contents...ii AARP Services, Inc. Annual Report / 2009 AARP Services, Inc. Annual Report / 2009 1...

ii AARP Services, Inc. Annual Report / 2009 AARP Services, Inc. Annual Report / 2009 1

/contents/ 2 / Letter from the Chair—Jo Ann Jenkins

3 / Letter from the President and CEO—John Wider

4 / Discounts

6 / Financial Products

10 / Health Products

12 / Travel

16 / The AARP Services Board of Directors

18 / The AARP Services Leadership Team

19 / The AARP Services, Inc. Financial Summary

2 AARP Services, Inc. Annual Report / 2009 AARP Services, Inc. Annual Report / 2009 3

In a year filled with unsettled economic conditions, many consumers wondered whether anyone was looking out for them. But members of AARP and older Americans had a strong ally in AARP Services, which made some great strides in helping them live better lives and get more value from hard-earned dollars.

The economic crisis prompted us to look more closely at how to ask providers to further enhance AARP-branded products and services to make changes that would resonate throughout the marketplace.

The most visible effort literally rolled around the continental U.S. and Puerto Rico. Nine bright-red AARP/Walgreens Wellness Tour buses brought free health screenings to some 194,000 people. Not everyone can afford adequate health care and many don’t have access to health providers, so the tour was designed to reach out to those who might not receive important screenings otherwise. We will continue this important joint effort in 2010 so that more people can get the information they need to take better care of their health.

With UnitedHealthcare, we began piloting a program that tests our belief that people with multiple chronic conditions will feel better and spend less on medical care if they receive hands-on help with managing their heart disease, diabetes or other debilitating conditions. United is currently serving 5,400 participants through this important pilot.

In response to members’ requests for help making their dollars go further on everyday items, we introduced the online AARP Grocery Coupon Center powered by Coupons.com in October. Its impact extended far beyond the check-out line, however. Coupons.com donated five cents for every redeemed coupon to the charitable AARP Foundation.

The letter we received from a customer of AARP’s Consumer Cellular mobile-phone plan expressed appreciation for the value that AARP Services strives to get from our providers in all of AARP-branded offers. Ray E. wrote, “We have had our account (two phones) with you for almost two years now. With you we have cut our cell phone bill by 50 percent and haven’t ever had a problem. You all are the best thing since popcorn. Keep up the great work.” Our goal is to have all the members we serve feel the same.

We are committed to making available products and services that AARP’s diverse members want and need, while improving the marketplace for all older Americans. We know that AARP members are an energetic, curious, dynamic, diverse and forward-looking group – and that makes our job endlessly exciting and fulfilling.

We look forward to our shared future.

J o h n W i d e r

President and Chief Executive Officer, AARP Services, Inc.

Letter from the President and CEO

AARP Services, Inc. celebrated its 10th birthday in 2009. We did a lot of counting up how far we’ve come, how much we’ve accomplished and how many AARP members we’ve served. Numbers are certainly important to us, as they are for any organization. But, ultimately, the most important numbers to us are “one on one;” one member’s relationship with our one AARP. Our success is measured by how we provide for each individual. And, although the relationships we manage number in the millions, it’s providing each of those members access to products and services that they find valuable, regardless of their particular situation, that’s our goal.

Basically, our role is to research what goods and services members want and need most; analyze the marketplace to look for gaps and other opportunities; then identify service providers who will understand these insights and explore how we might be responsive. When a company’s product or service merits AARP’s approval, AARP Services manages the relationship to help ensure good value and positive member experiences.

We set high standards of service for all of the providers we work with and constantly collaborate on ways to improve the products and the services they offer to AARP members. We understand the importance of keeping interactions safe, effective and simple. We choose service providers who are as dedicated as we are to serving people 50+. And we are always looking ahead, to next

year, the next decade, to new products and new ways to stay in touch with consumer trends.

AARP’s great size and reputation grant us the opportunity to make positive changes in the marketplace. Through the companies we work with, we can alter the experiences of older consumers. We can open up markets to underserved groups. Along with our goal of increasing member value in AARP, we serve a goal of affecting positive market-driven social change.

