USAA has a decidedly military bearing. The mutual insurance company serves 9.3 million member customers, primarily military personnel, military retirees, and their families. Its products and services include property/casualty and life insurance, banking, discount brokerage, investment management, and real estate development. It offers such specialty products as life insurance for soldiers deployed in war zones and financial planning services to invest hazardous duty pay. The company's USAA Alliance Services unit provides discount shopping (floral, jewelry, and safety items), and travel and delivery services to its members.
In addition to its San Antonio, Texas headquarters, USAA has domestic offices in Arizona, Colorado, and Florida, and overseas offices in Frankfurt and London. The company has smaller offices in New York State and Maryland that serve US military and naval academies. In the US it has also opened 10 regional Financial Centers which offer banking and member services in communities close to military posts. The USAA Real Estate division has about 15 offices across the US.
USAA dominates its niche market, knows its customers well, and enjoys a remarkable level of member loyalty and retention. The company has made it a priority to recruit and hire transitioning military members including wounded warriors, junior NCO's, and junior officers. At its helm is retired major general Josue Robles, who was named CEO in 2007.
On average, members use five of the company's different products, and the company has begun tying its auto insurance rates to the number of products a member uses, as well as how long they have held insurance with USAA. The company's insurance divisions include United States Automobile Association, USAA Property and Casualty, and USAA Life.
USAA's finance and investment management businesses have some $183 billion in owned or managed assets. The company's banking divisions include USAA Federal Savings Bank, USAA Savings Bank, and USAA Relocation Services. The USAA Real Estate division serves institutional and corporate customers with real estate development.
Sales and Marketing
USAA relies largely on direct marketing to sell its products, including reaching clients via the telephone and Internet. The company employs teams of wealth management advisors to assist customers at its regional offices.
USAA reported a 9% revenue rise in 2012 to some $20.7 billion due to increased insurance premiums, investment returns, real estate investment income, and net fee, sales, and loan income. The increase marks a fourth straight year of revenue growth for USAA.
Even as the company has grown in membership and financial service products, it is still an insurance company, and Mother Nature has impacted USAA's income in recent years. Tornadoes and other major storms led to high claims payouts in 2010 and 2011, causing profits to decline. However, USAA reported a 33% increase in profits to $2.8 billion in 2012 due to increased investment returns (attributed to prudent portfolio management and strategic investment decisions), which offset high catastrophe losses that year.
To drive growth, the company broadened its eligibility guidelines in 2009 to include all ranks of the US military, and all veterans honorably discharged. As a result, USAA is projecting its membership to nearly double -- a likely estimate given that by 2013 membership had jumped by about two million members.
USAA also expands its insurance and financial services business by forming alliances with various military branches, as well as other organizations. For instance, it partnered on personalized credit cards with organizations including the Civil Air Patrol and the Norwich University Alumni Association in 2012. It also partnered with the American Military Society (AMS) to provide insurance and investment services to eligible AMS members.
In another attempt to increase revenue, the company has entered new markets by making efforts to target people less affluent than military officers. At present, nearly 50% of its members are the grown children and grandchildren of people who have served in the military.