USAA | Developments in the 1990s and Beyond
Developments in the 1990s and Beyond
A new building for USAA's mid-Atlantic regional center in Norfolk, Virginia, was completed in 1992. It featured contemporary architecture and high-tech security.
By the mid-1990s, USAA had nearly three million members and 16,000 employees. About 95 percent of active-duty military officers were customers, and in 1996 USAA opened up its auto insurance to enlisted personnel. Revenues were $6.8 billion in 1996. USAA had a greater than average exposure to weather-related catastrophes due to its retired members moving to coastal areas.
A new product, retirement and estate planning, was added in 1998. The success of cross selling led to expansion and to a need to upgrade both USAA's facilities and its computer networks. From 1995 to 1998, the company spent $100 million upgrading its network infrastructure (Cisco Systems was the vendor) for its regional offices and its headquarters, which, according to the San Antonio Business Journal, processed 16 million computer transactions a day. USAA's document imaging system, one of the world's largest, also required sophisticated data handling capabilities. According to Forbes, USAA scanned 65,000 documents, or 650,000 pages, a day, and sent out 5,000 faxes a day without producing hard copies for them. USAA saved 35,000 square feet of office space by going paperless.
USAA's relationship with its employees continued to draw positive press. It consistently landed a spot in Fortune's "100 Best Companies to Work for in America" on the strength of such benefits as college tuition reimbursement ($2.7 million worth per year, according to Fortune), a childcare center, and recreational facilities. It also offered a four-day, 38-hour work week. Dress was business casual, with jeans allowed on Fridays. A one million square-foot expansion to the company's 4.5 million square-foot San Antonio headquarters was begun in 1998.
Robert G. Davis became chairman, president, and CEO of USAA in June 1999, succeeding Robert Herres. Davis had formerly led several of the group's subsidiaries. Before joining USAA, he had worked for a number of investment companies and banks. Davis succeeded Herres as chairman as well in 2002.
There were considerable layoffs in 2000 and 2001, and the number of regional offices was also reduced. Offices in Reston, Virginia, and Seattle were closed and about 800 of their personnel relocated to Norfolk, Virginia, and Colorado Springs. USAA had 24,000 employees at the time; 17,000 of these were in San Antonio, Texas. By July 2002, though, the company was hiring again for 100 customer service positions for its San Antonio office. Another 500 positions were added there in March 2004; regional offices were hiring as well.
The end of the bull market of the 1990s affected USAA's investment income, but the insurer was still able to post a profit (unlike its larger rival State Farm, which was losing money by the billions). Consolidated net income fell 17 percent to $500 million in 2002.
In 2003, USAA was preparing to make all of its core processing transactions accessible through the Internet. The Web already handled most of USAA's non-insurance transactions and half of its insurance transactions, such as rate inquiries, reported American Banker.