Our 10 year anniversary was great to celebrate. We know we’ve made a real difference in the lives of millions. But it’s the next 10 years that will be truly exciting. With changes coming in health care delivery, expanding technologies and new financial challenges, the opportunities for helping people understand and use available services is going to continue to expand. As you’ll see in this report, we are ready to meet these opportunities with action. We hope to help millions of AARP members become more knowledgeable planners for their years after 50.

2009 was a busy and successful year for AARP Services. We recognize that the work we do enriches lives and provides security to millions of unique individuals. That’s our real success, measured one person at a time.

J o A n n J e n k i n s

Chair of the Board, AARP Services, Inc.

Letter from the Chair


discountst o g e t h e r c r e at i n g o p p o r t u n i t i e s /

Enhanced Service from Consumer Cellular

AARP members, many seeking mobile phones for convenience and safety, received enhanced value from Consumer Cellular. The company expanded several of their popular calling plans by adding up to 25 percent more minutes to four of the program’s six calling plans, as well as increasing covered usage for text-messaging plans—all at no additional cost. Among new cell phone models introduced was the Doro Phone-Easy (designed with large separated buttons, a big screen and amplified sound—easy to use and less than half the cost of others with similar features).

The AARP Everyday Savings Center powered by Next Jump exceeded 210,000 registered users. The Everyday Savings Center offers online shopping discounts; top categories include Home and Furnishing, Apparel, Computer and Home Office, Electronics and Food and Wine. Members have saved over $1.1 million simply by using the site since its launch in November 2008.

AARP Roadside Assistance from Allstate

AARP Roadside Assistance from Allstate protected over 950,000 members, helping to rescue over 450,000 stranded motorists per year. All members were entitled to discounted access, which saved them millions in 2009.

Borders—Books and More

Borders offered Special “Member Appreciation” weekends in February, May, September and November. AARP members received up to 20 percent off the list price of nearly everything in stores and at Borders.com during these weekends.

> In a year when penny-pinching became an art form for many, we were pleased to introduce some new discount offers and to enhance several favorite benefits. Many people say they join AARP to enjoy access to the group discounts that are offered on a wide range of products and services—we’re working to fulfill their expectations.

New Discount Offers Launched in 2009:

• The AARP Grocery Coupon Center powered by Coupons.com launched in late 2009. This new benefit gave access to coupons that help save on everyday items from dozens of leading brands. Over 200,000 coupons were downloaded by registered users in the first two months of offering the service.

• Budget Truck Rental offered members an exclusive rental rate through our first truck rental company relationship. AARP members saved 10 percent on weekend truck rentals (Friday-Saturday), and 20 percent on mid-week rentals (Sunday-Thursday).

• Orchard Brand catalogs offered AARP members shopping discounts on apparel and home products. The various Orchard brands (including Haband, Gold Violin, Norm Thompson, Appleseeds, WinterSilks and more) provide quality products to consumers through print catalogs, online and retail stores.

• Teleflora provided members with a 20 percent discount on a wide variety of floral arrangements, plants and gift baskets. AARP members saved on every purchase made through Teleflora and enjoyed the convenience of same-day delivery.

A complete list of the discounts, health, travel and other exclusive AARP member benefits available as of Winter 2009 is found here (PDF).


Financial Products

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> AARP Services’ subsidiary, AARP Financial, Inc., (AFI) is the investment advisor and administrator for the AARP Funds and manages the relationships with providers of AARP-branded property and life insurance, as well as the credit card program.

AFI’s responsibilities include offering financial guidance and education, and providing quality control for the AARP-branded financial and non-health insurance products. Across the programs, we work to provide plain language and straight-forward information on financial products and services.

AARP Automobile and Homeowners Insurance Program from The Hartford celebrated 25 years of service to AARP. (See next page.)

