Insurance services company Amynta Group last week agreed to acquire American Auto Guardian Inc., forming one of the largest F&I product companies in the U.S., according to executives.
Combined, the companies will serve 15,000 dealers in the U.S., the majority of whom would be provided by Amynta.
Amynta manages more than $1.8 billion in insurance premiums, with approximately half coming from automotive lines such as warranties, service contracts and other F&I products. The automotive products also cover RVs, power sports and heavy equipment.
AAGI, though much smaller, has a strong foothold in one of the nation's most desirable markets — the Midwest.
Rob Giammarco, CEO of Amynta, said while AAGI operates in all 50 states, half of its business is conducted in regions across Michigan, Ohio, Illinois and Indiana. AAGI works with 4,500 dealers in the U.S.
"It's a high-quality organization with a great management team that has built a strong franchise," Giammarco told Automotive News. "We each bring to the table a core group of products that we could have an opportunity to take across the company."
The Midwest is known for being rough terrain for F&I product sales, says Tim Brugh, CEO of AAGI. The region's high concentration of auto industry jobs and available family-and-friends benefit plans make leasing an enticing option for car buyers, typically limiting F&I product opportunities.
The Midwest also accounts for approximately 20 percent of U.S. new-vehicle sales, according to Cox Automotive and IHS Markit.
AAGI has been successful in the region with an excess wear and tear product, which has proved popular in markets with higher leasing levels.
"It's a great product when leasing is high, even in markets where it's hard to do F&I," Brugh said.
Terms of the deal were undisclosed. Executives from both companies said no jobs would be lost in the acquisition, and that AAGI will operate as a subsidiary of Amynta.
