Despite being buffeted by the same headwinds it faced in 2022 — inflation, high interest rates and an “above average” number of severe weather events — San Antonio-based USAA turned a profit in 2023, a year after posting the first loss in its now 102-year history.

The company made a “difficult decision” to raise auto and homeowners insurance rates last year, and according to President and CEO Wayne Peacock, the increases were “necessary to ensure the association remains financially strong.”

The company also listed global conflicts in Ukraine and the Middle East and the threat of government shutdowns as pressures influencing the decision to raise rates in its 2023 annual report, released Friday.

“We know these factors put a strain on household budgets and continued to drive up the cost to fix and replace cars and homes,” Peacock wrote. The company also reduced operating expenses.

USAA took in $32.2 billion in insurance premiums last year, up from $28 billion in 2022, and returned “almost $1.9 billion to member customers through distributions, dividends and bank rebates and rewards.”

USAA reported a net income of $1.2 billion in 2023, after posting a $1.3 billion net loss for 2022. The year prior to that, the financial services and insurance giant reported a $3.3 billion profit.

Revenue increased to $42.5 billion in 2023, up 17% from $36.3 billion the year before. The annual report stated that favorable investment returns, which jumped 67% over 2022, boosted revenue.

USAA was hardly alone in raising insurance rates last year.

Texas auto insurance rates climbed by an average of 25.5% in 2023, according to the Texas Department of Insurance, on top of a 23.8% increase the year before. That's higher than nationwide increases, which were just over 17% on average in 2023, according to the Bureau of Labor Statistics — the biggest jump since 1976.

Texas home insurance rates rose an average of 21% in 2023, on top of 10.8% the year before, the department reported. According to S&P Global Market Intelligence, USAA rates rose an average of 14.7%. Like USAA, other insurance companies are reporting inflation, high reinsurance rates and an increasing number of natural disasters as culprits.

Executive compensation at USAA, including Peacock's, increased dramatically in 2023 alongside rising rates.

Peacock recently joined a panel of C-suite San Antonio executives who opined on the future of work.

“There’s never been a time when there’s been this much change going on, and this much uncertainty, and the velocity of the change has never been this fast,” Peacock said. Like many companies in recent years, USAA has struggled with layoffs and bringing workers back into its headquarters.

USAA serves 13.5 million members, primarily made up of military servicemembers, veterans and their families. It employs around 37,000 people, roughly 17,000 of those in San Antonio.

The insurance giant paid out almost $24 billion in claims in 2023, according to the report, with more than 350,000 catastrophe-related claims. It listed floods as the number one most common and costly natural disaster risk.

Flood insurance is only offered through the Federal Emergency Management Agency (FEMA), but USAA participates in the “Write Your Own Flood Policy” program, which allows the company to write and service flood policies on FEMA's behalf. Because of this participation, according to the report, “one in four homeowners with USAA has a flood insurance policy, compared to the one in six industry standard.”

In June of last year, USAA, along with the Humana Foundation and Reach Resilience, founded “Face the Fight” to address the veteran suicide epidemic.

According to the annual report, the now 170-member coalition “has committed nearly $85 million to support evidence-based care for those at risk.”

Tracy Idell Hamilton covers business, labor and the economy for the ISF FORUM.