National Roll Out of AARP-Branded Auto Insurance through Independent Agents—The AARP-branded auto insurance program from The Hartford was made available through select, Hartford-appointed independent agents in 20 states (Arizona, Colorado, Connecticut, Florida, Georgia, Illinois, Indiana, Maryland, Minnesota, Missouri, New Mexico, New York, Ohio, Oregon, Pennsylvania, Tennessee, Texas, Virginia, Washington and Wisconsin). Previously, the insurance was only available directly from The Hartford by phone, Internet or mail. The decision to expand through the agent channel was based on strong customer feedback, pilot testing and new research revealing that the many AARP members prefer the advice and counsel of a local agent when making decisions about their auto insurance.

AARP Credit Card Program from Chase—Chase began work on adding several new features to the cards to help better protect AARP cardholders. The Enhanced Protection Benefits that allow people to use their cards with confidence include price protection, purchase protection and return protection. There are over one million accounts in the AARP Chase Credit Card Program.

AARP Life Insurance Program from New York Life—The AARP Life Insurance Program had a very strong year. In 2009, sales were 15 percent higher than in 2008. The 445,000 new certificates issued brought the total number of policies to more than 1.8 million. In order to meet member needs, AFI secured approval from the AARP Board of Directors for New York Life to offer a portfolio of life insurance products that provide greater coverage and are appropriate for sale through the face-to-face channel. New York Life will introduce this program to select agents as the pilot rolls out in 2010 in seven locations throughout the country.


The Hartford: 25 Years of Service to AARP

On April 2, 1984, the AARP Automobile and Homeowners Insurance Program from The Hartford officially launched.

Back in 1984, when the doors first opened, there were only four product offerings—automobile, homeowners, personal umbrella and fire for dwellings policies. As was soon discovered, AARP members are a sophisticated and diverse group who have countless insurance needs. As a consequence, through the years, with consultation and quality control provided by AARP Services, The Hartford has worked tirelessly to create a Program with value added features such as First Accident Forgiveness, Disappearing Deductibles and RecoverCare, while at the same time, creating social impact through the Lifetime Continuation agreement.

Today, the Program, overseen by AARP Financial, has expanded to 18 product offerings (including antique/classic automobiles, jet skis, boats, snowmobiles, ATVs and more). Recent expansion of the automobile program into the Hartford’s independent agent distribution channel was just launched in response to members’ expressed preferences.

When the Program was created in 1984, The Hartford formed a renowned Corporate Gerontology group (renamed in 2008 to The Advance 50 Team) to better understand the needs of the 50+ market and our members. Indeed, all Hartford customer sales, service and claim representatives undergo gerontology training prior to taking their first call from AARP members. Sensitivity and awareness of members’ needs is paramount to offering an unparalleled and unique member experience.

Further, the Advance 50 Team has produced a number of important publications (in many cases in partnership with the MIT AgeLab) that members and non-members alike have come to rely on, including:

• We Need to Talk…Family Conversations with Older Drivers

• At the Crossroads: A Guide to Alzheimer’s Disease, Dementia & Driving

• Fire Sense: A Smart Way to Prevent, Detect and Escape Home Fires

• It Could Happen to Me: Family Conversations about Disaster Planning

• Make Your House a Home For A Lifetime: Practical Ideas and Products to Enhance Independent Living

• Your Road to Confidence: A Widow’s Guide to Buying, Selling and Maintaining a Car

These publications fulfill a very important need for AARP members and older Americans at potentially critical junctures in their lives.

Little Known Facts:

• The Hartford generously supports the AARP Driver Safety Program through a combination of web and newspaper promotions, as well as in 2.1 million renewal and new business inserts.

• The Hartford promotes the Program through advertising in every issue of AARP The Magazine and the AARP Bulletin, as well as through advertising on AARP.org.

• The end of 2008 marked the 17th straight year of Program growth, an enormous feat in the property and casualty industry.

• The Hartford has over 4,000 employees associated with this Program.

• The 25-year relationship between AARP and The Hartford represents our longest running relationship with a service provider.

