USAA 2010 Report to Members

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OUR FINANCIAL STRENGTHMANAGEMENT’S RESPONSIBILITYFOR FINANCIAL REPORTINGThe management of USAA is responsible for theintegrity and objectivity of the financial informationpresented in this annual report. Due to the volumeof financial information contained in the auditedconsolidated financial statements, which includesthe financial statements as well as the accompanyingfootnotes, we have chosen not to include the fullaudited consolidated financial statements in thisReport to Members.The financial statements that appear in this documenthave been selected from the audited consolidatedfinancial statements to give basic and necessaryfinancial information about USAA. Certain prior yearamounts were reclassified to conform to the currentyear presentation. The selected financial informationwas prepared by USAA in accordance with AccountingPrinciples Generally Accepted in the United States ofAmerica (GAAP), except for the key statutory data,which was prepared in accordance with StatutoryAccounting Principles (SAP). Management believesthe financial information contained in the auditedconsolidated financial statements fairly presentsUSAA’s financial position, results of operationsand cash flows. A copy of the complete auditedconsolidated financial statements of USAA, includingErnst & Young LLP’s unqualified independentauditors’ report thereon, is available upon requestto USAA headquarters in San Antonio, Texas.USAA’s internal controls are designed to reasonablyensure that USAA’s assets are safeguarded fromunauthorized use or disposition and that USAA’stransactions are authorized, executed and recordedproperly. In addition, USAA has a professional staff ofinternal auditors who monitor these controls on anindependent basis. The Finance and Audit Committeeof USAA’s Board of Directors engaged Ernst & YoungLLP as independent auditors to audit USAA’s financialstatements and express an opinion thereon. Ernst &Young LLP’s audit included consideration of USAA’sinternal controls over financial reporting as a basis fordesigning audit procedures that support their financialstatement audit opinion, but not for the purpose ofexpressing an opinion on the effectiveness of USAA’sinternal controls over financial reporting.The Finance and Audit Committee of USAA’s Boardof Directors consists of five members, who are notofficers or employees of USAA. This committee meetsperiodically with management, internal auditors andErnst & Young LLP to ensure that managementfulfills its responsibility for accounting controls andpreparation of the consolidated financial statementsand related data.Josue (Joe) Robles Jr.Maj. General, USA (Ret.)President and Chief Executive OfficerKristi A. MatusExecutive Vice PresidentChief Financial OfficerUSAA HIGHLIGHTS Years Ended December 312010 2009 2008TOTAL MEMBERS (in millions) 8.0 7.4 7.0TOTAL PRODUCTS (in millions) 33.5 30.8 29.1TOTAL EMPLOYEES (in thousands) 22.6 21.5 21.9USAA CONSOLIDATED (Dollars in millions)2010 2009 2008Revenue $ 17,946 $ 17,558 $ 12,912Expenses 15,309 14,538 12,489Net income 2,637 3,020 423Assets owned 94,262 79,905 68,296Assets owned and managed 147,858 137,288 119,550Total liabilities 75,551 62,888 53,716Net worth 18,711 17,017 14,580CONSOLIDATED STATEMENTS OF NET WORTHStanding strong for tomorrowA solid financial position enables USAA to be there for our members year after year.In 2010, USAA’s net worth increased by 10 percent to $18.7 billion.Net worth ensures the stability of USAA by providing that future potential lossescan be covered, regulatory and rating agency requirements can be met, and fundingis available for current and future operations.Because of our financial strength, you can count on USAA to be here for youthrough every stage of life.Years Ended December 31 (Dollars in millions) 2010 2009 2008NET WORTHBeginning of year $ 17,017 $ 14,580 $ 14,377Net income 2,637 3,020 423Distributions to subscribers (687) (597) (376)Unrealized losses on securitiesduring year, net of income taxes andreclassification adjustments — — (36)Other (includes change in accounting principles) (256) 14 192TOTAL NET WORTH $ 18,711 $ 17,017 $ 14,580NET WORTH (in billions)$13.1$14.4$14.6$17.0$18.72006200720082009201014 USAA 2010 REPORT TO MEMBERS
