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UNITED SERVICES AUTOMOBILE ASSOCIATION FINANCE AND AUDIT COMMITTEE OF THE BOARD OF DIRECTORS CHARTER

Last Updated: August 2024

I. SCOPE AND PURPOSE

The Finance and Audit Committee ("Committee") is established by the Board of Directors ("Board") of United Services Automobile Association ("USAA") to support USAA's mission, strategic plan, and long-term financial security.

With respect to USAA's Audit function, financial statements, and accounting and reporting processes, the Committee will maintain oversight of: (i) the quality and integrity of USAA's financial statements, and accounting and reporting processes; (ii) the independent external auditor's qualifications, independence, and performance; (iii) the Chief Audit Executive and Audit Services Department ("Audit Services"), including responsibilities, performance, independence, and stature; (iv) compliance with applicable legal and regulatory requirements, as appropriate; and (v) the adequacy and effectiveness of USAA's internal controls over financial reporting. Solely for purposes of the Audit Rule adopted by the Texas Department of Insurance, the Committee will also be deemed to be the Audit Committee for USAA's directly or indirectly owned affiliates that are insurers who do not have an independent board audit committee.

With respect to the financial performance and operations of USAA, the Committee will maintain oversight of USAA's: (i) capital adequacy and planning, (ii) enterprise investment portfolios, (iii) corporate financial performance, (iv) liquidity management, (v) the balance sheet, and (vi) potential strategic and other material transactions within limits that may be established by the Board from time to time ("Special Transactions"). For the avoidance of doubt, Special Transactions include acquisitions, mergers, dispositions, divestitures and similar corporate opportunities for USAA or its subsidiaries and affiliates (as such term is defined in the Special Transactions Policy). Nothing in this charter regarding Special Transactions shall modify any authority expressly reserved for the Board under USAA's Bylaws or under applicable law.

Notwithstanding anything otherwise contained in this Charter, responsibility for oversight of the enterprise risk management framework and any risk oversight matters inherent in capital, liquidity, investment performance or stress testing activities shall remain with the Risk and Compliance Committee of the Board. The Committee will discuss pertinent activities within its scope with the Risk and Compliance Committee, as appropriate, to facilitate the Committee's consideration of the impact these activities may have on USAA's Risk Management program.

II. RESPONSIBILITIES

The Committee shall have the following responsibilities:

  A. Financial Statements

  1. Review and discuss with management and the independent external auditor the annual audited consolidated financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles ("GAAP") and Statutory Accounting Principles and the independent external auditor's reports related to the financial statements.
  2. Review quarterly USAA Consolidated GAAP financial statements and analysis and quarterly Statutory analysis.
  3. Review and approve significant accounting policies and practices, and any changes thereto.
  4. Review significant issues as to the adequacy and effectiveness of internal controls over financial reporting and oversee any specific remedial actions adopted in light of significant deficiencies or material weaknesses.
  5. Review the asset/liability valuation methods used by management.
  6. Review USAA's tax status, including the status of tax reserves, uncertain tax positions and significant tax planning issues.
  7. Review legal and regulatory matters that may have a material impact on the financial statements.
  8. Review the Property & Casualty loss and Loss Adjustment Expense Reserves methodology and sufficiency.

  B. Independent External Auditors

  1. Review the audit scope and plan prepared by the independent external auditors to understand completeness, the effective use of audit resources, objectivity, and general audit approach.
  2. The Committee shall be directly responsible for the appointment, compensation, retention, and oversight of the work performed by the independent external auditor engaged by USAA to prepare or issue an audit report or perform other audit, review or attest services for USAA. The independent external auditor shall report directly to the Committee.

        (a) Review annually the qualifications, performance, and independence of the independent external auditor, including the review of the lead audit partner, taking into account the opinions of management and Audit Services.

        (b) At least annually, obtain and review a report by the independent external auditor describing, to the extent permitted under applicable auditing standards, (i) the independent external auditor's internal quality-control procedures, (ii) any material issues raised by the most recent quality-control review, or peer review, of the independent external auditor, or by any inquiry or investigation by governmental or professional authorities, including the Public Company Accounting Oversight Board, within the preceding five years, with respect to one or more audits carried out by the independent external auditor, and any steps taken to deal with any such issues, and (iii) all relationships between the independent external auditor and USAA to assess auditor independence and discuss with the independent external auditor the potential effects of any such relationships on independence.

        (c) Determine whether the independent external auditor has a process in place to address the rotation of the lead audit partner and other audit partners serving the account as required under applicable regulatory auditor independence rules.