To learn more about The AARP Automobile and Homeowners Insurance Program from The Hartford, please see the Program website at aarp.thehartford.com.


health Productst o g e t h e r c r e at i n g o p p o r t u n i t i e s /

> In many ways, 2009 was the “Year of Health” with all the attention being paid to efforts for health care reform in Congress. AARP-branded health products and services continued to serve millions, and we continually reviewed and made enhancements to our products throughout the year.

AARP/Walgreens Wellness Bus Tour

AARP and Walgreens launched a two-year, joint national mobile health screening tour. By combining resources, Walgreens was able to provide these free health screenings to people most in need of affordable health care. The Wellness Tour buses traveled to 1,800 events nationwide. Screenings provided to more than 190,000 people measured cholesterol, blood pressure, bone density, glucose levels, waist circumference and body mass index.

Genworth Financial

Genworth Financial introduced a suite of long-term care insurance plans tailored exclusively for AARP members: “My Future, My Plan.” Unlike many competitors’ offers, all plans included a five-year rate guarantee, inflation protection and a “future purchase option.” Policies with the future purchase option feature had lower initial premiums than those with automatic benefit increases, and the beneficiary could purchase more coverage over time without having to qualify through medical screening.

Integrated Care Management Pilots

UnitedHealth Group, working with AARP Services, began a pilot of integrated care management programs for policyholders of AARP-branded Medicare Supplement plans who resided in Central North Carolina, Cleveland, Los Angeles, New York City and Tampa. More than 5,400 participants had enrolled by year’s end. The programs are designed to improve the participants’ health outcomes and help us determine whether care coordination can successfully be achieved within the traditional Medicare fee-for-service environment. Early, heartwarming anecdotal stories from patients, caregivers and physicians indicated that care coordination has improved the lives and health of our enrolled members. Moreover, early evidence pointed toward prevention of hospital readmissions as well.

New Providers in 2009:

• AARP Hearing Care program, provided by HearUSA, launched in October in Florida and New Jersey in the first phase of a nationwide rollout. Over the next two years, the program will be made available to all AARP members in all 50 states and the U.S. territories. HearUSA is one of America’s leading providers of hearing aids and hearing care.

• Fitness expert Leslie Sansone gave members access to discounts on her popular Walk at Home DVD programs and online Walk Club memberships. AARP members saved 50 percent on a one-year online Walk Club membership and received up to half off on select Leslie Sansone Walking DVDs and DVD bundles.


Travelt o g e t h e r c r e at i n g o p p o r t u n i t i e s /

> Those 50+ make up a large percentage of the vacation travel market, and they are very savvy consumers. The mix of value-added features, discounts and personal service on AARP member benefits helps people get the most from their travel dollars.

AARP Travel Center Powered by Expedia

The AARP Travel Center powered by Expedia continued to strengthen. Its increasing popularity with AARP members was due both to the convenience of a powerful “one-stop shop” website designed just for AARP and the personalized service offered by customer representatives available 24/7 to provide expert guidance.

Members saved an average of five to 10 percent off hotels and up to 25 percent when renting with one of AARP’s preferred car rentals providers. Members enjoyed an additional onboard cruise credit of up to $100, no booking fees on airlines tickets and cruises and other discounts.

Car Rentals

AARP members saved an estimated $10 million in 2009 by taking advantage of the car-rental discounts made available by Alamo, Avis, Budget, Enterprise, Hertz and National.

Hotels

In 2009, six hotel suppliers (encompassing 30+ unique brands, including Best Western, Hampton Hotels, Sheraton and Wyndham Hotels and Resorts) provided AARP member benefits and discounts.

Tour and Vacation Packages

Collette Vacations freed travelers from the hassles of driving to the airport and handling luggage after it began offering free door-to-door sedan service for members who booked air-inclusive tours to the South Pacific, Canada and Europe or its educational Smithsonian Journeys Travel Adventures.

General Tours World Traveler and AMAWATERWAYS continued to provide members with a broad offering of international travel options including increasingly popular small-ship river cruises in Europe, South America, Asia, Russia and Egypt.

