Talk:USAA/Archive 2

Because of their length, the previous discussions on this page have been archived. If further archiving is needed, see How to archive a talk page.

Previous discussions:


 * Archive 1 (8 Dec 2005 to 31 Dec 2005):
 * Archive 2 (1 Jan 2006 to 18 Jan 2006):

Litigation
POV? == No other insurance company article that I can see has sections regarding past litigation so it seems to me that this is simply POV. Especially considering only selections where there has been adverse findings for USAA are presented in this article. User:24.160.136.10 (Jan 1,2006)
 * I believe the past litigation section, if it is going to be included (which for the moment I believe it should not.) should contain at least one favorable judgement on the part of USAA. Perhaps one of the judgements against Mr. Koenig? If he were so certain USAA is using a corrupt judiciary as a personal attack dog like he has claimed in the past then wouldn't be it obvious to third party observers? 24.160.136.10 08:58, 4 January 2006 (UTC)

Compensation of Robert G. Davis and the Board of Directors

 * The 2004 Report on Compensation at USAA can be found here: Compensation

Capital Structure
''Argument for successful submission of this sub-article on USAA is as follows. The Capitalization and Net Worth of any commercial venture is its most important financial measure. An understanding of USAA's net worth is impossible without a comprehensive portrayal of its capital structure. In the case of this URIE - Unincorporated Reciprocal Inter-insurance Exchange, establishing the true net worth becomes even more tortuous as USAA submits widely divergant sets of financial to four different audiences: one glossy annual report made to the "member/owners", or the "subscribers", who get the most rudimentary and insufficient data (without auditors notes);  audited GAAP financials which are purportedly prepared for the URIE's Board of Directors;  Statutory Financials prepared for Quasi-autonomous non-governmental organisation (QUANGO) National Association of Insurance Commissioners, and lastly the amplified actuary report and financials prepared for the Texas Department of Insurance [TDI]. Only the clear light of day with complete disclosure of the facts married to cogent civilized discussion can fairly represent USAA's true financial condition.''

USAA is completely different from every other Fortune 500 Company in that it has no subscribed capital stock: that is to say that USAA has never raised any capital through conventional means. Yet, USAA purports to be "owned by its members".

See SEC on Affinity Fraud

All capital at USAA, about $10 billion, is supplied by the "members" on a "current basis": about half, or $5 billion, purports to meet the test of IRS regulations as to "cooperatives, and is held in accounts identified with each individual current subscriber.  These are called the SSA's.  The other $5 billion is held in an "unassigned surplus" account, and is claimed "loosely" to be the property of the "current members".  There is no provision to allocate "unassigned surplus" to the departing "members" who have apparently left their money on the table.  Their is at least one class action law suit dealing with this matter:  True v. USAA.

Another feature of USAA's capital structure is that according to the by-laws, subscribers are subject to assessments equal to the amount of insurance premiums paid during the previous year. As USAA now apparently issues non-assessable policies, it is unclear whether the assessement provisions of the by-laws over-ride non-assessable policies, or visa versa.

It is inherently unsettling that the essential nature of this Unincorporated Reciprocal Inter-insurance Exchange is that each subscriber is personally and individually liable for all the insurance claims against or by the other 2.2 million subscribers.

The mechanism by which the Directors and AIF re-identify funds once owned by the "individual subscriber" as funds now owned by "all the subscribers" as "unassigned surplus" is unclear.

Zorro redux 22:10, 2 January 2006 (UTC)

Essential Organizational Structure of USAA
Is USAA a corporation or an unincorporated entity?

Two documents conclusively define and describe USAA's essential organizational structure.

The first sentence of "Note # 1" to the auditor's statement defines any company's essential nature. KPMG's notes to the 2003 audited statements state that USAA is a "reciprocal inter-insurance exchange". KPMG, after 40 years of service, has resigned from the USAA account under circunstances which remain unexplained. It is believed that USAA's new auditors, Ernst & Young, make the same statement in Note # 1. As USAA does not make its full financials freely available, E&Y's statement can not be cited with full certainty.

