GMAC Insurance–whose parent, GMAC Financial Services, recentlyreported a second quarter net loss of $2.5 billion–has stoppedusing independent agents to write business in three states and cutback activity in a fourth, NU has learned.

While it is no longer accepting any new business throughindependent agents in three states, the St. Louis-based home andauto insurer said it will still offer policies through its directchannel online and by telephone.

In a limited response to a request for information, GMAC saidthe action is aimed at helping its bottom line, and that it is “nolonger accepting any new business through independent agents inColorado, Illinois and Michigan.”

In Texas, the company said it will accept new agency businessonly for commercial vehicle insurance.

GMAC Insurance said the move is part of a focus on “long-termprofitability.”

According to the company, the change “will better serve agentsand customers with the products they deserve.”

Asked how agents and customers in the affected states were beingserved if the company was not accepting new business from agents,GMAC Insurance had no response.

The company said it will continue to service existing policiesin the affected states.

GMAC's statement said customers can purchase new policiesthrough its direct channel at www.gmacinsurance.com, or by calling1-800-GMAC-123.

Asked if the halt in taking new agent business would be expandedto other states, GMAC Insurance did not respond.

GMAC Financial Services reported on July 31 that in the secondquarter its insurance business recorded net income of $135 million,up slightly from net income of $131 million in the period lastyear.

It said the results primarily reflected a nonrecurring taxbenefit, which offset higher weather-related losses.

The insurance investment portfolio was $7.1 billion on June 30,compared to $7.4 billion as of June 30, 2007. The decrease in theportfolio was attributed to repayment of intercompany loans relatedto the funding of last year's $340 million purchase of the UnitedKingdom-based automotive insurance division of Provident FinancialPlc.

At the time of the purchase announcement, Ron Judd, GMACInsurance's senior vice president for international operations,said: “It is a strategic priority at GMAC Insurance to continue togrow and diversify our business both in product lines andgeography.”

He said the purchase not only provided entry into the U.K. autoinsurance market but, “the potential to also expand throughoutEurope.”

In July, GMAC completed a plan to dividend 100 percent of thevoting interest in the insurance business to GMAC's shareholders.GMAC continues to hold 100 percent of the economic interest in GMACInsurance.

The action was taken in the interest of maintaining thecompany's current financial strength rating, GMAC said. A.M. Bestsaid on July 25 that as a result of the voting interestrestructuring, it had affirmed the company's A minus “Excellent”financial strength rating.