USAA SWOT & PESTLE Analysis

Strength

1. Firm grip on niche market: USAA serves only the military families of United States which gives them a very big advantage. The Company restricts its products and services to the target group only. When it comes to brand awareness, the $155 billion insurance has beaten all its competitors. According to Raddon research, 83% customers of USAA gets additional financial benefits. It was founded in the year 1922 by a group military personnel to insure each other’s cars. It has expanded into home and life insurance and mutual funds. As mentioned above the company only serves military families which gives the company a tremendous focus and lends it a great competitive advantage. Members who are the part of this company use a wide array of services such as including credit cards, checking accounts and saving accounts.

2. Technology innovations boosting performance: USAA offers many services including a mix of insurance, financial management, mortgage, and auto loan and banking services, all through virtual networks such as mobile devices and web. Most of the centers of the company are nearer to the military bases which are regulated through remote access technology and videos in order to expand the business at minimum cost. Now USAA is employing advanced technologies to facilitate one to one video, web bandwidth agility, data analytics, contextual web marketing and voice automated response. The online banking sites looks more like an app and the company is attempting to make the mobile phones and tablets to be the banking channels in their own way. 93% of USAA's total member base was digitally active in 2018. USAA members launched the organization’s virtual agent, EVA, 34M times in 2018. On a monthly basis, 2.2M members exclusively used mobile, a 27% increase over 2017. In 2018, USAA Labs had 7,600+ employee submissions and implemented 1,172+ new ideas for the benefit of members and employees. 87% of employees participated in employee innovation in 2018. USAA helped stall 13M+ cyber-attacks and prevented $11.1 million in fraud loss daily.

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Weakness

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Opportunity

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Threat

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Political

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Economic

1. Performance of stocks, bonds and other investments: Domestic equities fell sharply during the fourth quarter, leaving major indices with losses for calendar year 2018. The downward trend for stocks began in October on concerns that the U.S. Federal Reserve (the Fed) would exceed expectations with respect to the pace of interest rate increases in 2019. In addition, uncertainty surrounding U.S. trade policy, the U.S. government shutdown, and a softer outlook for 2019 economic growth and corporate earnings weighed on investor sentiment into year end. While the Fed raised the benchmark overnight lending rate by a quarter point in mid-December to the 2.25% to 2.5% range, the central bank signaled that, if anything, its rate hike plans for the coming year would most likely be scaled back. On the trade front, despite initial positive reports coming from the G-20 summit, investors questioned whether additional progress on trade would be made before the March 1 deadline. Lastly, as investors moved into more defensive sectors during the past three months, value stocks outpaced growth stocks. Against this backdrop, the USAA Growth & Income Fund posted disappointing quarterly performance. To worsen this, the novel corona virus pandemic spread in 2020 has sent global economies bleeding and USAA has no exception shielding from its devastating impact.

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Social

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Technological

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Legal

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Environmental

1. Climatic catastrophes hurting insurance revenues: During the past five years, floods have wreaked havoc in every single state in the U.S.A — those marked low-risk were also not spared. As storms, floods and wildfires are getting worse, and USAA, which has an employee strength of 19,000 people at its North Side region and other local offices, has been battling to figure out a way to rise to this challenge. As per data shared by Insurance Information Institute, amongst the 10 costliest wildfires in U.S. history, as measured by insured losses, the top five occurred in 2017 and 2018. The most draconian was the devastating Camp Fire in Northern California in November 2018. Natural calamities scarred USAA’s results in 2018. Earnings dipped from $2.4 billion the fiscal before, even as revenue hit a record $34.2 billion, affecting USAA’s property and casualty business.
The insurer paid more than $2 billion in claims in 2018 for the Camp Fire and other wildfires, two hurricanes and other catastrophes. It was USAA’s third straight year in which claims stemming from natural disasters surpassed $2 billion. USAA, like all other major insurance players are mulling hiring more climate experts, changing their catastrophe models and pushing up premiums in higher-risk communities.

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