  3. At least annually, review and pre-approve all proposed audit and permissible non-audit services (utilizing the bucket or category approach) to be provided by the independent external auditors, including the related fees, terms, and conditions. The Committee shall not engage the independent external auditor to perform non-audit services proscribed by applicable law or regulation. The Committee delegates to its Chair the authority to pre-approve audit or permissible non-audit services not originally pre-approved via the bucket or category approach that must be commenced before the next regularly scheduled Committee meeting and to inform the Committee thereof at the next scheduled meeting.
  4. Review and discuss with the independent external auditor matters related to the audit of USAA's financial statements which are to be communicated to the Committee under generally accepted auditing standards, including: the auditor's judgment about the quality of USAA's accounting principles as applied in its financial reporting, such as the clarity of USAA's financial disclosures and consistency of USAA's accounting principles and underlying estimates and other significant decisions made by management in preparing the financial disclosures. The independent external auditor should review with the Committee USAA's critical accounting policies and practices, including material permitted practices, corrected and uncorrected audit differences, and alternative accounting treatment related to material items discussed with management. The independent external auditor also should disclose to the Committee other material communications with management or regulators related to accounting or auditing matters.
  5. The Committee shall resolve any disagreements between management and the independent external auditor.
  6. Review at least annually with senior management and the independent external auditor the adequacy and effectiveness of USAA's internal controls over financial reporting.
  7. Meet with the independent external auditor and senior management in separate executive sessions to discuss any matters that the Committee or these groups believe should be discussed privately with the Committee.
  8. Periodically review USAA's procedures for hiring of employees or former employees of the independent external auditor.

   C. Audit Services Department

  1. At least annually, review and approve the Audit Services Department Charter and mandate, including any significant changes.
  2. At least annually, review and approve the audit plan and general risk assessment methodology, including any significant changes made during the year.
  3. Review and approve any significant interim changes to Audit Services' staffing levels and budget made during the year.
  4. Periodically review Audit Services' audit plan completion status, and ratify significant additions, significant deletions, and other significant modifications to the audit plan.
  5. Review and approve any significant aspects of Audit Services' outsourcing arrangements with a third party and retain oversight responsibility for any aspects of the internal audit function that are outsourced to a third party.
  6. Periodically review any significant aspects of Audit Services' co-sourcing arrangement with third parties.
  7. Review, at least annually, the activities, organizational structure, qualifications, and independence of Audit Services using industry standards such as the Global Internal Audit Standards as promulgated by the Institute of Internal Auditors and any applicable regulatory guidance.
  8. Consider and review with the Chief Audit Executive, as appropriate:

        (a) Significant findings identified by Audit Services, including areas of concern in internal controls, past due and repeat issues, root cause themes, and thematic historical trends and management's responses thereto, along with timeliness of remediation.

        (b) Any significant difficulties encountered during Audit Services audits, including any scope limitations or interference that impacted the work or restricted access to required information.

        (c) Information on i) significant current and industry internal audit practices, ii) significant industry and enterprise trends in risks and controls, and iii) major USAA projects.

        (d) Significant changes in Audit Services processes.

  9. Consider and review with the Chief Audit Executive and senior management, as appropriate, Audit Services' assessment and opinion on the effectiveness, efficiency and adequacy of front-line units, risk management, internal controls, and governance processes, including the effectiveness of management's self-assessment and remediation of identified issues; elicit any recommendations for the improvement of such processes.
  10. Provide the Chief Audit Executive with unrestricted access to the Committee and meet regularly with the Chief Audit Executive in separate executive sessions, as appropriate, to discuss any matters that the Committee or Chief Audit Executive believe should be discussed privately.
  11. Review and approve the qualifications, appointment, replacement, reassignment, and dismissal of the Chief Audit Executive. The Chief Audit Executive shall report functionally to the Committee and administratively to the Chief Executive Officer.
  12. Review and approve Chief Audit Executive roles and responsibilities beyond the scope of internal auditing.
  13. Annually review and approve a succession plan for the Chief Audit Executive.
  14. At least annually review and approve clear nonfinancial goals and performance objectives as outlined in the Accountability and Responsibility sections of the Audit Services Department Charter for the Chief Audit Executive that are consistent with USAA's strategy, financial objectives, risk appetite and culture, and risk management practices and the Audit Services Department Charter.
  15. Annually review the performance and approve the compensation of the Chief Audit Executive.
  16. Review the results and status of activities of the internal quality assurance and improvement program at least annually. Review and approve the Chief Audit Executive's plan for the performance of an external quality assessment at least once every five years, and review the Chief Audit Executive's plans to address any deficiencies.