MEMBER DISTRIBUTIONSSharing our successWe honored our commitment to provide exceptional member experience and returneda record $1.3 billion to members through distributions, dividends, and bank rebatesand rewards. This 12 percent increase in distributions was achieved by USAA runningan increasingly efficient operation and delivering the highest levels of service to ourmembers. In addition to the member distributions, USAA helped members with someof the big decisions in life — refinancing mortgages and buying vehicles — saving themmore than $165 million. We were also there to help members as they searched forsolutions to work their way back to solid financial ground.DISTRIBUTIONS TO MEMBERS (in millions)Years Ended December 31 (Dollars in millions) 2010 2009 2008Subscriber’s Account distributions $ 416 $ 339 $ 170Automobile policyholder dividends 178 151 69Total automobile policyholder dividends andSubscriber’s Account distributions 594 490 239Subscriber’s Account Senior Bonus* 149 132 121Subscriber’s Account terminations 122 126 85Total property and casualty distributions 865 748 445Life insurance policyholder dividends 44 44 44Bank rebates and rewards 424 396 368TOTAL DISTRIBUTIONS TO MEMBERS** $ 1,333 $ 1,188 $ 857$1,188$1,333Past dividends or distributions are not a guarantee or promise of future dividends or distributions.* Members of the association with more than 40 years of membership may be eligible for the Senior Bonus,which is an additional distribution from the member’s Subscriber’s Account.$795$910$857**Includes amounts returned to members, associates and other customers.20062007200820092010CONSOLIDATED BALANCE SHEETSThriving through it allUSAA saw assets grow by 18 percent to $94 billion, which was largely fueled bystrong product volumes. Also contributing to this growth were previously securitizedbank loans, which came back onto the balance sheet in 2010 in accordance with newaccounting standards.As each business segment of USAA continues to grow, we will remain focused on beinghighly competitive and an industry leader in financial strength and member service.ASSETS (in billions)Years Ended December 31 (Dollars in millions) 2010 2009 2008ASSETSCash and cash equivalents $ 8,786 $ 7,435 $ 6,277Investments 35,033 31,633 23,634Real estate investments, net 1,956 1,587 1,284Bank loans, net*** 37,548 28,739 26,532Premiums due from policyholders 2,124 1,977 1,812Property and equipment, net 1,343 1,380 1,469Securities lending collateral 473 459 754Other assets 6,999 6,695 6,534TOTAL ASSETS $ 94,262 $ 79,905 $ 68,296$60.32006$67.22007$68.32008$79.92009$94.32010LIABILITIESInsurance reserves $14,062 $13,061 $12,158Life insurance — funds on deposit 13,626 11,544 8,423Bank deposits 39,775 33,467 28,954Borrowings*** 3,441 534 610Securities lending payable 477 478 754Other liabilities 4,170 3,804 2,817TOTAL LIABILITIES $ 75,551 $ 62,888 $ 53,716NET WORTHTotal net worth 18,711 17,017 14,580TOTAL LIABILITIES AND NET WORTH $ 94,262 $ 79,905 $ 68,296*** In accordance with new accounting standards, certain off balance sheet securitized bank loans and relatedborrowings are now included in our 2010 results.RATINGS OF FINANCIAL STRENGTHFulfilling our commitmentContributing to our position as an industry leader, USAA Property and CasualtyInsurance Group was the only property and casualty insurer to maintain the highestpossible financial strength ratings from A.M. Best, Moody’s and Standard & Poor’srating agencies. These independent assessments of USAA’s financial strengthacknowledge our ability to fulfill our commitment to members.USAA PROPERTY & CASUALTY INSURANCE GROUPA++(Superior, highestof 16 possible ratings)A.M. Best CompanyAaa(Exceptional, highestof 21 possible ratings)Moody’s InvestorsServiceAAA(Extremely Strong, highestof 21 possible ratings)Standard & Poor’sUSAA FEDERAL SAVINGS BANKTOP 15%OF PEER GROUPHighline Banking Data ServicesSUPERIORIDC Financial Publishing Inc.USAA LIFE INSURANCE COMPANIESA++(Superior, highestof 16 possible ratings)A.M. Best CompanyAa1(Excellent, second highestof 21 possible ratings)Moody’s InvestorsServiceAAA(Extremely Strong, highestof 21 possible ratings)Standard & Poor’sSee legal information on Page 21. USAA 2010 REPORT TO MEMBERS 15
Page 1: USAA 2010 REPORT TO MEMBERSSERVING
Page 4 and 5: Pat & Manuel EscobarUSAA MEMBERS SI
Page 6 and 7: USAA IS MYTerm Life InsuranceHome a
Page 8 and 9: John D. Monahan, USA (Ret.)USAA MEM
Page 10 and 11: USAA’S MISSIONThe mission of the
Page 12 and 13: HOW WE SERVE YOUServing our members
Page 14 and 15: USAA IS OURImparting the Core Value
Page 18 and 19: CONSOLIDATED STATEMENTS OF INCOMECo
Page 20 and 21: OUR 2010 BOARD OF DIRECTORSSixteen
Page 22 and 23: OUR 2010 EXECUTIVE COUNCILThe day-t
Page 24: THANK YOU and loyalty in 2010.for y

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