The other document confirming USAA's organizational structure is its statement to the Texas Insurance Department, which begins with the company actuary's description of the enterprise. USAA's actuary in her 2004 statement to the TDI begins by saying that USAA is a "reciprocal inter-insurance exchange".

A third source of information about USAA's essential organizational structure comes from the "description of the party" section of lawsuits to which USAA is a party. Again and again, USAA refers to itself in its own briefs as an "unincorporated" "reciprocal inter-insurance exchange".

Reciprocal inter-insurance exchanges are unincorporated, by definition: thus the term URIE, or Unincorporated Reciprocal Inter-insurance Exchange.

In essence, USAA is a "partnership" of 2.2 million individuals who have each personally entered into an agreement to personally indemnify each of the other 2.2 million subscribers. That liability is limited by Chapter 942 of the Texas Insurance Code in a manner which gives some of the limited liability benefits of a corporation. Subscribers to any URIE might wish to check with their own lawyer about the suitability of such a contract wherein 2.2 million other persons are being personally indemnified by each individual subscriber. Some subscribers and their attorneys might find that global personal liability unsettling.

Capital Structure
USAA is completely different from every other Fortune 500 Company in that it has no subscribed capital stock: that is to say that USAA has never raised any capital through conventional means.

All capital at USAA, about $10 billion, is supplied by the "members":  about half, or $5 billion, meets the test of IRS regulations as to "cooperatives, and is held in accounts identified with each individual current subscriber.  These are called the SSA's.  The other $5 billion is held in an "unassigned surplus" account, and is claimed "loosely" to be the property of the "current members"

The mechanism by which the Directors and AIF re-identify funds once owned by the "individual subscriber" to funds owned by "all the subscribers" is unclear.

Taxation
USAA is taxed as a corporation; except that a substantial portion of USAA's income is qualified for tax-advantaged treatment as a "cooperative". It is not known which IRS form USAA uses to file taxes.

As USAA evidently feels that it qualifies for tax treatment as a cooperative, it is unclear why USAA has paid over $1 billion in taxes over the course of its existence. Had USAA placed its "profits" in the Subscriber Savings Accounts which are identified with individual subscribers, then taxes might not have been due. The choice to pay taxes seems curious.

By-Laws as the source of Governance
The relationship between each subscriber (partner) to the unincorporated reciprocal inter-insurance exchange and the other 2.2 million subscribers is governed by the current subscriber agreement and the by-laws. These two documents are core to the purpose of the exchange, which is that each subscriber personally indemnifies all the other 2.2 million subscribers. Neither the current subscriber agreement nor the by-laws are readily available to the members on the USAA web site. It is unclear when the current by-laws were last mailed to the "members": slipping the by-laws into one of the many mailings USAA sends out doesn't seem like an insurmountable challenge. It is also unclear when and how the most recent subscriber agreement is attached to the policies.

This author is now advised that a subscriber, after logging on with his/her user name and password, may have a copy of the subscribers agreement at this address.

by-laws

The by-laws, however, are apparently not available on the USAA website.
 * Are not the bylaws and any changes included in the annual report to members? Of which you may view portions of on USAA.com or order an additional copy for free to be sent to your mailing address? User:24.160.136.10 (Jan 2,2006)

This author submits that reading, over the phone, a complex agreement entailing personal liability for assessments of thousands of dollars is a curious way of doing business. As the USAA subscriber agreement is beyond the comprehension of sophisticated attorneys, without extensive study, one has to ask how the average subscriber is going to grasp the import of this complex document without having a copy to study.
 * You need not write in the third person on the talk page, it just sounds disingenious. However, the subscribers agreement is not in fact difficult to understand. I do not have it memorized obviously but the text is less than this preceeding paragraph of you complaining about it. User:24.160.136.10 (Jan 2,2006)

And finally, why doesn't USAA just make the document available on its website, in the clear. I don't know, but it makes you think.


