ARPP...ARPP AARP SERVICES, INC. ANNUAL REPORT 2011 H E L P I N G P E O P L E L I V E H E A L T H I E R , E M O R E S E C U R E A N D H A P P I E R L I V E S H E L P I N G P E O P L

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2011 AARP SERVICES, INC. ANNUAL REPORT

2011 HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND

HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND

AARP SERVICES, INC. ANNUAL REPORT

2011 HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND


2 LETTER FROM BOARD CHAIR DARLENE DEREMER

3 LETTER FROM PRESIDENT & CEO JOHN WIDER

4 INTRODUCTION: QUALITY CONTROL, HIGH STANDARDS AND INNOVATION

6 HEALTH CARE PRODUCTS AND SERVICES

12 HEALTH TRANSFORMATION INITIATIVES

14 FINANCIAL PRODUCTS

20 LIFESTYLE: DISCOUNTS AND TRAVEL

26 AARP SERVICES, INC. BOARD OF DIRECTORS

27 AARP SERVICES, INC. EXECUTIVE TEAM

28 2011 REVENUE GROWTH SUPPORTS AARP

CONTENTS

HELPING PEOPLE GET HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF HELPING PEOPLE LIVE HEALTHIER, MORE SECURE HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES

2 | AARP SERVICES, INC. ANNUAL REPORT

HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE

HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT O

F LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET

The economic picture began to improve slight-ly in 2011, and for this we can all be grateful. Yet, even with people returning to work and families breathing a little easier, a great deal of uncertainty remained for people 50+.

The AARP Services Board of Directors de-voted a great deal of time to discussing both valuable products and services that could help people 50+ and new offerings that helped make their lives more convenient.

With some 10,000 people turning 65 each day and reduced state resources for long-term care, our board approved a new offer-ing designed to make it easier for caregivers to find supportive services for a family mem-ber or friend. Genworth Financial launched a complimentary caregiving provider look-up tool late in the year. In 2012, fee-based telephone support and in-home visits will be made available. This program flows from AARP’s longstanding support for enhancing the caregiving experience.

AARP members tell us they appreciate the advantages that today’s technology brings to their lives. Staying connected with family and friends and conducting online transactions easily is important to their well-being. That’s why the board laid the groundwork for a 2012 offering designed to give people 50+ peace of mind about getting help with technology

when and where they want it. It couldn’t come at a better time, given members’ height-ened engagement with technology.

Research found that achieving financial security is members’ top goal along the way to living their best lives. AARP Financial Guidance Services provided by Charles Schwab launched in January to give mem-bers easy access to straightforward informa-tion and guidance from a familiar source in a pressure-free setting.

We also sought to make AARP member discounts top-of-mind for daily purchases, because sometimes, a little savings and a lot of value can go a long way in improving your outlook. So AARP Services went big in 2011 and made available more discounts for members. Discounts on popular dining, entertainment, shopping, and travel choices were among the new offers.

AARP Services is pleased to play a part in helping people live better lives—perhaps with a little extra fun or peace of mind. Of course, everything we do circles back to social mission. And for AARP, this means helping people 50+ live independently, make informed choices and have more control over their quality of life. So as we look ahead to 2012, we are excited about the fresh land-scape of opportunity to do just that.

LETTER FROM THE CHAIR

Darlene Deremer

Chair of the AARP Services, Inc. Board of Directors

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LETTERS


AARP SERVICES, INC. ANNUAL REPORT | 3




The most valuable insight we had at AARP Services, Inc. in 2011 was that raising the bar on quality is good for people 50+ and good for the marketplace.

Quality assurance is essential to our core efforts. Overseeing and managing the rela-tionships with providers of AARP member benefits is job one. Often, when you buy something from most companies, you’re on your own. But when you buy a product or service that merits the AARP brand, you have an entire organization behind you, one committed to quality.

We set high standards for providers. After identifying market-leading providers who can address their wants and needs based on research of people 50+, we negotiate for special features and differentiated value. To inform, guide and educate consumers, we re-quire providers to use clear, transparent facts and information that is accessible through multiple channels. To foster superior value, we work with providers to ensure simplic-ity in purchasing or accessing benefits, and efficiently resolving issues. And to encour-age providers to focus on continued quality improvement, we monitor feedback carefully and employ those insights to make further improvements in products or service.

No question, AARP can be a challenging or-ganization to work with. But meeting its high standards generates a sense of pride among

many providers. Several executives have even told me, “AARP has made us a better company.”

