USAA has a decidedly military bearing. The mutual insurance company serves 8.4 million member customers, primarily military personnel, military retirees, and their families. Its products and services include property/casualty and life insurance, banking, discount brokerage, and investment management. It offers such specialty products as life insurance for soldiers deployed in war zones and financial planning services to invest hazardous duty pay. USAA relies largely on direct marketing to sell its products, reaching clients via the telephone and Internet. The company's USAA Alliance Services unit provides discount shopping (floral, jewelry, and safety items), and travel and delivery services to its members.
Its USAA Real Estate division serves institutional and corporate customers with real estate development. In addition to its San Antonio, Texas headquarters, the company has domestic offices in Arizona, Colorado, and Florida, and overseas offices in Frankfurt and London. In the US it has also opened nearly a dozen Financial Centers which offer banking and member services in communities close to military posts.
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.
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 membership jumped by a million members since the new guidelines went into effect. 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.
Even as the company grows in membership and financial service products, it is still an insurance company, and Mother Nature can cost USAA its income. Tornadoes and other major storms in the first half of 2011 had the company paying out upwards of $900 million in claims.
In recent years USAA has streamlined operations by reducing staff and outsourcing services it used to keep in-house, including mailing, printing, and information technology services. – less