This story has been updated.

USAA this week posted its first annual loss since 1923, blaming a challenging economic environment, including inflation, continued supply chain woes, labor disruptions and rising interest rates.

The insurance and financial services giant reported a $1.3 billion net loss for 2022, according to its annual report, down from a $3.3 billion profit in 2021, and just over $36 billion in revenue in 2022, a 3% decline from last year.

Insurance payouts from weather-related catastrophes stressed company finances. USAA reported paying out nearly $2.5 billion in claims last year, including for Hurricane Ian, one of the biggest weather events of 2022, and one of USAA’s costliest catastrophes.

Investment returns declined by 44%, “driven by the absence of large prior-year investment gains and weak equity market performance,” stated the report.

Despite the challenging environment, the company retained a “strong net worth” of $27.4 billion, stated President and CEO Wayne Peacock in the report, released Tuesday. That’s down from $40 billion in 2021.

Insurance customers felt the pinch with higher premiums, Peacock acknowledged.

“We recognize the stress on family budgets, and we don’t take lightly the decision to raise rates,” he wrote.

Peacock received $4.8 million in total compensation from five USAA insurance companies last year, up 157 percent from $1.9 million in 2021, according to reporting by the San Antonio Express News.

It was a tough year for USAA to celebrate its centennial; the company formed in 1922 when a group of Army officers joined together to insure each others’ vehicles “when no other company would,” according to the report. Today USAA serves more than 13 million members from the entire military community, including spouses and children.

It paid out nearly $2 billion to members through distributions, dividends and bank rebates.

Employees also were affected by the difficult financial year. USAA laid off 1% of its workforce in early April, citing a “challenging economy,” after trimming its real estate lending staff earlier in the year.

In recent years, USAA’s bank has been hit with millions of dollars in fines and penalties in the wake of regulatory compliance issues. Last year the U.S. Treasury’s Financial Crimes Enforcement Network imposed a $140 million civil penalty for what it called “willful violations” of the Bank Secrecy Act. 

Prior to that, the Office of the Comptroller of the Currency fined USAA $85 million in 2020 for what it deemed unsound banking practices that did not adequately protect customers from risk.

And in 2019, the Consumer Financial Protection Bureau ordered the bank to pay $3.5 million in penalties and $12 million in restitution to settle claims that it neglected stop-payment requests and reopened accounts without customers’ consent, among other claims.

USAA is a financial supporter of the San Antonio Report. For a full list of business members, click here.

Tracy Idell Hamilton covers business, labor and the economy for the San Antonio Report.