UnitedHealthcare is one example of how an organization adapted to align with AARP’s mission and values. The organization stepped up to support the launch of AARP’s Create The Good® volunteering initiative. United then encouraged its employees to volunteer in their communities. The impact of that in-volvement on employees and the organization was so positive that the next year, United gave employees paid time off to volunteer.

This annual report showcases other exam-ples of how the companies we work with are inspired to go above and beyond the product offering to do more for the 50+ population. Like United, Chase helped alleviate hunger among older adults by supporting Drive to End Hunger. Walgreens provided free health screenings to tens of thousands of people who otherwise may not have had access to preventive care. Aetna employees collected school supplies for children in underserved communities. The list goes on.

Every day, we ask ourselves if those who turn to AARP-branded products and services are pleased with the value and performance they receive. While we are proud of the results to date, we won’t rest on our laurels in 2012. We will continue our focus on improving quality, strengthening communities and creating posi-tive experiences for the 50+ consumer.

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LETTER FROM THE PRESIDENT & CEO

John WiDer

President & CEO of AARP Services, Inc.






INTRODUCTIONQUALITY CONTROL, HIGH STANDARDS AND INNOVATION

AARP Services, Inc., a wholly owned taxable subsidiary of AARP, supports positive social change through market innovation and leadership. Our primary role is to provide quality control on AARP’s behalf for AARP-branded offerings made available by third-party providers. These products and services cover a wide range of members’ health, financial and lifestyle needs. The royalty income that AARP receives from licensing its brand is used to support the Association’s social change mission.

AARP Services leads the way in the marketplace by influencing companies to make available new and better choices for Americans 50+. Importantly, we also perform quality control services over branded products.






OUR VISION: Helping people 50+ live healthier, more secure and happier lives.

OUR MISSION: To inspire new and innovative business practices, guide consumers to make informed choices, and deliver products and services that better fulfill life-stage needs.

AARP Services fulfills this mission in five key ways. We:

1 Research what people 50+ want and need, working with leading companies to develop new products and services for the benefit of

AARP members and others 50+.

2 Negotiate special features uniquely suited for individuals 50+ as well as differentiated value (not just the lowest price) with market leaders.

3 Ensure superior service and value by encouraging providers to provide easy, convenient transactions, monitoring providers and

improving customers’ experiences. This entails oversight of providers’ marketing materials and customer service efforts; engaging actuaries to annually review premium rates; and other quality measures.

4 Inform, guide and educate members by ensuring that providers use plain language, clear descriptions and multiple channels to deliver

that information.

5 Work continually with providers to listen, learn and improve programs through members’ feedback, “Voice of the Customer” information,

member satisfaction surveys, hundreds of mystery shopping efforts and other quality-control tools.

These quality-control efforts begin with listening intently to AARP members through reports on millions of contacts, and tracking hundreds of performance indicators across all major providers to help ensure that providers are responsive to members’ needs and requests. In 2011, for example, the Lean Six Sigma business philosophy added rigor to achieving continued improvement in members’ satisfaction with product offerings, loyalty and product quality.

These and many other efforts are all part of advocating in the marketplace so it is more responsive and attentive to the dynamic 50+ population.

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HEALTHHEALTH CARE PRODUCTS AND SERVICES

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HEALTH


STAYING HEALTHY CONTINUES TO BE A PRIORITY FOR AARP MEMBERS. AS AN ADVOCATE IN THE MARKETPLACE FOR INDIVIDUALS 50+, AARP SERVICES HELPS CREATE POSITIVE CHANGES IN HEALTH CARE THROUGHOUT THE U.S.






For several years, AARP Services has made solid progress in achieving our strategic objectives for health care products and services, including:

> Leveraging relationships with providers to help consumers get trustwor-thy information, tools and guidance about health care.

> Making available offerings that meet broad needs, such as filling gaps in health coverage (such as hearing, vision, or dental care); and

> Helping to recognize the need to transform the health care delivery sys-tem by addressing fragmentation and establishing and monitoring ways to measure health quality and cost.

WALGREENS

More than a half-million people received free health screenings and helpful information about wellness during the AARP/Walgreens Wellness Tour between 2009 and 2011. Many of those who boarded one of nine specially equipped buses did not have access to affordable health care or to preventive screenings.

In all, more than 3 million specific health screenings worth $66 million were provided free of charge by Walgreens. They included tests for total cholesterol levels, blood pres-sure, bone density, glucose levels, waist

circumference and body mass index.In addition, as part of its relationship with AARP, Walgreens: > Distributed information about healthy be-haviors and about the wise use of medica-tions;

> Provided up to 30 percent savings to AARP members on most prescriptions at Wal-greens; and

> Provided a 5 percent discount on more than 20,000 items online, by phone and in its printed catalogue.

