Why is there USAA layoffs in 2023? Soon after reporting its first loss in its 100-year history, USAA announced more job cuts across the organization. It is San Antonio’s largest banking and insurance company. In its most recent wave of layoffs this year, USAA is firing 300 workers.
For many years, USAA has been one of the biggest employers in San Antonio. Based on the city of San Antonio’s 2022 Annual Comprehensive Financial Report, the company employed 19,000 locals in 2022. But with this latest round of layoffs, the business has eliminated 300 more jobs. Hence, it has done so for the third time this year.
Since its founding in 1922, USAA has developed into one of San Antonio’s greatest corporations. Thus making it to the point where it is no longer often referred to as the United Services Automobile Association. Today, The company provides several insurance and financial services under the USAA name through many companies. It ranges from USAA Bank to USAA Life Insurance.
Journey of USAA
In June 1922, 25 Army officers gathered in San Antonio to form the United Services Automobile Association to insure one another’s vehicles. The first president was William Garrison. That same year, Maj. Walter Moore insures his car and enrolls as the first member.
1934 USAA appointed Stuart Gwyn as the first woman to join its management team after its membership doubled to 30,000 in 1931. In 1952, USAA established a branch office in Frankfurt, Germany. Later, it began developing global insurance plans. Then, in 1956, Consuelo Kerford was appointed as USAA’s first executive officer.
Homeowners’ insurance was first made available by the expanding insurance behemoth in 1962. Later, life insurance was added the following year with the founding of USAA Life Co. Eugene Butel, an officer candidate. He would become USAA’s millionth member in 1969.
For USAA, the 1970s were a significant period of transition. The decade began with the establishment of USAA Fund Management Co., which offered mutual fund services.
Then, in 1976, USAA established its present corporate headquarters at 9800 Fredericksburg Road. In 1977, the corporation had assets worth $1 billion. The business also provides members in the U.S. with toll-free phone service.
In 1983, the USAA Federal Savings Bank debuted. Also, the USAA Volunteer Corps was established to coordinate employee community service.
Enlisted service personnel were made eligible in 1996. USAA developed its website in 1999 to allow members to conduct business online.
In 2008, USAA, a now-giant corporation, added retired military personnel and their families to its clientele. The corporation then expanded in 2009 to all men and women in the military. It was extended to those who are serving or have served, as well as to their families.
With a $31 billion net value, USAA served approximately 12 million members in 2017. In 2020, the business chose Wayne Peacock to take over as CEO. As the first CEO with no military experience, Peacock makes history. In 2021, the business opened a sizable office in Charlotte, North Carolina.
Company’s Overview
USAA serves military veterans and their families by providing various financial services. This includes insurance policies, banking accounts, investments, house loans, and staff morale programs. It has achieved one of the top rankings among the best companies to work for in America. It is because of its dedication to providing exceptional customer service. Also, it created a positive workplace culture. But that does not imply its journey has been without ups and downs.
Even recently, in the late 1960s, USAA had trouble keeping up with its rapidly expanding company. Their Grayson Street offices were practically full. The employees were forced to wait hours every evening while college interns looked through lost files. Due to their inefficiency, the company needs only temporary staff to carry out daily operations.
USAA often had problems. For example, the Financial Crimes Enforcement Network of the U.S. Treasury penalized them in 2022. It was for breaking the Bank Secrecy Act, which resulted in sluggish housing markets and a decline in mortgage applications.
Despite these challenges, USAA could still grow its workforce and business. By the 1980s, it had added new financial services such as cheap brokerage and savings accounts. It also extended into nationwide locations, with offices spread around the country.
Over 100,000 individuals are employed by the organization now. With branches all around the country, its main office is in downtown San Antonio. Customers include both citizens and personnel of the armed forces and their families.
USAA has said they will change operations to serve customers better, although they have not specified exactly how their employees will decrease. They want to provide benefits and services to help those who leave transition. They plan paid transition periods and career training. They will also provide health insurance for this year and the following. USAA won’t be the only company to reduce its employees this year.
Layoffs history
The most recent in a series of severe cuts made by some of the biggest businesses in America due to COVID-19 are the layoffs at USAA. Companies have cut workers while putting less emphasis on investing in goods or services they might not need right now than on cutting operational costs.
United Furniture Industries recently let go two thousand seven hundred employees. According to reports, United informed staff members via emails and texts that their jobs had been removed due to “unforeseen business situations.” But they would still receive their paychecks through November. But they would no longer be eligible for health insurance.
By the end of November, the business had still not disclosed who would be laid off. It is predicted that existing staff members or new hires might fill such positions. Any affected employees will receive aid in seeking new jobs inside and outside the firm. This is according to a corporate representative.
Due to declining demand for mortgages, USAA Mortgage Lender recently laid off 90 employees. Also, it further decreased its personnel in March. It also issued a warning about an unstable market for purchases.
