Scott Ball / Rivard Report
In a year when a series of natural disasters, versus one big catastrophic event, drove claims to record highs, USAA has reported a net income of $2.29 billion, down from $2.4 billion in 2017.
The San Antonio insurance, banking, and financial services company released its year-end financials to members Thursday, emphasizing that the numbers show USAA continues to have the financial strength to serve its 12.9 million members into the future.
USAA came out of 2018 with a net worth of more than $31 billion in 2018, up more than $500 million over the previous year. The company reported assets – cash, investments, loans, and property – of more than $158 billion, an increase of 2 percent.
In addition to the positive balance sheet, USAA returned nearly $1.8 billion to members in the form of annual distributions, dividends, and bank rebates and rewards, which is $300 million more than in 2017. The company also paid more than $2 billion in catastrophe-related claims for the third straight year.
Total annual revenue came to $31.4 billion, up from $30 billion in 2017 and $27 billion in 2016. Annual losses for 2018 totaled $28.7 billion.
No doubt 2018 was a rough ride. The insurer mobilized almost 600 employees to help process 290,000 claims as a result of wildfires, hailstorms, earthquakes, hurricanes, and a volcano in Hawaii during the year.
Yet the annual report also states USAA achieved a property and casualty operating expense ratio that was better than the industry average. Three key credit rating agencies – S&P, Moody’s, and Fitch – reaffirmed USAA’s financial strength ratings.
In a letter to members, retiring Board Chairman Lester Lyles said the company successfully thwarted other financial threats, which included blocking approximately 13 million cyberattacks and preventing more than $11 million in fraud losses. USAA also launched an augmented-reality tool for car shoppers to get buying information via their mobile phones.
Late last year, USAA announced the sale of its mutual fund, ETF (exchange-traded fund), and 529 education savings plan business to Victory Capital. That deal is expected to close during the second quarter of this year.
USAA’s total workforce numbers 34,000 people, with 19,000 based at its San Antonio headquarters campus and downtown. The company opened two additional office buildings – one in Tampa, Florida, and more recently in Plano – to accommodate planned growth.
In February, USAA officials said a challenging business environment in 2018 contributed to a lower-than-usual performance bonus for employees due to catastrophe-related claims, a more competitive marketplace, and growing regulatory requirements. USAA agreed to pay $3.5 million as a civil penalty and $12 million in January in restitution for “unfair acts or practices,” as charged by the Consumer Financial Protection Bureau.
The year’s catastrophes also played a role in reduced compensation for top executives at USAA. CEO and President Stuart Parker received about $4.2 million in total compensation from five USAA insurance companies last year. That was 6 percent less than the roughly $4.5 million he received in 2017, according to figures reported to the Nebraska Department of Insurance.
The company’s philanthropic contributions – by USAA, USAA Federal Savings Bank, and The USAA Foundation – came to $36 million in 2018 in support of community and military causes. Employees and retirees volunteered more than 500,000 hours and donated $10 million to various causes last year, the company said.