From February 2009 through December 2011, more than a half-million people, in 4,260 communities, received three million tests worth $66 million—free of charge.






MEDICARE SUPPLEMENT PLANS

Participation increased in the AARP® Medi-care Supplement Plans insured by Unit-edHealthcare, reflecting a stable premium and members’ continued satisfaction with the quality of the program in a competitive marketplace.

The health care transformation initiatives undertaken by United with AARP Services’ support included efforts to promote wom-en’s heart health, prompt attention to medi-cal questions and preventive care. > Since heart disease is the leading cause of death for women, UnitedHealthcare worked with AARP Services to help break down the barriers that women experience in getting the recommended cardiac care.

> The company developed and implemented specific interventions targeted at women

in six markets. Enrollees in the Med Supp plans could speak to a registered nurse about their health concerns 24/7 via a toll-free help line.

> Consistent with AARP’s emphasis on healthy living, the company’s Silver Sneak-ers fitness benefit—which includes free membership at participating fitness centers, exercise classes and walking programs—was expanded to four new states: Alabama, California, South Carolina and Virginia. Additionally, as part of its commitment to

supporting AARP’s social-change mission, UnitedHealth Group was a major corporate sponsor of Drive to End Hunger. This initia-tive of AARP and the charitable AARP Foun-dation seeks to end hunger among nearly 9 million Americans 50+.

MEDICARE PRESCRIPTION DRUG PLANS

The AARP® MedicareRx Plans from UnitedHealthcare continued to help Medi-care beneficiaries purchase prescription drugs and other medications. The AARP MedicareRx Preferred Plan remained the only basic national plan offering with no deductible. It also offered features such as ro-bust drug coverage, generics for as low as $4 and access to generics at no cost through the preferred mail order plan.

Nearly 30,000 hungry seniors received packages of food after staff volunteers from AARP Services and UnitedHealthcare teamed up to package groceries at the Los Angeles Regional Food Bank in September.






HEALTH COVERAGE FOR 50-64 YEAR-OLDS

A range of flexible plans made it possible for people too young for Medicare to purchase individual health insurance. Participants in the AARP® Essential Premier Health Insur-ance Plans insured by Aetna Life Insurance

are often self-employed, seeking coverage for dependents, coming off COBRA, looking into early retirement or retired before Medicare eligibility.

HEARING CARE

The AARP® Hearing Care program from HearUSA made available consumer protec-tion product features that have become standard in the marketplace, such as three-year warranties on all hearing aids. Market-leading enhancements to the program added in 2011 included hearing aids suitable for use while showering or swimming as well as a wireless Bluetooth listening system

designed to enhance enjoyment of television, music or smartphone calls. These improve-ments resulted from quality-control outreach by AARP Services after Siemens acquired HearUSA in August. In addition, HearUSA funded a national educational initiative on hearing awareness and education, which AARP undertook in collaboration with lead-ing hearing organizations.

Thanks to Aetna employees, some 1,730 students in Alpharetta, Georgia, received new backpacks filled with back-to-school supplies through their Equipped to Learn drive.






CAREGIVING AND LONG-TERM CARE

To make it easier for caregivers to find supportive services for a family member or friend, Genworth Financial launched a complimentary online Caregiving Provider Look-Up Tool. It provided free access to a

database of more than 90,000 providers, including public programs. Additional fee-based features will be rolled out in 2012. These resources are designed to help people make informed choices.

VISION DISCOUNTS

The AARP® Vision Discount Program from EyeMed increased its value-added offerings. Features included preventive health benefits, such as comprehensive eye examinations, and discounts on products designed to pre-vent sunlight-related damage to eyes.






HEALTH TRANSFORMATION AND INNOVATION INITIATIVES

Over the past few years, as part of the AARP Medicare Supplement Health Insurance Program, UnitedHealthcare undertook certain health transformation initiatives. These initia-tives showed promise for enhancing the qual-ity of patients’ experiences with health care.

These innovative efforts, which involve high-touch care-management services to thousands of chronically ill members, could help dem-onstrate how to organize and deliver health services more efficiently. Two examples: > Coordinated Care: A pilot project contin-

ued to provide more coordinated care for more than 20,000 policyholders of AARP-branded Medicare Supplement plans in certain areas of North Carolina, Ohio, Cali-fornia, New York and Florida. Participants who have one or more chronic conditions (such as heart disease, diabetes or cancer) receive supportive services at no additional cost to them. Importantly, 90 percent of participants say they are satisfied.

