A Pentagon-like insurance HQ that serves the military

At first, the headquarters of one of America's largest insurance companies does not seem very impressive. Unlike the skyscrapers that reach above cities like Boston, New York, and Chicago, the home of the United Services Automobile Association (USAA) is only six stories high, and three of those are belowground, unseen.

But its precast, artistically chipped concrete walls give it a feeling of mass and power. This and its length -- more than a third of a mile reaching into the woods -- reminds a visitor of the Pentagon, headquarters of the US military establishment.

The comparison is valid. The organization that calls this structure home is a mutual insurance company whose present head is sixth in a line of generals or colonels who have served as president. And it requires prospective policyholders to be officers in the US military while on active duty, or while members of the Reserve or National Guard. Retired officers may also apply.

The military requirement means football fans will not see TV ads for United Services Automobile Association during the Sunday afternoon game; they aren't needed. USAA uses no agents to sell its insurance. Instead, it relies on word of mouth among the officers, mail-in requests for information or coverage, and a toll-free telephone line.

It prefers to call its policyholders "members," because like any mutual insurance company, the surplus from its premiums and income on investments goes back to the members as dividends.

The company counts more than a million such members, says senior vice-president William McCrae. Handling the paper work for this many people makes USAA San Antonio's largest employer work 10 hours a day, four days a week and include clerks, security guards, messengers, cafeteria workers, computer system managers, executives, and people to run the "physical-fitness center."

The building these employees moved into -- in stages -- in 1975 and 1976 is essentially the idea of company president Robert F. McDermott, a retired Air Force brigadier general. In drawing up the specifications for it, the man who is often referred to as "General McDermott," or simply "McD.," tried to include almost everything he could think of in the building.

Thus, in addition to the physical-fitness center, it contains a post office, travel agency, two cafeterias, and a library. There are also four large indoor courtyards, one of which contains a store with books, stationery, clothes, and toys. The 286-acre site also contains Mr. McDermott's private residence.

The new building, Mr. McCrae says, is designed to help employees fulfill the company's goal of providing the most efficient service possible to its customers. And, according to a recent survey by Consumers Union, they have succeeded. It found USAA tied with another mutual company, Amica, for the highest percentage of customer satisfaction in handling and settlement of homeowners' claims. Both companies received a 97 percent favorable rating.

As its full name implies, United Services Automobile Association did not start out by handling homeowners insurance. It began in 1922, Mr. McCrae related, when a group of about 20 military officers in San Antonio were having trouble obtaining auto insurance. They decided to form an insurance cooperative to serve the needs of career officers. "And the company grew on that basis," he said. "Today we provide auto insurance for about 90 percent of all active-duty officers."

Later, the company changed its rules so people who left the military could keep their insurance. It also expanded its casualty coverage to include homeowners and property damage.

USAA also started a life insurance company that has proved rather successful: In 1969 it had $250 million worth of insurance in force; today it has over $5 billion, according to Col. John F. Daye, executive vice-president of the USAA Life Insurance Company.

Overall, USAA has over $1.55 billion in total assets, says George Ensly, executive vice-president and treasurer. About $1.25 billion of that is used for investing. Approximately 75 percent of this is in short-term bonds and 25 percent is in stocks. This is up from 20 percent a few months ago, Mr. Ensly says, reflecting a trend among institutions to increased stock holdings. Much of the stock portfolio, he added, is in high-technology and energy-related companies two industries well represented in Texas.

The company also has two mutual funds and is "actively investigating" opening a money-market fund for its members, Mr. McCrae says.

With its large military establishment, San Antonio remains the logical location for the headquarters of USAA, he adds. For the same reason, its largest overseas office is in Frankfurt, West Germany, near several US military installations, and where there are some 40,000 USAA members.

But Mr. McCrae feels the company would stay here anyway. "San Antonio has about all the advantages of any major city," including the more traditional insurance-headquarters cities, he says. One of the advantages is the city's symphony orchestra. Having recently completed a stint as head of the board of the San Antonio Symphony, he is admittedly partial to that organization. But it also plays a role in USAA's growth, he believes. "Having a symphony is an important part of attracting the kind of people we need."