SAN ANTONIO – For the first time in over 100 years of operation, financial services giant USAA posted losses on its annual balance sheet.
In an annual report published on Tuesday, the company, headquartered on San Antonio’s Northwest Side, reported just over $36 billion in revenue in 2022, a 3% decline from last year.
Unrealized losses in the company’s investment balances were attributed to weakened equity markets.
“Investment returns declined 44% driven by the absence of large prior-year investment gains and weak equity market performance as markets continued to be impacted by high inflation and a weakened global economy,” the company wrote in its report.
More unrealized losses resulted from significantly lower valuations in the company’s available-for-sale securities. USAA blamed higher interest rates for the resulting drop in net worth, but noted in the report that valuations would “accrete back to par” as the securities approached their maturity dates.
Liabilities also grew by 4% due to an increase in its long-term borrowings.
A 13% increase in losses, benefits and expenses was the result of inflationary increases in claims expenses, the company said. Inflation also impacted the cost of vehicles alongside an increase in the rate of accidents, and labor shortages and supply chain disruptions impacted repair costs and times for homes and vehicles. It also noted increases in energy, petroleum and lumber costs.
The loss posted in its annual report enshrines a challenging year for the national financial services giant. It recently let go 1% of its workforce from various departments two months after laying off 130 members of its mortgage services department in response to a national downturn in the housing market. Other national insurers, including State Farm, GEICO and Allstate, also posted annual losses on their balance sheets.
Read the story in the San Antonio Business Journal.
Editor’s note: This story was published through a partnership between KSAT and the San Antonio Business Journal.