> Medical Home Pilot: Health care in the U.S. can be costly and confusing—espe-cially for patients with multiple chronic conditions who try to coordinate their care on their own. The “medical home” pilot program in Arizona established a team approach to care, centered in primary care practices. Launched in the spring of 2011, it involves nearly 500 people insured in the AARP-branded Medicare supplement plan offered by UnitedHealthcare.

UnitedHealthcare continued a pilot project offering supportive services to 20,000 policyholders with chronic conditions—at no additional cost to them.






THREE “A HA!” MOMENTS IN TRANSFORMING HEALTH CARE

The key to better health lies with decisions people make every day at home, according to Charlotte Yeh, M.D., the chief medical officer for AARP Services. A former emergency room physician, she consults on health transformation initiatives with UnitedHealth Group. Here, Charlotte shares three recent insights.

First: The traditional view [of aging] is, “You’re born, you climb the career ladder, you peak and then either you fall off the end or you fade

into the sunset like John Wayne.” That’s the tradition-al view. But it’s wrong.

People at 50 plus really focus on what’s next and finding new horizons. It’s about vitality and optimism. I totally changed my thinking after seeing results of in-terviews that AARP Services and UnitedHealth Group conducted with people at age 100. For example, half of them know who Lady Gaga is and more than 1 in 10 have an iPod or MP3 player.

Second: Doctors focus on things like hemo-globin levels. Patients focus on quality of life. What people want to know is whether

they can go to a granddaughter’s wedding, or control their incontinence well enough to enjoy a lunch out with friends. Even when a doctor thinks they have succeeded by managing diabetes or arthritis, it’s a loss to the person and the community if they aren’t able to get out and enjoy life.

Third: We’re really, really good in the medi-cal community at telling people, “Here are my recommendations for your care. Take this prescription three times a day, and you

will be fine.” But we have not learned to incorporate those recommendations into how people can live successfully every day. That’s why United Health-care’s innovative health management pilots hold so much promise.

Charlotte Yeh (center), chief medical officer of AARP Services, received the American Hospital Association’s Board of Trustees Award. Presenting the award in April were Mika Brzezinski, co-host of MSNBC’s Morning Joe, and AHA Chair John Bluford. Photo by Bill Fitz-Patrick

FINANCIALFINANCIAL PRODUCTS



CHALLENGING ECONOMIC CONDITIONS CONTINUED TO DISRUPT HOW MANY AMERICANS APPROACH THEIR CURRENT AND FUTURE FINANCIAL NEEDS.

A WIDE RANGE OF AARP-BRANDED FINANCIAL AND NON-HEALTH INSURANCE PRODUCTS HELPED PEOPLE 50+ BECOME MORE FINANCIALLY SECURE.






Our strategic objectives for helping AARP members achieve their goals and dreams include:

> Expanding and enhancing value-oriented products;

> Developing retirement planning solutions;

> Personalizing interactions by overseeing the expansion of distribution initiatives by the providers, such as their face-to-face agents; and

> Helping people make sound decisions about their futures through finan-cial education and financial literacy efforts.

AUTOMOBILE AND HOMEOWNERS INSURANCE

The Hartford introduced new features in its homeowners insurance plan for AARP mem-bers. Identity restoration services helped members recover from having their identi-ties stolen or compromised. An optional “green rebuilding” endorsement allows certi-fied green materials to be used when rebuild-ing after a loss. Since 2009, members could purchase AARP-branded homeowners insur-

ance through agents. In a community-mind-ed effort, nearly 40,000 veterans brushed up on their driving skills in November free of charge, thanks to a $100,000 donation by The Hartford to AARP Driver Safety. The Hartford also helped address hunger among adults 50+ by donating $5 for every auto insurance quote to AARP Foundation’s Drive to End Hunger efforts.






Ending Hunger, Nourishing Hope “A kind deed is always seen by a grateful heart,” read the thank-you letter that staff members from the New York Life call center in Tampa, Florida, received from the local Feeding America affiliate. The volunteers collected and donated 5,744 pounds of food for hungry adults as part of Drive to End Hunger.

LIFE INSURANCE AND ANNUITIES

Enrollment in the AARP Life Insurance and Annuity Programs from New York Life continued to grow. New York Life’s dedicated call center for AARP members, located in Tampa, Florida, was named “Innovator of the Year” by Verint® Systems Inc. Also named “Global Contact Center of the Year” by International Customer Management Institute, the New York Life call center is the only one to be certified as a “Center of Excellence” by Purdue University for eight consecutive years. The AARP Life Insurance Program from New York Life provides valuable access to insurance through simplified

underwriting and a streamlined application process. The company also supported AARP Foundation and Drive to End Hunger.

