USAA
 | The neutrality of this article is disputed. |
| USAA logo | |
| Company type | Private |
|---|---|
| Industry | Financial Services |
| Founded | 1922 |
| Headquarters | San Antonio, Texas, USA |
Key people | Robert G. Davis, Chairman & CEO Tim Handren, COO Joe Robles, CFO Greg Schwartz, CIO |
| Products | Insurance, Banking, Investing |
| Revenue |  $11.273 billion USD (2004) |
Number of employees | ~21,000 (2004) |
| Website | www.usaa.com |
USAA Group is a financial services company headquartered in San Antonio, Texas, that offers insurance, including life insurance; banking services through the USAA Federal Savings Bank; financial planning; and discount brokerage and investment services including a line of mutual funds. Other ventures include a real estate investment company, a mail-order retail catalog operation, and travel services. As an insurer they operate as an unincorporated reciprocal inter-insurance exchange (URIE) under the Texas Insurance Code [1]. They extend membership primarily to current and former U.S. military personnel and their families and as of 2004 USAA had over $81 billion in assets under management for approximately 5 million customers.
The United Services Automobile Association was founded in 1922 by a group of military officers, and named the US Army Automobile Exchange. It operated illegally until 1924, when it was compelled to obtain a Certificate of Authority from the Texas Department of Insurance. Previously, it had been difficult for military officers to obtain automobile insurance because they were considered to be crazy drivers.
The mission of USAA is to facilitate the financial security of its members, associates and their families through provision of a full range of highly competitive financial products and services; in so doing, USAA seeks to be the provider of choice for the military community.
Essential Organizational Structure of USAA
Is USAA either a corporation, a partnership, a limited liability company, a limited partnership, or an simply an unincorporated association?
Two documents conclusively define and describe USAA's essential organizational structure.
The first sentence of "Note # 1" to the auditor's statement defines any company's essential nature. KPMG's notes to the 2003 audited statements state that USAA is a "reciprocal inter-insurance exchange". KPMG, after 40 years of service, has resigned from the USAA account under circunstances which remain unexplained. It is believed that USAA's new auditors, Ernst & Young, make the same statement in Note # 1. As USAA does not make its full financials freely available, E&Y's statement can not be cited with full certainty.
The other document confirming USAA's organizational structure is its statement to the Texas Insurance Department, which begins with the company actuary's description of the enterprise. USAA's actuary in her 2004 statement to the TDI begins by saying that USAA is a "reciprocal inter-insurance exchange".
A third source of information about USAA's essential organizational structure comes from the "description of the party" section of lawsuits to which USAA is a party. Again and again, USAA refers to itself in its own briefs as an "unincorporated" "reciprocal inter-insurance exchange".
Reciprocal inter-insurance exchanges are unincorporated, by definition: thus the term URIE, or Unincorporated Reciprocal Inter-insurance Exchange.
In essence, USAA is a "partnership" of 2.2 million individuals who have each personally entered into an agreement to personally indemnify each of the other 2.2 million subscribers. That liability is limited by Chapter 942 of the Texas Insurance Code in a manner which gives some of the limited liability benefits of a corporation. Subscribers to any URIE might wish to check with their own lawyer about the suitability of such a contract wherein 2.2 million other persons are being personally indemnified by each individual subscriber. Some subscribers and their attorneys might find that global personal liability unsettling.
Ratings
A.M. Best, Moody's Investor Services, Standard and Poor's (S&P), and Fitch Ratings provide a measure of an insurance company's financial capacity to pay claims.
If an Insurance Company is simultaneously a SEC-registered publically traded shareholder owned company, then either Moody's or Standard and Poor's may have something to say about the advisability of owning shares in that company. A share-value opinion by Moody's or S&P would be entirely distinct from an opinion about the capability of an insurer to pay large catastrophic claims.
When one reads Best or Fitch about one's insurer, it is read so that you will sleep well at night knowing that your insurer has sufficient money "ready to pay" large claims.
No rating agency pretends to provide an "overall rating" of an insurance company's operations as to the way it deals with its policyholders.
Given the "premise" offered by USAA and its auditor de jour, it is very hard too disparage USAA's financial condition.
But as is sometimes true, the "premise" does not stand up well to scrutiny under the cold hard light of day.
USAA's principal financial strength resides in the simple fact that each of its 2,120,322 Subscriber Savings Account holding subscribers, if issued "assessable policies" can be assessed for the losses experienced by the insurer. This is generally not understood.
- A.M. Best Company: A++ (Superior)
- Moody's Investor Service: Aaa (Exceptional)
- Standard and Poor's: AAA (Extemely Strong)
Litigation involving USAA
- USAA v Loretta Williams
- USAA v National Labor Relations Board
- Powers v USAA
- True v. USAA: a class action in Illinois which demands the return of all "unallocated surplus" at USAA.
External links
- USAA home page
- USAA Real Estate Company
- USAA Educational Foundation, a nonprofit organization providing consumer information
  | This bank and insurance-related article is a stub. You can help Wikipedia by expanding it. |