 * The subscribers agreement/LPOA is available on usaa.com by going to https://www.usaa.com/inet/gas_pc/StaticPages?PAGEID=pc_poa after you have logged in. You may also opt to have the SA mailed to you to sign and return or alternatively use the automated telephone voice response system to have the subscribers agreement read to you and you may sign it electronically over the phone. - User:24.160.136.10 (Jan 1,2006)

Compensation of Directors and Senior Employees of the unincorporated entity
USAA believes that its directors and senior employees are entitled to privacy as to their compensation. Compensation information is filed with the Texas Department of Insurance: but the TDI has agreed to not release the compensation information.

The source(s) of funds for the "unassigned surplus"
Where does the USAA $5 billion unassigned surplus come from? A material portion may be derived from close-out of the insurance reserves; the settlement of USAA's litigation portfolio. The litigation portfolio is shown on USAA financial documents as a line item in "current liabilities" called "losses".

USAA forestalls payment of $2 billion in claims by litigation. That $2 billion litigation portfolio becomes USAA's largest source of working capital: it is "borrowing" $2 billion from the counter-parties to litigation by setting aside a reserve. As the litigation reserves are likely over-stated, when the claims are eventually settled, there is a profit. In a shareholder-owned insurance company, the profit (or loss) on the close-out of litigation is returned to the shareholders. At USAA, those funds should pehaps and more appropriately be returned to the subscribers and credited to their SSA accounts.

The USAA "members" own the litigation portfolio at all times: and curiously this is true even when USAA is litigating against and denying the claims of its own members.

Does USAA return the surplus from successful litigation to its "members": this is a very knotty question.

Instead, it appears that the profit/loss on close out of litigation at USAA is declared as "corporate income" and as that income is not credited to the subscriber SSA accounts, USAA then pays unnecessary taxes on that income. Since USAA's inception in 1922, it has paid about $1 billion of largely unnecessary Federal taxes: $1,124,279,252 as of December 31, 2004, to be exact.

As USAA is a mutual - and taxed as a cooperative - there should be no income taxes. (That of course is not always true as the IRS has its own views and does assess taxes on cooperatives but sometimes permits recapture of those taxes and payback to subscribers when the money is actually returned to the subscribers.)

The after-tax income is then put into "unasigned surplus". In True v USAA, USAA has argued that the "unassigned surplus" does not truly belong to the members. Well - I'm inclined to agree with that. But, that conclusion also begs the question: to whom does the $5 billion belong?  And that question should be answered below by somebody else - a person on Robert G. Davis' staff. Who does the extra $5 billion belong to? Should Robert J. Koenig go to jail again for simply asking that question?

In that fashion, USAA's litigation department becomes the URIE's 2nd largest source of operating capital - right after the Federal Savings Bank's deposits. The problem with this sort of working capital is that if you're going to grow, you need an ever expanding base of litigation to provide the requisite working capital. And that may evidently be a motivation/explanation for why USAA litigates against so many of its members.

Who owns the unassigned surplus? That is what is being decided in True v USAA, a class action law suit against USAA in St. Clare County, IL.

A Workable Solution

Why doesn't Robert G. Davis simply capitalize a new "corporate attorney in fact" and make a registered stock offering. The $5 billion in unassigned surplus could be returned to its rightful owners, and each past and current subscriber could be given the option of applying his/her refund to USAA's new capital stock issue.

That affirmative course of action would leave USAA as a truly world-class and legitimately capitalized financial services holding company: and would obviate the need for Robert G. Davis (and Robert F. McDermott and Robert T. Herres before him) to tip-toe around the margins of the issue (not to mention putting the occasional critic in jail).

Hey, it kept you from editing this page for a few days. Could not have been all that bad. Hope you did not drop that 1/2 bar of soap that they gave you.--Looper5920 16:42, 31 December 2005 (UTC)

Putting New York residents in jail with orders from Texas judges hardly sounds like a long-term solution to the intrinsically problematic capital structure at USAA. Wisdom received is that Robert J. Koenig is prepared to spend whatever time it takes in maximum security lock-up to get this issue resolved.