MOBILE HOME AND MOTORCYCLE INSURANCE

Foremost rolled out a new feature for its Motorcycle Insurance Program that mirrors a similar feature in the AARP-branded Foremost Mobile Home Program. Once a member has participated in the motorcycle program for three years, he or she may qualify for a first-accident waiver, provided the policyholder had a safe driving record for the previous five years. Foremost also supported efforts to alleviate hunger among people 50+. The company supported Drive to End Hunger in two ways: by donating $2.50 for every mobile home and motorcycle quote, and by sponsoring the Tony Bennett benefit concert for Drive to End Hunger following Life@50+/ AARP’s National Event & Expo, held in Los Angeles, California.






CREDIT CARD SERVICES

The AARP® Visa® Credit Card from Chase featured a new value proposition: 3% cash back on eligible travel purchases. In addi-tion, members’ redemption of rewards points increased during 2011, thanks in part to additional rewards options. Chase helped al-leviate hunger among adults 50+ by sponsor-ing Drive to End Hunger organized by AARP and AARP Foundation. Chase also donated 3 cents for each purchase made with the AARP Visa Card and $1 for each new account opened to AARP Foundation in support of Drive to End Hunger.

FINANCIAL GUIDANCE SERVICES

AARP® | Financial Guidance Services pro-vided by Charles Schwab launched early in 2011. Services for AARP members include a free one-hour guidance session from Schwab counselors, a complimentary subscription to Schwab’s On Investing magazine, compli-mentary branch seminars exclusively tai-lored to AARP members’ needs, fee waivers

on Schwab Managed Portfolios and dis-counts on Schwab financial plans. Schwab also made a generous grant to AARP Foun-dation to meet the essential needs of low-income individuals and collaborated with AARP Foundation on an innovative effort to foster financial literacy.

A dynamic image of the AARP Credit Card from Chase adorned the hood of Jeff Gordon’s #24 Drive to End Hunger Chevrolet during the NASCAR Sprint Cup champion’s races in Richmond, Virginia, and Dover, Delaware. Fans at those tracks contributed the largest donations of food out of the 20 events in which Jeff Gordon drove to leave hunger in the dust.






GIVING BACK: AGENTS MAKE LIFE BETTER FOR OTHERS

What do the London Bridge and feeding hungry adults have in common? Agents who performed community service while also representing AARP-branded insurance products from Aetna, Genworth Financial, The Hartford and UnitedHealth Group.

As part of AARP Services’ efforts to make life better for Americans 50+ through marketplace initiatives, we encourage community service by agents authorized to offer AARP-branded products. Impressively, 300 agents logged 15,000 hours of community service over six months.

The 37 agents who provided the most hours of service -- 155 hours each, on average – were treated to an all-expenses-paid trip to Los Angeles to attend

Life@50+ | AARP’s National Event & Expo in late September.

In addition to three days of informative sessions and concerts, they gave back by assisting with a food drive that generated more than 1,500 meals for the Los Angeles Mission, which serves homeless people.

To make the effort fun, the agents formed teams to stack the cans of food into famous architectural struc-tures. The winner: the London Bridge.

The second annual Agent Community Engagement and Services (ACES) Recognition Program awards will be presented in 2012 at Life@50+ in New Orleans, Louisiana.


LIFESTYLELIFESTYLE: DISCOUNTS AND TRAVEL

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HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE ANHELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND HAPPIER LIVES HELPING PEOPLE LIVE HEALTHIER, MORE SECURE AND

HELPING PEOPLE GET VALUE FOR THEIR MONEY HAS BEEN A PRIORITY FOR AARP SINCE THE ASSOCIATION WAS FOUNDED IN THE LATE 1950s. DISCOUNTS ENABLE MEMBERS TO GET VALUE FOR THEIR MONEY AND MORE ENJOYMENT OUT OF LIFE. NOT SURPRISINGLY, MONEY-SAVING OFFERS CONTINUE TO BE ONE OF THE REASONS WHY PEOPLE SAY THEY JOIN AND STAY WITH AARP.






DISCOUNTS

To anticipate and meet the needs of people 50+, AARP Services conducts thorough research. As a result, new offerings made available by providers in 2011 helped people save on leisure activities, such as dining out, enjoy-ing popcorn and a soda at the movies or expressing creativity through arts and crafts.