Also complementing the portfolio were GrandTravel, Hurtigruten, Sandals and Beaches Resorts, and Untours.

“We enjoy a strong relationship with AARP, and admire its commitment to delivering value to AARP members. Even in an economy like today’s, travel remains an important part of life. Expedia is proud to power the AARP Travel Center, providing deals and tools that helped AARP members save over $4 million in 2009.”Sunil Bhatt, VP and General Manager, Expedia Affiliate Network, Americas


New Providers in 2009

DuVine Adventures

DuVine Adventures made available an exclusive AARP discount on deluxe bicycle tours offered throughout Europe and North America. Members received a $75 per person discounts on any DuVine Adventures’ scheduled bicycle tour, as well as a complimentary bottle of champagne.

Grand European Tours

Grand European Tours offered members a $100 discounts on the lowest price of any Grand European Tours escorted tour or river cruise. Grand European offered more than 40 destinations and itineraries throughout Europe, the Mediterranean, Egypt, North and South America, Australia and New Zealand.

Group IST

Group IST brought four new brands to the AARP Travel portfolio. Exploritas (formerly known as Elderhostel) created the Exploritas 101 Series specifically for AARP members, focused on education-oriented travel. Journeys Unlimited and Regina Tours began offering religious and culturally focused travel options for members. Variety Cruises offered sails on unique small-ship luxury yachts in the Mediterranean and Red Seas.

MSC Cruises

MSC Cruises gave AARP members access to a discount and other great benefits on Caribbean, Mediterranean, Northern European and Transatlantic cruises. Exclusive pricing reflected a discount off the price of any MSC Cruises’ Early Booking rates, and up to a two-category upgrade.

Park Ride Fly USA

Park Ride Fly USA, owner/operator of leading U.S. offsite airport parking facilities since 1987, began offering members a discount on all reservations made at any of Park Ride Fly USA’s 132 off-airport parking locations.

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The AARP Services Board of Directors - 2009

Jo Ann C. Jenkins (Board Chair) Jo Ann Jenkins is chief operating officer of the Library of Congress, with full authority and responsibility for the Library’s day-to-day operations, including planning, reviewing,

monitoring, and directing overall programmatic and infrastructure support operations consistent with its mission and the Librarian’s goals. Previously, Ms. Jenkins was a consultant to the Office of Diversity at the Federal National Mortgage Association; director of the Office of Advocacy and Enterprise at the U.S. Department of Agriculture; special assistant for minority affairs to former Secretary of Transportation Elizabeth Dole; and a partner in a management consulting firm, Quality Management Service.

Timothy ArmourTim Armour recently retired after 10 years with Morningstar, Inc. as Morningstar’s managing director. He was managing director of Morningstar from 2000 to 2008, president from 1999 to 2000, and chief operating officer

from 1998 to 1999. From 1992 to 1998, he served as president of Stein Roe & Farnham’s mutual fund division. Prior to that, he was senior vice president and director of marketing in Citibank’s retail bank division. Mr. Armour began his career in 1975 with General Foods Corporation, where he spent 12 years in product management and planning.

Darlene DeRemerDarlene DeRemer joined Donald H. Putnam in 2005 in founding Grail Partners LLC, an advisory merchant bank serving the investment management industry. Prior to

becoming an investment banker at Putnam Lovell NBF in 2003, Ms. DeRemer was a leading advisor to the financial services industry, specializing in strategic marketing, planning, product design and the implementation of innovative service strategies. She has participated in numerous fund company asset management restructuring transactions. She has also served as a vice president at State Street Bank & Trust Company and T. Rowe Price & Associates.

Leobardo EstradaLeobardo Estrada, PhD, is a member of the AARP Board of Directors. He is a professor of urban planning at the University of California, Los Angeles (UCLA). He has served as an advisor

on national data systems to several national entities, including the U.S. Census Bureau, the National Center for Health Statistics and the National Research Council. His social science expertise includes the demography of Latinos in the U.S. He serves on the boards of the National Association of Hispanic Elderly, the National Association of Child Care Resource and Referral Agencies, and New Economics for Women.

