: Transaction expected to achieve rating de-linkage from GM
Transaction expected to achieve rating de-linkage from GM Sale by GM of controlling interest Dramatic reduction in GM exposure Sound governance to protect all GMAC stakeholders Contractual agreement that ensures arm’s length GM-GMAC operating relationship Rating agencies have provided indication tha
Slide 19: GM/GMAC Strategic Linkage
Solid Strategic Linkage Auto financing relationship GMAC exclusive provider of GM’s subvented auto finance programs GMAC relationships with GM dealer network GMAC Customers : Dealer floorplan financing GMAC Sales Force : Auto finance & insurance products “GM Family” customer base Millions of custome
Slide 20: Next Steps
Next Steps Meet all pre-closing conditions PBGC agreement that GMAC and its subsidiaries will have no liability that could arise from GM’s pension plans No Material Adverse Effect (including a credit rating below CCC for GM’s unsecured long-term debt) Obtain significant number of regulatory approval
Slide 21: Transaction Benefits Summary - GM
Significant liquidity for GM $10 billion upfront $14 billion over 3 years Broad auto financing support for GM GM will benefit from comprehensive wholesale and retail automotive financing to support its vehicle sales globally Ongoing earnings from GM’s 49% equity stake retained in GMAC Expect that mi
Slide 22: Transaction Benefits Summary - GMAC
Strengthened GMAC capital base long-term Preferred equity injection of $1.9 billion Earnings reinvestment provisions Improved GMAC liquidity Committed 3-year $25 billion funding facilities Anticipated access to unsecured markets Significant and steady flow of auto financing revenue Agreement grants
Slide 23: Business Outlook
Business Outlook -- Consolidated Results Financing Operations Mortgage Operations Insurance Operations Funding Update
Slide 24: Consolidated Earnings Trend
Consolidated Earnings Trend $ millions Non-Financing 16% 22% 24% 30% 26% 31% 34% 30% 34% 51% 49% 62% % of Income - 1,000 1,500 2,000 2,500 3,000 3,500 1,241 2,793 1,870 1,786 1,602 1,527 1,325 1,301 2,913 1,031 2,833 • This is a non-GAAP financial measure. Consolidated earnings on a GAAP basis were
Slide 25: Net Income – 2006 First Quarter
Insurance ($56) $672 $728 Total (155) Mortgage $65 $313 $248 Financing Fav/(Unfav) Net Income – 2006 First Quarter $ Millions
Slide 26: Recent Challenges
Recent Challenges Credit rating downgraded below investment grade Several additional GM / GMAC rating downgrades incurred GMAC borrowing spreads climbed to unprecedented levels Short-term interest rates trended upward 3-month LIBOR increased by nearly 200 bps Yield curve flattened
Slide 27: Earnings Mix – Business Diversification
70% 30% 38% 62% Earnings Mix – Business Diversification Financing Mortgage / Insurance * * Excludes goodwill impairment charge of $439 million
Slide 28: Earnings Mix – Geographic Diversification
Earnings Mix – Geographic Diversification 29% Total 63% Insurance 39% Mortgage 21% Financing CAGR $ Millions International Net Income * * Income outside U.S. and Canada ** Compound Annual Growth Rate **
Slide 29: Insurance Operations
Insurance Operations Premium / Revenue growing International growth Niche acquisitions Favorable loss cost experience Steadily increasing underwriting profits Increasing competitive trends Growing investment portfolio Insurance Net Income $7.7 $7.3 $6.2 $5.1 Market Value of Investment Portfolio ($ B
Slide 30: Mortgage Operations
Mortgage Operations GMAC has maintained strong profitability at its Residential Mortgage Operations despite decline in industry volume and margin pressures Growth in residential market share for 9 consecutive years Increased mortgage servicing income Profitable expansion overseas Stand-alone investm
Slide 31: Financing Operations
Financing Operations Financing $ Millions Funding constrained business Ratings impact competitiveness Upcoming ratings delinkage will benefit costs Leverage existing relationships to capture opportunities within GM dealer channel Leverage existing dealer relationships to expand presence in non-GM de