In 2011 AARP members accessed their discounts some 24 million times—nearly one-fourth more frequently than in 2010. Notably, family dining discounts grew in popularity, as did savings on everyday necessities such as groceries.

NEW DISCOUNTS WEBSITEIt became easier to see a wide range of lifestyle and travel offerings made available through membership with the launch of a new website that put them in one location: AARPdiscounts.com. This dynamic new platform, funded by providers, also enabled members to find limited-time offers featur-ing increased savings. The site logged nearly 700,000 visits and 2.8 million page views between its November 21 launch and mid-January of 2012.

CONSUMER CELLULARThe marketplace for mobile phone service changed for the better in 2008 when AARP Services negotiated an offering that included important consumer protections for which AARP had long advocated. Consumer Cellular emerged as the company most willing to shake up the status quo. As a result, a new standard for wireless service was set. In December, Consumer Reports ranked Consumer Cellular as the top provider of standard cell phone service. Consumer Cellular was the only post-paid wireless service provider in this category that does not require long-term contracts or impose early termination fees.

DENNY’SDining out became a little more affordable for AARP members who took advantage of $1.00 coffee all day long and/or 20 percent off the entire check from 4:00 p.m. – 7:00 p.m. at Denny’s family restaurants. Some restaurant managers reported that groups of AARP members—including church groups, alumni members and crafters—met regularly for coffee, meals and fellowship. In September, Denny’s executive chef and senior manager of product development joined seven other noted chefs in preparing






nutritious food for hundreds of homeless people in Los Angeles prior to the start of Life@50+ | AARP’s National Event and Expo. The event was organized by AARP and AARP Foundation as part of Drive to End Hunger.

GROCERY COUPON CENTEREveryday savings on groceries helped AARP members save money through the AARP® Grocery Center Coupon Center Powered by Coupons.com – while also helping vulner-able seniors gain back opportunity. For each coupon printed and redeemed from the Grocery Coupon Center, the member could direct a Coupons.com donation of five cents to one of AARP Foundation’s charitable initiatives.

KELLOGG’S Since gasoline discounts remained a top area of interest, Kellogg’s launched a promotion in the spring through which AARP members received a $10 gasoline gift card by mail with the purchase of 10 boxes of cereal and redemption by mail of the box tops.

TANGER OUTLETSShoppers at Tanger Outlet Centers saved up to 20 percent on clothing, shoes and home accessories by using free coupon books made available to AARP members. At three Tanger Outlet centers, boomer women enjoyed a stylish day of free pampering, entertainment and one-on-one discussions about planning for a secure future. These “Me and My Life Makeover” events were held as part of the AARP Decide.Create.Share.SM campaign, which is designed to help women in their 40s, 50s and 60s to take steps today to plan for a healthy, secure tomorrow. AARP plans to offer additional “Me and My Makeover” events at Tangier Outlet Centers in 2012.

NEW PROVIDERS IN 2011

LANDRY’SA new dining discounts provider, Landry’s Restaurants, Inc., offered AARP members savings on food and non-alcoholic beverages at its 350 affiliated restaurants nationwide, including chains such as Landry’s Seafood House, Bubba Gump Shrimp Company, The Chart House and others. This relationship was added after member research indicated a strong interest in additional dining dis-counts to supplement Denny’s and offerings from Restaurants.com.

MICHAEL’S In July, to help Americans 50+ tap into their creativity, Michael’s Stores—the largest arts and crafts specialty retailer in North America—rolled out an AARP-member discount. Members saved 10 percent every Tuesday at more than 950 stores nationwide.

REGAL ENTERTAINMENT GROUPFor movie buffs, Regal Entertainment Group began offering an AARP-member discount on a bundled purchase of pop-corn and a soft drink at its 500+ local U.S. movie theaters.






TRAVEL

Travel is the top aspirational activity for people 50+, according to research conducted by AARP. This has been the case for many years. In fact, the retired school principal who founded AARP said in the late 1950s, “There is a real need for inexpensive, trouble-free travel, sensibly priced, with no hidden costs.”

AARP Services worked throughout 2011 to secure travel offerings to meet these travel needs—whether the traveler wished to enjoy a weekend drive, take a teen to college or experience an exciting world adventure.

AARP Services also laid the groundwork for a 2012 strategy that seeks to transform the way travelers age 50+ plan and experience their trips. The goal is to make it even easier for people to plan and manage their travel, and provide a more personalized approach in today’s complex and frag-mented travel realm.

HOTEL ACCOMMODATIONSAARP members saved an estimated $60 mil-lion from ongoing and special “pulse” offers from participating hotels, including Hamp-ton, Best Western, Choice Hotels, and the Wyndham Hotel Group.

