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Tuneup at AAA; Insurance growth key to offset other challenges.

Article Excerpt
Byline: Brent Snavely

Dearborn-based Auto Club Group, Michigan's leading auto insurer, is in better financial shape than ever, mostly due to a push into new markets with its insurance products, but also is facing growing pains and continues to fend off other challenges.

The membership club, parent company of AAA Michigan Inc., posted net income of $80.2 million on revenue of $1.7 billion in 2003.

Employees, however, are weathering a painful restructuring that includes the elimination of more than 218 positions in Michigan and 550 throughout the system.

Plus, membership fell by 39,000 last year, emergency roadside service is draining resources, the travel industry continues to change rapidly and Auto Club Group is still absorbing several acquisitions.

Under the direction of President and CEO Charles Podowski, hired in June 1999, Auto Club Group has grown rapidly acquiring four additional auto clubs - expanding the holding company's reach into six new midwestern states and nearly doubling membership to 4.1 million.

A central part of the acquisition strategy was to gain access to new markets for the sale of auto and homeowners insurance, which produces the vast majority of Auto Club Group's sales and profits.

Podowski has rapidly extended AAA Michigan's successful auto insurance model through the new clubs. Out-of-state insurance premiums have grown from less than $10 million in 1999 to $130 million last year, Podowski said. This year he expects out-of-state premiums to top $200 million. All the while, Auto Club Group has maintained its A, or excellent, rating from Oldwick, N.J.-based A.M. Best Co. Inc.

But the need to finish integrating its...