  D. Capital Adequacy and Planning

  1. Annually review and approve the Enterprise Capital Policy.
  2. Review and assess the sufficiency of the capital adequacy management program and appropriateness for USAA's overall size, complexity, and risk profile.
  3. Jointly with the Risk and Compliance Committee, approve the annual USAA Consolidated Capital Plan, which includes capital targets that reflect the potential impact of legal and/or regulatory restrictions on the transfer of capital between legal entities.
  4. Review capital adequacy reporting at least quarterly, including current capital levels and risks, with consideration of planned capital contributions and distributions.
  5. Oversee efforts to restore capital above the identified risk appetite by following the established Enterprise Capital Contingency Plan.
  6. Jointly with the Risk and Compliance Committee, annually review and approve the enterprise-wide stress testing results that are included in the capital plan, and any remediation or recovery planning efforts which result from such stress testing.

  E. Liquidity Management

  1. Annually review and approve the Enterprise Liquidity Management Policy and the Consolidated Contingency Funding Plan in coordination with review and approval of the Enterprise Liquidity Management Policy and Consolidated Contingency Funding Plan by the Risk and Compliance Committee.
  2. Jointly with the Risk and Compliance Committee, annually review enterprise-wide liquidity stress testing results for inclusion in the contingency funding plan, and any remediation or recovery planning efforts which result from such stress testing.
  3. Review and assess the sufficiency of liquidity and the liquidity management program (including stress and fungibility) and appropriateness for USAA's overall size, complexity, and risk profile.
  4. Review quarterly liquidity reporting and stress test results to evaluate adequacy of liquidity for current and projected cash flow needs, and for consistency with established risk tolerances.
  5. Oversee efforts to restore liquidity above the identified risk appetite by following the established Consolidated Contingency Funding Plan.

  F. Enterprise Balance Sheet and Investment Portfolio Oversight

  1. Review reports at least quarterly pertaining to USAA's asset / liability management and capital markets activities, including related reports pertaining to risk tolerances for such activities.
  2. Review periodic reports pertaining to investment portfolio objectives, overall investment strategies, and portfolio performance against approved benchmarks and established risk tolerances.
  3. Annually review and approve the P&C Investment Policy and the Derivative Use Plan of USAA.

  G. Corporate Financial Performance

  1. Review management reports pertaining to USAA's financial performance including its consolidated balance sheet and income statement and evaluate corporate performance.
  2. Review Rating Agency results and remediation plans as necessary.
  3. Review and make recommendations pertaining to Subscriber's Account ("SA") allocations, P&C policyholder dividends, and SA distributions (including December discretionary, terminations, and Senior Bonus distributions).
  4. As needed, review significant budget variances, and all significant strategic enterprise project expenditures for alignment with enterprise strategic priorities and for effective implementation.

  H. Monitoring and Internal Reporting

  1. Receive and discuss reports from management concerning the status of significant financial examinations by regulatory authorities.
  2. Receive and discuss reports from management concerning significant operating and control issues identified in independent external audit or Audit Services reports, management letters, significant regulatory authorities' examination reports and investigations, and the status of significant special investigations, if any.
  3. Approve and oversee procedures for receipt, retention, and treatment of complaints received by USAA regarding accounting, internal accounting controls, or auditing matters and for confidential, anonymous submission by employees of concerns regarding questionable accounting, internal accounting controls, or auditing matters.
  4. Receive reports promptly from the Board Chairman, Committee Chair, Chief Executive Officer, and/or Chief Legal Officer concerning material complaints of deficiencies regarding accounting, internal controls or auditing matters, including the status and results of any investigation and the disciplinary or other corrective action taken in response. If “other than material” complaints of accounting, internal controls, or auditing matters have been made, written reports summarizing the status or resolution of such complaints will be received by the Committee in connection with each regularly scheduled meeting until such complaint is reported resolved.
  5. Receive reports promptly from the Chief Compliance Officer, Chief Ethics Officer, Chief Risk Officer, and Chief Legal Officer, as appropriate, concerning complaints of criminal misconduct or potential criminal misconduct.
  6. Regularly receive reports from the Chief Ethics Officer concerning USAA's ethics program, including information on case management, indicative trends and any related investigations.

