USAA implements another round of layoffs

USAA implements another round of layoffs | Insurance Business America

Insurance News

USAA implements another round of layoffs

Job cuts follow news of first annual loss since 1923

Insurance News

By
Mika Pangilinan

USAA has announced another round of layoffs just weeks after it reported its first annual loss in a century.

Christian Bove, a spokesperson for USAA, stated that the affected positions were spread across various offices and functions. He emphasized that the company continues to hire, but the layoffs were necessary due to shifting business needs.

“Impacted employees are treated with care and compassion and provided with assistance to find new roles inside and outside of the organization,” added Bove.

The company had already laid off 475 employees in March. Prior to that, USAA Federal Savings Bank eliminated at least 220 positions from its mortgage group beginning in early 2022 due to a cooling housing market caused by rising interest rates. An unspecified number of jobs were also cut across various departments in August of the same year.

First annual loss since 1923

USAA’s latest layoffs come on the heels of a rare year of losses for the company.

In its annual report, released earlier this month, USAA revealed a $1.3 billion net loss in 2022. This marked a significant decline from the $3.3 billion profit it achieved in 2021 and represented its first loss since it was founded in 1923.

USAA attributed the loss to several factors, including high inflation that increased the cost of car repairs and replacements for insured vehicles.

USAA also cited a decline in investment returns and an upswing in claims due to natural disasters, with the company highlighting how customers have had to face higher premiums due to rates reaching “levels not seen in 40 years.”

“Coming out of the pandemic, the perfect storm of inflation, rising interest rates, supply chain disruption, labor shortage and intense weather led to a very challenging year for the association in 2022,” said USAA president and CEO Wayne Peacock.

USAA’s revenue for 2022 amounted to $36.3 billion, a decrease from the record $37.5 billion achieved in 2021.

Net worth also dropped to $27.4 billion from $40.1 billion, although the company said this was temporary and a result of losses in its investment portfolio due to rising interest rates.

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