AARP® TRAVEL CENTER POWERED BY EXPEDIA®

TripAdvisor® travel planning features and real traveler reviews were added to the hotel booking portion of the AARP Travel Center website provided by Expedia®. This enabled






viewers to see independent ratings and user comments.

VEHICLE RENTALSAARP members saved more than $10 mil-lion in 2011 by taking advantage of car-rent-al discounts made available by Alamo, Avis, Budget, Enterprise, Hertz and National; and the truck rental discount from Budget Truck.

TOUR AND CRUISE PACKAGESMembers experienced destinations in the United States and abroad by booking tour and vacation packages through Grand Euro-pean Tours, Norwegian Cruise Line and eight other tour and cruise providers.

NEW TRAVEL PROVIDERS IN 2011We welcomed one of the world’s leading airlines and a widely respected hospitality company to the family of AARP member-benefit providers.

BRITISH AIRWAYSStarting in November, British Airways made available to AARP members up to $400 off flights to the United Kingdom or over 110 cities in Europe, Asia, Africa and the Middle East. The AARP-member discounts were offered through a special website on flights booked in their entirety through British Airways for round-trip travel originating in the U.S.

MGM RESORTS INTERNATIONALMGM Resorts International offered AARP members a 10 percent discount on select days with advance purchase at 17 of its U.S. properties. They include the Bellagio, the Mirage Hotel and Casino and 11 other prop-erties in Las Vegas, Nevada (ARIA Resort and Casino, Circus Circus Las Vegas, Excalibur Hotel and Casino, Luxor Hotel and Casino,

Mandalay Bay Resort and Casino, MGM Grand Las Vegas Hotel and Casino, Monte Carlo Resort and Casino, New York New York Hotel and Casino, The Hotel at Man-dalay Bay, the Signature at MGM Grand and Vdara Hotel and Spa). In addition, the AARP discount is honored at the Circus Circus Reno, the Gold Strike Casino Resort, the Beau Rivage Resort and Casino on the Mississippi Gulf Coast and the MGM Grand Detroit in Michigan.






Darlene DeRemer (Board Chair)Darlene DeRemer joined Donald H. Putnam in 2005 in founding Grail Partners LLC, an advisory merchant bank serving the investment management industry. She has led or participated in

a score of advisory transactions. Prior to becoming an investment banker at Putnam Lovell NBF in 2003, Ms. DeRemer was a leading advisor to the financial services industry for 25 years, 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.

Gary E. Knell (Board Vice Chair)Gary Knell is president and chief executive officer (CEO) of NPR. Until November 2011, he served as president and CEO of Sesame Workshop, a nonprofit educational organization which

creates innovative, engaging content that maximizes the power of media to help children reach their highest potential. He also helped found PBS Kids Sprout, a 24-hour domestic cable channel in the U.S. Previously, Mr. Knell was managing director of Manager Media International, a print and multimedia publishing company. He has also 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.

Timothy ArmourTim Armour retired as managing director of Morningstar, Inc., in 2008, having served in that capacity since 2000. He was Morningstar’s president from 1999 to 2000 and its chief operating officer

from 1998 to 1999. He has served as a member of Janus Capital Group’s Board of Directors since 2008 and served as its interim CEO from 2009-2010 while the firm conducted a CEO search. 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.

Martha DallyMartha Dally served the Sara Lee Corporation for 30 years in positions of increasing responsibility. When she retired in 2006, she was senior vice president of customer development.

She also served as chief customer officer; senior vice president of business development; vice president of the Target Corporation Customer Team; and executive vice president of personal products. During her tenure, Sara Lee adopted a number of innovative operations and processes, and became one of the top suppliers to Wal-Mart. Ms. Dally’s governance experience includes 15 years of service on the board of American Woodmark Corporation, the advisory board of Chicago-based Prism Capital and with numerous nonprofit organizations.

Jacob Lozada Jake Lozada is a member of the AARP Board of Directors. Following a 27-year career as a health care executive in the U.S. Army Medical Department, retiring as a Colonel, Mr. Lozada began a consulting

career. He served as a principal with Booz Allen and Hamilton, and managing consultant with Electronic Data Systems. He then served the U.S. Department of Veterans Affairs as assistant secretary for human resources and administration; later, he became senior advisor for diversity strategies at the U.S. Office of Personnel Management. Mr. Lozada retired as an independent consultant in 2006. He serves on the board of the VA National Medical Music Group.