Slide 32: Strong Liquidity Position
Strong Liquidity Position GMAC continues to have access to large liquidity cushion Cash balance of $22 billion* at March 31, 2006 Over $45 billion of unutilized bank lines and conduit capacity Multi-year committed whole loan facilities with Bank of America and Bank of Nova Scotia with $59 billion of
Slide 33: Strong Liquidity Position (cont'd)
Strong Liquidity Position (cont’d) In March, closed sale of majority interest in GMAC Commercial Mortgage and received $8.8 billion comprised of sale proceeds and repayment of inter-company debt Strong stand-alone ResCap funding capability established ResCap has repaid all inter-company debt to GMAC
Slide 34: 2005 U.S. Term Funding
90% 10% 2005 U.S. Term Funding Secured Funding & Whole Loan Sales Unsecured Funding $41 Billion Note: Represents domestic auto finance only
Slide 35: 2005 U.S. Term Funding
42% 13% 10% 35% 2005 U.S. Term Funding Money Market Investors Term Investors Whole Loans Unsecured Funding $41 Billion Secured Funding & Whole Loan Sales (90%) (10%) Note: Represents domestic auto finance only
Slide 36: Evolution of U.S. Term Funding
21% 79% 46% 54% 90% 10% Evolution of U.S. Term Funding $65 Billion $47 Billion $41 Billion Secured Funding & Whole Loan Sales Unsecured Funding Note: Represents domestic auto finance only
Slide 37: Structural Subordination Analysis
Structural Subordination Analysis Asset Coverage Ratio continues to adequately protect unsecured debt holders despite increase in secured funding Although unencumbered assets have declined, asset coverage ratio remains stable-to-higher as unsecured debt levels decline even more rapidly * Total Asset
Slide 38: GMAC Funding Plan
GMAC Funding Plan GMAC’s innovative funding initiatives have reduced its need to rely on unsecured financing With a stable and potentially improving credit rating post- closing, GMAC will opportunistically seek to access the unsecured institutional and retail markets
Slide 39: GMAC Global Liquidity Profile
GMAC Global Liquidity Profile GMAC has access to massive liquidity cushion Two large, multi-year funding agreements: Bank of America (BofA), Bank of Nova Scotia (BNS), with plans for a third $25B facility anchored by Citigroup BofA and BNS commitments for retail assets while the $25B facility includ
Slide 40: Consolidated Asset and Liability Maturities
Consolidated Asset and Liability Maturities Note: Includes cash, excludes on-balance sheet secured debt and the related assets, as of March 31, 2006 Interest-Earning Assets Interest-Bearing Liabilities - Under 3 months Under 6 months Under 1 year Under 2 years Under 3 years $ Billions
Slide 41: ResCap Capital Structure
ResCap Capital Structure GMAC plans to maintain the ResCap firewall to preserve ResCap’s relatively higher credit rating Firewall: Governance and Dividend Limitations $ Billion (as of 05/31/06) Global Debt Issued 12.4 Global Bank Lines 4.0 Total 16.4 ResCap already enjoys significant access to unsec
Slide 42: Conclusion
Conclusion Operating metrics for Financing, Mortgage and Insurance remain strong Some margin pressures due to interest rate cycle and competitive trends, but expect to have solid performance in 2006 GM, GMAC and Cerberus led consortium working on speedy closing of 51% sale transaction Target fourth
Slide 43: Create Premier Global Finance Company
Create Premier Global Finance Company GMAC Strategic Vision + Leadership positions across all major sectors #1 in Auto Finance Top player in Mortgage #1 provider of Extended Auto Warranty #1 provider of Dealer Inventory Insurance + Tremendous global asset origination capability + World-class servici
Slide 44: Long-Term Outlook
Existing Business Strengths Improved Capital Position and Credit Ratings Long Term Profitable Growth Long-Term Outlook +
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