  I. Special Transactions

  1. Periodically review and recommend to the Board approval authorities for Special Transactions.
  2. Review and provide oversight on proposals or indications of interest for Special Transactions proposed by the Corporate Development team or other management team to be sent to a third party and make a recommendation to the Board as to whether the final terms and associated materials of such proposals should be approved by the Board.
  3. Maintain post-closing oversight of Special Transactions, as needed.

  J. Committee Performance

  1. Annually review and assess the Committee's performance and provide the results to the Board.
  2. Annually review the Committee charter and recommend any necessary changes for approval by the Board.
  3. As necessary, recommend, execute, and oversee investigations into any matters under the Committee's purview.

  K. Other

  1. Annually review the adequacy of the staffing level and talent, skills, and allocation of resources supporting USAA's finance functions.
  2. The Committee shall perform such other duties as may be delegated to it from time to time by the Board.
  3. The Committee may delegate its authority to subcommittees, which shall report regularly to the Committee.

III. DURATION

The Committee shall continue in existence until dissolved by the Board.

IV. CHAIR AND VICE CHAIR

The Chair and the Vice Chair of the Committee ("Committee Chair" and "Committee Vice Chair") shall be elected by the Board at least annually or as necessary with due consideration given to nominee(s) recommended by the Nominating and Governance Committee. In the event of the death, disability or other incapacity that prevents the Committee Chair from properly performing his or her duties, the duties of the Committee Chair shall pass to the Committee Vice Chair until a new Committee Chair is elected as provided for herein.

V. COMMITTEE MEMBERSHIP

The Committee shall consist of at least three members, including the Chair and Vice Chair. The membership of the Committee shall be through appointment by the Board on consideration of nominee(s) recommended by the Nominating and Governance Committee. The Board shall have the authority to fill any vacancies and to remove any Committee member for any reason.

The Committee will be comprised solely of independent directors as set forth in the Corporate Governance Guidelines. Each member shall have demonstrated financial literacy through the ability to read and understand financial statements, financial management concepts, and audit principles, and at least one member of the Committee shall have accounting or related financial management expertise. Each Committee member will annually execute a "Certification Regarding Qualifications" (the "Certification") prepared by the Chief Legal Office.

Each member will also declare in the Certification whether he or she serves on three or more audit committees of other companies. If a member certifies that this is so, the remaining members of the Committee will determine whether it believes that simultaneous service by such member would impair the member's ability to fulfill his or her responsibilities as a member of the Committee. The Committee Chair will report to the Board the results of the Certification.

No less than annually, the Board shall assess Committee members' independence and determine if they meet applicable requirements.

VI. OUTSIDE CONSULTANTS

The Committee shall have the sole authority, without further approval by the Board, to select, retain, and terminate such outside consultants, including legal counsel, as it determines appropriate to assist it in the performance of its functions, or to advise or inform the Committee. The Committee shall be able to approve, without further approval by the Board, any compensation payable by USAA to such consultant, including the fees, terms, and other conditions for the performance of such services.

VII. MEETINGS

The Committee shall meet at such times and shall conduct such business as required to fulfill its responsibilities under this Charter, with at least four regular meetings per year. Agendas and materials will be provided to Committee members in advance of any regular meetings. Special meetings may be held as called by the Committee Chair in consultation with the Chairman.

A majority of the members of the Committee shall constitute a quorum and the affirmative vote of a majority of the members of the Committee participating in any meeting of the Committee is necessary for the approval of any Committee business. The Committee may also act by unanimous written consent. Meetings by telephonic or video conference call are authorized, and actions taken during such meetings shall have the same force and effect as actions taken at an in-person meeting.

Meetings are to be attended only by members of the Committee, the appointed recorder, designated management, and guests approved by the Committee Chair.

The Committee or any member of the Committee has the right to contact the independent external auditor, the Chief Financial Officer, or the Chief Audit Executive directly. The independent external auditor, the Chief Financial Officer, or the Chief Audit Executive has the right to contact the Committee Chair or any member of the Committee if warranted.

VIII. MINUTES AND REPORTS

The Corporate Secretary, in collaboration with the Committee Chair, shall designate a person to record the proceedings of the Committee's meetings. The records of the Committee meetings shall be confidential and retained in accordance with USAA's records retention schedule.

The Committee Chair may authorize the creation and distribution of reports or position papers as appropriate. The Committee shall make regular reports to the Board regarding its deliberations and actions and to make recommendations to the Board.

IX. EFFECTIVE DATE

This charter was approved by the Board on August 22, 2024, to be effective August 31, 2024, and shall govern the operation of the Committee thereafter.