Gary E. KnellGary Knell is president and chief executive officer (CEO) of Sesame Workshop. Mr. Knell has been instrumental in focusing this nonprofit organization on Sesame Street’s global

mission, including groundbreaking co-productions in South Africa, India, Northern Ireland and Egypt. He also helped found PBS Kids Sprout, a 24-hour U.S. cable channel. Previously, Knell was managing director of Manager Media International, a print and multimedia publishing company. He also has served as senior vice president and general counsel at WNET/Channel 13 in New York, and as counsel to the U.S. Senate Judiciary and Governmental Affairs Committees.

Addison Barry Rand (ex officio Board member)

A. Barry Rand is AARP’s CEO. He has distinguished himself as a leader of social change in some of the nation’s largest corporate and educational

institutions. During his 31-year tenure at Xerox, where he began as a sales representative and rose to executive vice president for worldwide operations, he helped it become the most diverse company in the Fortune 500. Mr. Rand later served as chairman and CEO of Avis Group Holdings and as CEO of Equitant Ltd. He currently serves as Chairman of the Board of Howard University. He holds a B.A. from American University and an MBA from Stanford University, where he was also a Sloan Executive Fellow.

Edward T. Reilly Edward T. Reilly is president and CEO of the American Management Association, International, the world’s leading not-for-profit, membership-based management development, research and publishing

organization. Mr. Reilly previously served as president and CEO of Big Flower Holdings, Inc. (now Vertis, Inc.), a leading provider of integrated marketing and advertising services. Under his leadership, the NYSE-listed company broadened its services and made numerous acquisitions. Prior to joining Big Flower Holdings, Mr. Reilly spent over 25 years in a variety of capacities within the broadcast and book publishing groups of The McGraw-Hill Companies.

T. Byron ThamesT. Byron Thames, M.D., is a member of the AARP Board of Directors. He is medical director of Darden Restaurants, Siemans Westinghouse and COMPNET, a managed care organization for

occupational medicine. He is also a certified medical review officer (drug screening specialist) serving Florida Hospital and other clients. Dr. Thames consults on medical issues to the Area Agency on Aging (AAA) for Central Florida, the Retired Senior Volunteer Program and the Senior Resource Alliance, and is the medical provider for the AAA Medical Mobile Clinic for the Elderly. He retired from private practice in 1999.


AARP Services, Inc. — 2009 Revenue Growth Supports AARP

AARP Services oversees and manages the relationships with the service providers of AARP-endorsed products and services. These companies often offer specially designed services and price-points for the members of AARP. They develop unique offers, expand into under-served markets and create marketing messages that educate consumers. AARP receives royalty income from these providers that is used in support of AARP’s social welfare mission.

The products and services offered by AARP-endorsed providers provided nearly $657 million of royalty revenue directly to AARP in 2009, a year-over-year growth of $4.3 million.

These financial resources helped AARP to build and grow community projects, support advocacy efforts at the national and state levels and to leverage the power of AARP members.

At AARP Services we know our ultimate goal is to create a better world for all as we age. Our focus is on improving the marketplace to better serve the 50+ population. The service providers we work with are selected for their sound business practices and commitment to join us in supporting the goals of AARP.

The AARP Services Executive Team – 2009

John WiderPresident and CEO

Jean AlexanderChief Operating Officer

Howard ByckSenior Vice President, Lifestyle Products and Services

Linda CaliriSenior Vice President, Marketing

Scott FrischChief Financial Officer

Angela JonesSenior Vice President, Corporate Relationships

Frank LoPiccoloSenior Vice President, Operations and Support Services

David MathisSenior Vice President, Health Products and Services

Sarah MikaGeneral Counsel

Al PraticoSenior Vice President, Distribution

Chong-Ae ShahSenior Vice President, Strategy and Innovation

601 E Street NW Washington, DC 20049

www.aarp.org

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