United Services Automobile Association Case Study

United Services Automobile Association (USAA) was established in 1922 by a group of 25 Army officers in San Antonio, Texas. The Army officers, who were unable to obtain insurance due to their “high risk” nature, started the company as a means of self-insurance for each other’s vehicles. When the officers founded USAA, their mission was to serve those who serve our country hence their motto “Service to the Services.” Membership with USAA is currently open to U.S. military service members: officers and enlisted personnel who are either on Active Duty, National Guard or Reserve status, officer candidates in commissioning programs (Academy, ROTC, OCS/OTS), all those who have served in the aforementioned categories and who have retired or have been
USAA offers more benefits for military members and their family members than any other major financial service provider. And since USAA was founded by military members for military members their products and services are tailored with understanding of their unique needs. USAA offers a full range of highly competitive financial products including insurance, banking, investments, retirement planning and real estate. Members also have access to many tools and services provided to them free of charge through USAA such as a financial assessment, financial planning advice and guidance, and USAA Money Manager which helps to manage your budget and spending (Corporate Overview).
As a part of USAA’s commitment to its mission statement, the company has been successful in providing a strong financial foundation for their members. USAA increased its net income by 25% from 2013 to $3.4 billion and its assets by $8 billion.
In 2014, USAA’s property and casualty insurance group achieved an operating expense ratio that was nearly two times better than the industry, and our bank and life insurance companies recorded lower-than-average expense ratios compared to their industries, as
military, it is limiting the amount of growth the company can do. And to further limit the company, USAA currently is operational only within the United States. This leaves the diversification, geographically speaking, very small and also means that USAA is only receiving revenues from the U.S. and should anything detrimental happen to the U.S. economy, the company’s operations and profits will be negatively impacted. So by limiting the company, a weakness is created for an otherwise very successful company. From this weakness though, USAA has the opportunity to grow its business and profits significantly were to open its company to more members outside of the military as well as in the global market (USAA SWOT Analysis).
In recent years, there have been an increase in the occurrence of natural disasters. This is a huge threat for USAA because with the increase in occurrences there will also be an increase in the number of claims needing to be paid out. Currently USAA has the financial stability to support the pay outs but should the occurrences become more frequent in the future, the company simply may not be able to reimburse claims. Since USAA cannot control nature, it will have to create a plan to ensure the company can continue to growing enough to support an increase in the number of claims in the