John Penn Jack Penn is a member of the AARP Board of Directors. He is chairman and CEO of Intek Plastics Inc. He previously served as CEO of Satellite Companies, CEO of the Centers for Diagnostic Imaging and CEO

of the Benson Optical Company. Mr. Penn is currently chair of Evangelical Lutheran Good Samaritan Society, a member of the board of the Good Samaritan Society Foundation and president of Cross View Lutheran Church. His extensive governance experience has earned recognition, including being named by Twin City Business Magazine as one of five Outstanding Directors and as one of the 50 “Hardest Working Directors” by the Minneapolis/St. Paul Business Journal.

THE AARP SERVICES, INC. BOARD OF DIRECTORS—2011

BOARD OF DIRECTORS






THE AARP SERVICES, INC. BOARD OF DIRECTORS—2011

Jim Phills Jim Phills is the Claude N. Rosenberg, Jr., director of Stanford’s Center for Social Innovation and professor of Organizational Behavior (Teaching) at the Stanford Business School. He is also

faculty director of the Executive Program for Nonprofit Leaders. While on the faculty at the Yale School of Management, he received the Alumni Association Award for Excellence in teaching in 1995. Dr. Phills has consulted to a wide array of organizations. A magna cum laude graduate of Harvard College, he holds a master’s degree in psychology and social relations from Harvard University, and a PhD in organizational behavior from Harvard Business School and the departments of psychology and sociology.

A. Barry Rand (ex officio) Prior to joining AARP as CEO in 2009, Mr. Rand distinguished himself as a leader of social change in some of the nation’s largest corporate and educational institutions. He has served as executive

vice president for worldwide operations at Xerox Corporation; chairman and CEO of Avis Group Holdings; and chairman and CEO of Equitant, Ltd., an Ireland-based provider of outsourced management services which was successfully acquired by IBM in 2005 through Mr. Rand’s leadership. He currently serves as Chairman of the Board of Howard University. Mr. Rand earned a bachelor’s degree from American University and a master’s in business administration from Stanford University, where he was also a Sloan Executive Fellow.

Jaynie StudenmundJaynie Studenmund has been a board member for Eharmony.com Inc., Countrywide Bank, aQuantive Inc., Western Asset and Forest Lawn. She has served as COO for Yahoo! Search

Marketing Solutions (formerly, Overture Services Inc.), and as the president and COO of bill management service PayMyBills.com, which was eventually sold to Paytrust. Her pre-Internet career included 11 years at First Interstate (which is now part of Wells Fargo) where she grew from chief marketing officer to executive vice president in charge of all retail. She also served as a management consultant with Booz, Allen & Hamilton. Ms. Studenmund received her master’s in business administration from Harvard Business School and her bachelor’s degree in economics from Wellesley College.

EXECUTIVE TEAM—2011

John WiDer

President and CEO

Jean alexanDer

Chief Operating Officer

linDa Caliri

Senior Vice President, Marketing

SCott FriSCh

Chief Financial Officer

angela JoneS

Senior Vice President, Corporate Relationships

Frank loPiCColo

Senior Vice President, Operations and Support Services

DaviD mathiS

Senior Vice President, Health Products and Services

Sarah mika

Senior Vice President and General Counsel

al PratiCo

Senior Vice President, Distribution

mitCh StevenS

Senior Vice President, Financial Products






2011 REVENUE GROWTH SUPPORTS AARP

AARP Services oversees and manages the relationships with the providers of AARP member benefits. 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 messages that educate consumers.

AARP receives royalty income from these providers that is crucial to supporting the short- and long-term goals of the Association. Financial resources are used to build and grow com-munity projects, support advocacy work nationally and locally and leverage the power of people 50+. At AARP Services we know our ultimate goal is to enhance the quality of life for people over 50 and support positive social change through market innovation and leadership.

The products and services offered by AARP-branded providers generated $704.6 million of royalty revenue to AARP in 2011, a year-over-year growth of $25.1 million, or approximately 3.7 percent.

The AARP-branded health-related offerings generated the largest percentage (69 percent) of revenue, followed by financial products and services (29 percent) and the AARP Travel and Discount programs (2 percent).

LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE

LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT O

F LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE





LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE

LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT O

F LIFE HELPING PEOPLE GET MORE OUT OF LIFE HELPING PEOPLE GET MORE OUT OF LIFE

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www.aarp.org


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ARPP...ARPP AARP SERVICES, INC. ANNUAL REPORT 2011 H E L P I N G P E O P L E L I V E H E A L T H I E R , E M O R E S E C U R E A N D H A P P I E R L I V E S H E L P I N G P E O P L

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