For almost my entire military career and beyond, USAA, the San Antonio-based insurance and financial services giant that built its reputation serving military members and their families, provided my family with auto and home insurance, and even a credit card.
But as I wrote last year, I left USAA after a long slide in customer service crystalized when I heard of USAA’s debanking of conservative lawyer John Eastman. And the hard lessons for USAA continue.
USAA’s troubles hit a new low when S&P Global Ratings downgraded its financial strength rating from AA+ to AA, following Moody’s decision to drop USAA’s rating from Aaa to Aa1 on May 19. The culprit? Persistent issues with USAA Federal Savings Bank, which has attracted regulatory scrutiny and suffered financial losses.
S&P pointed to “new or continuing violations of law, rule, or regulation” flagged by the Office of the Comptroller of the Currency (OCC) in December 2024, noting that the bank’s compliance failures have eroded USAA’s overall earnings diversity. Up until 2020, the bank contributed roughly $1 billion annually to USAA’s pretax income, but since then it has posted average annual losses of $236 million. These financial stumbles, combined with a weakened resilience compared to peers, led to the downgrade.