POV Edits
Attention User:Zorro redux, User:Robertjkoenig, and associated sockpuppets. When making edits to this and any other Wikipedia article, please refrain from placing blatently POV statements within them. Please refer to the following helpful resources:
 * 1) The Five Pillars of Wikipedia
 * 2) How to write a great article
 * 3) Naming conventions
 * 4) Manual of Style
 * 5) What Wikipedia is not
 * 6) Neutral point of view

Also please refrai from copy and pasting large chunks of information from the archived talk page to the current talk page. If it is relevant you can refer to it or summarize it. Pasting it here defeats the purpose of archiving.

Please take this advice to heart, if information regarding your arrest is posted to another Wikipedia page I will proceed to the next step in the dispute resolution process. I will be monitoring this page and it's associated pages. Your contributions are welocome so long as they adhere to established policies. Thank you and happy new year. Movementarian 08:15, 3 January 2006 (UTC)

Request for Comment (RfC)
I have intitiated a Request for Comment regarding Robertjkoenig, his IPs, and suspected sockpuppet Zorro redux. Interested parties should proceed to Requests for comment/Robertjkoenig in order to be heard. Movementarian 19:46, 3 January 2006 (UTC)

Capital Structure
''Argument for successful submission of this sub-article on USAA is as follows. The Capitalization and Net Worth of any commercial venture is its most important financial measure. An understanding of USAA's net worth is impossible without a comprehensive portrayal of its capital structure. In the case of this URIE - Unincorporated Reciprocal Inter-insurance Exchange, establishing the true net worth becomes even more tortuous as USAA submits widely divergant sets of financial to four different audiences: one glossy annual report made to the "member/owners", or the "subscribers", who get the most rudimentary and insufficient data (without auditors notes);  audited GAAP financials which are purportedly prepared for the URIE's Board of Directors;  Statutory Financials prepared for Quasi-autonomous non-governmental organisation (QUANGO) National Association of Insurance Commissioners, and lastly the amplified actuary report and financials prepared for the Texas Department of Insurance [TDI]. Only the clear light of day with complete disclosure of the facts married to cogent civilized discussion can fairly represent USAA's true financial condition.''

USAA is completely different from every other Fortune 500 Company in that it has no subscribed capital stock: that is to say that USAA has never raised any capital through conventional means. Yet, USAA purports to be "owned by its members".

See SEC on Affinity Fraud

All capital at USAA, about $10 billion, is supplied by the "members" on a "current basis": about half, or $5 billion, purports to meet the test of IRS regulations as to "cooperatives, and is held in accounts identified with each individual current subscriber.  These are called the SSA's.  The other $5 billion is held in an "unassigned surplus" account, and is claimed "loosely" to be the property of the "current members".  There is no provision to allocate "unassigned surplus" to the departing "members" who have apparently left their money on the table.  Their is at least one class action law suit dealing with this matter:  True v. USAA.

Another feature of USAA's capital structure is that according to the by-laws, subscribers are subject to assessments equal to the amount of insurance premiums paid during the previous year. As USAA now apparently issues non-assessable policies, it is unclear whether the assessement provisions of the by-laws over-ride non-assessable policies, or visa versa.

It is inherently unsettling that the essential nature of this Unincorporated Reciprocal Inter-insurance Exchange is that each subscriber is personally and individually liable for all the insurance claims against or by the other 2.2 million subscribers.

The mechanism by which the Directors and AIF re-identify funds once owned by the "individual subscriber" as funds now owned by "all the subscribers" as "unassigned surplus" is unclear.

Zorro redux 22:10, 2 January 2006 (UTC)

Three revert rule
Mr. Koenig, or Zorro Redux, we are both bound by the Three revert rule. However, I will follow the rule even if you don't.

To anyone else reading this: Please don't forget to visit Requests_for_comment/Robertjkoenig.

--Allen 07:00, 4 January 2006 (UTC)
 * I reverted essentially everything that was inserted since yesterday. While some of the organizational and capital structure information may be notable, the current article is extremely ugly. There are portions where it seems Mr. Koenig is using the article as a talk page, not to mention blatant POV and style issues: for example, Wikipedia's articles do not reference 'the author'. 24.160.136.10 08:50, 4 January 2006 (UTC)