In the 1960s and 1970s, USAA quickly grew beyond its original insurance offerings by opening branch offices in towns with large military populations. They welcomed National Guard and Reserve members and their families as members. It also founded its banking subsidiary in 1983, USAA Federal Savings Bank.
Their financial report shows that USAA recorded a $1.3 billion loss for 2022. It happened due to economic difficulties, losses from natural disasters, and an increase in expenses for salaries, benefits, and other costs of 13% year over year. Natural disasters and a 13% increase in business expenses resulted in reduced profits for USAA this year. They also caused a decline in profits.
Businesses continued to fire employees despite the economic unrest. The COVID-19 outbreak led SpotHero to fire 70 staff. The small company lender Fundbox reduced executive wages and let more than 12 employees go.
USAA announced Layoffs
Less than a month after announcing its first yearly deficit in a century, USAA revealed another round of layoffs. According to Christian Bove, a spokeswoman for USAA, the affected employees were dispersed across several departments and roles. He stressed that the business is still hiring. But the layoffs were required due to changing business requirements.
Bove states, “Affected employees are treated with empathy and concern.” They were given help finding new roles both inside and outside the organization. According to the San Antonio Express-News, the most recent wave of job losses at USAA affected 300 employees.
475 staff had already been let go by the business by March. Before that, beginning in early 2022, USAA Federal Savings Bank cut at least 220 personnel from its mortgage business. It resulted from the housing market cooling brought on by higher interest rates. In August of the same year, various departments similarly slashed an unknown number of jobs.
Reasons for Layoffs
The most recent round of layoffs at USAA followed an unusually loss-making year for the business. In April 2023, USAA disclosed a $1.3 billion net loss for 2022 in its annual report. This significantly reduced its $3.3 billion profit in 2021. As a result, it marked its first defeat since its founding in 1923.
The loss was attributed to several things by USAA. It included rising inflation that raised the price of replacing and repairing insured automobiles.
Also, USAA noted a drop in investment returns and increased claims due to natural disasters. Hence, it stressed that consumers had to pay higher premiums due to rates hitting levels not observed in 40 years.
After the pandemic, the perfect mix of inflation, rising interest rates, supply chain disruption, workforce shortages, and severe weather made 2022 a very difficult year for a company. This is according to USAA President and CEO Wayne Peacock.
The amount of revenue generated by USAA in 2022 was $36.3 billion. It is down from the record $37.5 billion released in 2021.
Additionally, net worth decreased from $40.1 billion to $27.4 billion. Nevertheless, the business claimed this was only a temporary situation brought on by losses in its investment portfolio from rising interest rates.
Over 90 USAA Financial Services’ San Antonio mortgage division employees will be let go. Hybrid roles will be affected by these reductions. USAA improved its processes after getting new computers. USAA currently focuses on multi-vehicle plans rather than offering different policies for each car.
Mortgage service of USAA
The mortgage division of USAA is a key revenue generator. The recent industry restructuring and layoffs have had a severe negative impact on the department’s workforce. Following the
The acquisition of Bay Equity Home Loans in March of last year eliminated 121 jobs in its home lending division. It happened as a result of the merger. The same month, Guaranteed Rate purchased Stearns Lending. This resulted in the elimination of its mortgage experts and related roles.
USAA’s portfolio of home-loan activities saw a sharp drop. It is because interest rates rose and mortgage applications dropped. The Express-News writes that by the beginning of 2023, its real estate loan portfolio had decreased from an astonishing $3.1 billion to under $2 billion.
This decline can be partially attributed to greater competition from rival mortgage lenders. They have cut employees in reaction to rising rates, dropping home sales, and changes within the sector. It is like more automated processes that have decreased human operations.
USAA has acted quickly and decisively. It offered affected employees extensive benefits packages. They also assisted them in finding other employment within the company. If this doesn’t work, USAA offers career training and transitional periods as alternatives.
Conclusion
More than 2,500 individuals are employed by USAA in San Antonio. It provides banking, financial, and insurance services to 13 million military personnel and their families. As the leading provider of financial services for the military, it was founded over a century ago.
USAA offers generous benefits packages and competitive salaries. They promote advancement in career prospects. Thousands of veterans and military spouses can also get employment and career opportunities through the Serve Heroes initiative. It was accomplished through a charity program. Employees backed this and linked veterans and military spouses with employment resources.
The current economic situation has affected USAA, resulting in layoffs. But, in 2022, USAA offered $5,000 one-time bonuses to employees making $100,000 or less while raising the hourly pay from $20.30 to $21. Due to regulatory compliance concerns, inflation, and the threat of millions in fines from authorities for financial fraud, money laundering, and violations of banking laws, it issued fewer performance bonuses than in the past.