[p2p-research] The Non-Corporate Fortune 500

J. Andrew Rogers reality.miner at gmail.com
Sat Nov 28 04:41:00 CET 2009

Most people are not aware that one of the largest US companies is
uniquely, literally, and legally P2P due to some quirks of its
history.  It may be one of the best examples of a high-functioning
massive-scale P2P quasi-commercial enterprise.  I was reminded of this
today and thought I would offer it up as an interesting real-world
example of how this can work at scale.

One of the largest and most successful financial services and banking
firms in the US is basically a true P2P organization.  It is neither a
corporation nor a non-profit, and it has no shareholders, the
top-level structure being a type of obscure P2P organization allowed
under an old Texas law. It is consistently rated as one of the
best-run financial services firms in the US. The very significant
diversified assets of the company are entirely owned by its customers.
A weird legal consequence of this is that the company's *customers*
had unlimited liability for most of its history, though a special
change to the law was created not that many years ago specifically to
limit their customer's liability.

The company?  USAA. It started out as a simple P2P auto insurance
organization in the 1920s when the existing insurance companies
refused to insure some people deemed to be "too risky" and so they
decided to insure each other. Almost a century later, it is still
legally a P2P organization but also one of the largest and most
successful financial companies in the US. It has restrictive
membership requirements, but since membership can pass to descendants
very few current members could actually qualify on their own.
(Disclosure: I am not qualified by myself but I do have a hereditary
membership to USAA and use them for pretty much every financial aspect
of my life.)


"One of the characteristics that allows USAA to operate differently
than almost every other Fortune 500 company is that it is not a
corporation. The parent company, United Services Automobile
Association is an inter-insurance exchange, the establishment of which
is provided for under the Texas Insurance Code.[23] This insurance
exchange is made up of current and former military officers and NCOs
who have taken out P&C policies with USAA; thus they simultaneously
are insured by each other and, as a group, own USAA's assets.
Theoretically, this implies that each member could be held completely
responsible for all the losses of all the other members."

J. Andrew Rogers

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