Moody's rates USAA Capital notes Aa1

Moody's Investors Service said it assigned an Aa1 rating to $400 million of two-year senior unsecured notes being issued by USAA Capital Corp.

USAA Capital is backed by a net worth maintenance agreement provided by its parent, United Services Automobile Association, Moody's explained.

The support agreement does not constitute a guarantee of the notes, the agency noted.

USAA Capital is offering the notes through its $3 billion medium-term note program to qualified institutional buyers under Rule 144A, Moody's said.

The proceeds will be used for general corporate purposes, including but not limited to working capital and repayment of existing indebtedness, the agency said.

The outlook is negative.

The ratings reflect its market leadership in providing insurance and other financial services to the military community, its efficient operations and its strong balance sheet, Moody's said.

USAA earns member loyalty by delivering competitive financial products and reliable service, the agency said.

Tempering these strengths are USAA's volatile personal and casualty results in recent years, reflecting industry-wide catastrophe losses and fluctuating personal auto loss cost trends, Moody's said.

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