Fitch Ratings Affirms USAA Ratings.Business Editors CHICAGO--(BUSINESS WIRE)--Dec. 19, 2002 Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. today affirmed the 'AAA' insurer financial strength rating of the United Services Automobile Association Automobile Association may refer to:
USAA Urban Superintendents Association of America USAA United States Achievement Academy USAA United States Arbitration Act of 1925 USAA United States Axemen's Association USAA United States Air-Table-Hockey Association ). Fitch also affirmed the 'AA+' long-term issuer rating, the 'AA+' medium-term note Medium-term note (MTN) A corporate debt instrument that is continuously offered to investors over a period of time by an agent of the issuer. Investors can select from maturity bands of: 9 months to 1 year, more than 1 year to 18 months, more than 18 months to 2 years, etc. rating, the 'F1+' short-term issuer rating and the 'F1+' commercial paper ratings of USAA Capital Corporation, a downstream holding company for USAA's non-insurance operations. The Rating Outlook for all ratings is Stable. The rating actions reflect USAA's excellent capitalization, low operating leverage Operating Leverage A measurement of the degree to which a firm or project relies on fixed rather than variable costs. Notes: The higher the degree of operating leverage, the greater the potential danger from forecasting risk. and low cost structure. The rating actions also consider the significant improvements made in underwriting results in 2001 and 2002, offset by realized investment losses that resulted from USAA's realignment re·a·lign tr.v. re·a·ligned, re·a·lign·ing, re·a·ligns 1. To put back into proper order or alignment. 2. To make new groupings of or working arrangements between. of its equity portfolio. Fitch also believes USAA possesses a competitive advantage because of its low cost structure and affinity with its membership, many of whom are active-duty U.S. or retired military personnel. At the same time, the ratings consider the negative effect of prior price inadequacies that resulted from intense price competition in personal insurance over the past several years. Additionally, USAA's operations have resulted in a concentration of homeowners' policies in states that expose it to greater risk of catastrophe. However, USAA monitors this risk closely and mitigates it with a sophisticated catastrophe management and reinsurance The contract made between an insurance company and a third party to protect the insurance company from losses. The contract provides for the third party to pay for the loss sustained by the insurance company when the company makes a payment on the original contract. strategy. USAA's results are also affected by policyholder dividends that are higher than the industry average. USAA is organized as a reciprocal insurance exchange. As such, it has members, not shareholders. Fitch believes USAA will continue to return premiums to members in the form of policyholder dividends when such action does not conflict with the maintenance of its high capital strength levels. USAA offers its customers a full line of financial services The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. through various subsidiaries. The subsidiaries include a life insurance company that sells annuities, life insurance and health insurance; a federal savings bank Noun 1. federal savings bank - a federally chartered savings bank FSB savings bank - a thrift institution in the northeastern United States; since deregulation in the 1980s they offer services competitive with many commercial banks that offers checking and savings accounts, loans, certificates of deposit, individual retirement accounts and credit cards; an investment company that offers mutual funds, and owns a registered broker-dealer and a mutual fund transfer agent; and a real estate company. USAA reported statutory assets for its combined property/casualty insurance operations of $13.5 billion and surplus of $6.6 billion as of December 31, 2001.
Entity/Issue/Type Action Rating/Outlook
United Services Automobile Association
--Insurer financial strength Affirmed 'AAA'/Stable.
USAA Capital Corporation
--Long-term issuer rating Affirmed 'AA+'/Stable;
--Medium-term note program rating Affirmed 'AA+'/Stable;
--Short-term issuer rating Affirmed 'F1+';
--Commercial paper rating Affirmed 'F1+'.
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