USAA returning $480 million on auto policies.

Services Automobile Association), an insurance and financial services company headquartered in San Antonio, is mailing checks worth $480 million to more than 2.3 million policyholders this week.

The checks are a special dividend representing 15% of recent annual auto insurance premiums.

"Lower

than expected auto claims expenses, reduced growth in medical costs, and our companywide cost-savings initiatives in combination with our strong financial position have allowed us to declare this special dividend," said General Robert Herres, chairman and chief executive officer of USAA. Herres said USAA has paid special dividends from time to time in the past, but this is the largest in the company's 73-year history.

Dividend checks were loaded into six 18-wheel U.S. Postal Service trucks and taken to a distribution center near USAA's headquarters for mailout. Due to the large volume of checks, preparations for mailout and the actual loading of the postal trucks took more than a week to accomplish.

The special dividend was based on automobile insurance premiums for a one-year period from May 1, 1994, to April 30, 1995. The dividend was approved by the respective boards of USAA, USAA Casualty Insurance Co. and USAA Ltd.

"We owe a debt of gratitude to our member-owners for their continued support of and faith in USAA," said Herres. "These dividends represent USAA management's commitment to return any premiums that exceed what is necessary for the operating needs of the Association."

Herres said the 15% dividend was in addition to the regular 10% dividend USAA pays to accident-free drivers in most states.

USAA is an insurance and financial services company serving primarily military officers and their dependents. It is the nation's fifth-largest private passenger auto insurer.

Earlier this month, USAA announced plans to offer property and casualty insurance to enlisted personnel. That market expansion is expected to begin next year.

CONTACT: USAA

Paul Schattenberg, 210/498-0910