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USAA CEO on the company's response to the coronavirus

Wayne Peacock, CEO of USAA, joined Yahoo Finance, to discuss the company's response to coronavirus.

Video Transcript

ADAM SHAPIRO: We're going to stay in Texas. Because we're going to talk about the insurance industry and, in particular, one company which does a very good job of helping the women and men who've served in the armed forces not only obtain insurance but also plot out their financial futures with financial services. Wayne Peacock is the CEO of USAA. We see these ads all the time. Lots of people know USAA. It's good to have you here, sir.

And just very simply, how would you describe what it's been like to be a CEO of a financial services company, an insurance company in the age of COVID?

WAYNE PEACOCK: Well, timing's everything, Adam. I became the CEO on February the 1st of last year. So I kind of like to joke, I think I had 19 days of grace before the world began to unwind. And you know, here we are a year later. It feels like the days were really long and the weeks short. And amazing what has gone on in this period of years.

But I will tell you that, as we look back on this, real clear about our mission to serve military families, staying focused on that every day, taking care of our employees every day, and asking them to serve that mission really, really well. And then in the financial services industry, managing the balance sheet and ensuring that that strong financial strength is there to serve us in these challenging times and every day is an adventure. I guess that's how I'd sum it up.

SEANA SMITH: Well, Wayne, it certainly is a interesting time, a difficult time to become CEO of a company here. When you look at the pandemic, its impact that it had on your auto insurance business, property and casualty insurance, I know you returned some money in the past year when it comes to the auto insurance policyholders. But when you take a look at how you've mitigated and how you've managed some of the risk of the past year, how is that translated just into your strategy then going forward?

WAYNE PEACOCK: Well, thankfully, our strategy has been to serve directly, to do that with great service, but to really augment it with digital and self-service. And we've been on that journey for over 10 years now. So I would tell you that what we've experienced in the pandemic with everyone at home is the need for great digital capabilities. We were already on that track. It's just really helped us advance our journey there to be able to serve more directly.

So that's been one of, I think, the big challenges is getting the employees home and being able to adapt from working at home and then really advancing our digital capabilities to be able to serve our members. Not only did we have COVID, but we had Snow-vid here in Texas as well a week or so ago. Last year was a historic catastrophe year more broadly. And our ability to both take that first notice of loss in the insurance space and then be able to manage claims virtually was a huge, huge benefit as we protected our employees and our member's health but still got that great USAA service out to each of them.

ADAM SHAPIRO: How do you see the future for insurance companies like USAA and even some of the, I mean, some of the larger mutual insurance companies, they're not publicly traded, but as we go forward, because we're in a low interest rate environment, and those interest rates still play a factor in how you manage a company like yours?

WAYNE PEACOCK: Yeah, interest rates are putting a lot of pressure on our investment portfolios which support operations. I think that brings you back to managing your operations extremely well, so that you're not quite as dependent on the investment portfolio to deliver the yield to you and really something we've been working on for, again, years at USAA. The better we run our operations, the better the service to our members.

The better we run our operations, obviously, a great way for us to keep prices down. And I think those are going to be really important trends as we play forward. Clearly, the public is not driving as much yet. And that's true for USAA's members as well. So that puts pressure on the top line in the auto insurance space. Now conversely, with more and more severe weather events, our homeowner's business feels those catastrophes and just the kind of regular storms that come along much more so as well.

And all of that says, you know, run your operation really, really well, so that you give great service and keep those prices low.

SEANA SMITH: Wayne, going back to what you just said about the number of drivers. Still a lot of your members are not driving typically as much as they did before the pandemic. When you look at some of your projections, I guess, when are you expecting us to reach that level that we saw just over a year ago?

WAYNE PEACOCK: Well, I'll tell you Seana, our crystal ball is broken. We continue to adjust our forecast. We saw really some bit of recovery last fall. And then as we got into the winter time and we had spikes in the pandemic outbreak again, those driving patterns kind of returned back a little bit closer to where they were in the spring and the summer. And then we've seen, really throughout this first part of 2021, folks getting back out on the road and driving.

What we're experiencing right now with the vaccine coming out and with many states reopening and the outbreak coming down, we're starting to see those miles driven come up week by week. And unfortunately, the accidents follow behind that. So we're moving back towards a more normalized environment. But my sense is, until people get back to work and are driving to the office every day, we still won't get back to that same level we were-- we were pre-pandemic.

ADAM SHAPIRO: So there are some C-suite folk who watch us on a regular basis. This question is for them. You talk about taking inspiration from the Marine Corps, the 70% solution. When you don't have all the facts needed to make a decision, trust your gut if you've got, what, 70% of the facts. How does that work in your seat?

WAYNE PEACOCK: Well, I'll tell you what we learned early on is you have to make decisions. You couldn't sit back and not make them. I'll give you a really quick example. When the pandemic was first breaking out, we started talking about whether we should or should not send people home, how many we should send home. And I asked the team to come back with a proposal to get 10,000 people home.

They came back and said, why don't you do that in about three weeks? I'm like, how about Monday? We did that on Monday. And on Thursday, we decided to send 35,000 people home. I mean, looking back on it, we didn't really know exactly what was going to happen. But we knew we had to move. And I think that early spur has been a great lesson for us in business. That you can make decisions with less information, and you can adapt and change.

So not everything we make is life and death. So make the decision today and move and then adapt tomorrow as necessary. And we followed that same pattern since March of last year.

SEANA SMITH: Wayne, what are you hearing from your employees, I mean, just in terms of how they're faring working from home, what your plans are then going forward when you take a look at that? I mean, is that something that you've been able to get feedback on and you're considering here when you figure out your future plans?

WAYNE PEACOCK: Yeah, interesting that you would ask, because today we actually announced our plans for returning back to the office. And our plans were really reimagining how we will work going forward. So we have surveyed regularly in a formal way. We take input really anecdotally almost every day. And I would say that the stories cut in a few camps.

We've got a group of employees who never ever want to come back to the office. We've got a group of employees who can't wait to get back. And then the majority of folks really would like some type of a hybrid solution where they can be in the office some days and be remote on other days. And a lot of that I think is dependent upon where you are in your career and then what's happening at home in terms of having to take care of school-aged kids and other challenges you may be facing on the home side.

So what we announced today is, over the next 60 days, we'll start to phase in a return back to our offices. But we'll provide a significantly greater amount of flexibility for some of our employees to work remotely 100% and others to adopt some form of a hybrid schedule where they're in the office part-time and remote others. And I'm hopeful that by July we'll be into our new equilibrium. And then we'll just continue to adapt from there.

ADAM SHAPIRO: We should point out, Wayne, because we haven't had time to do this, that USAA continually ranks number one, number two in different surveys of customer service. So let's just get that in there as we wrap up and say thank you to Wayne Peacock, CEO of USAA. We wish everybody, your team, everybody in San Antonio the best.