Eighty years ago, the United Services Automobile Association defined its market, its motives and its core values, and it hasn't wavered since. Created to meet the unique insurance needs of members of the military, the company has parlayed that niche focus into a place in the industry all its own--providing a "one-stop shop" for more than 4.8 million members.

Despite years of changing times, wars and a fluctuation in the U.S. military, USAA's relationship with the military stands firm. Its decision to forgo the traditional agent model of selling products and services and its commitment not to become a publicly owned company have differentiated it from most of its competitors.

Paralleling the military's call for honesty, integrity, loyalty and service, USAA has implemented these core values into each of its products, services and daily operations, said Robert G. Davis, president, chairman and chief executive officer. "These values are evident in everything we do, and where many companies today are receiving bad publicity about straying from their core values, our values have been inherent to USAA for 80 years and have been emphasized in our military training," he said.

From the Beginning

The United States Army Automobile Insurance Association was established in 1922 by a small gathering of Army officers who decided that the best way to obtain automobile insurance, despite the risk involved in their frequent moves, was to form a member-owned company in which members self-insured each other. In 1923, membership opened up to U.S. Navy and Marine Corps officers and warrant officers, and the company changed its name in 1924 to the United Services Automobile Association to reflect its growing market.

Eligibility requirements have evolved to include all other military branches, in addition to members' families and ex-spouses. This evolution into new markets and the creation of various companies--focusing on nearly every aspect of insurance and financial services--have turned USAA into a convenience store of products and services for millions of customers.

A Unique Package

In addition to strong adherence to its core values, USAA believes its structure positions it strongly against its competitors. "It's the combination of being uniquely structured as an interinsurance reciprocal exchange, being a direct writer and having top-notch employees that allows us to deliver services in an efficient and effective manner, which produces good financial results," said Josue Robles Jr., senior vice president, chief financial officer and corporate treasurer.

As a direct writer, USAA believes the decision to forgo an agency force gives it a financial leg up over its competition. Rather than relying on agents to sell and market products and services, USAA conducts most of its business by mail, telephone and the Internet, making it at one time the largest direct mail company in the United States. Customer service has always been a key component of its operations, with nearly 1,200 representatives on hand round-the-clock to assist customers calling, writing or logging into the company Over the past several years, USAA has received numerous accolades in recognition of this service, including the recent Chairman's Award from J.D. Power and Associates for its performance in customer satisfaction within the financial services and insurance industries.

High-level customer satisfaction is also evidenced by its nearly 97% customer retention rate. With less than a 4% customer defection each year, USAA stands apart from many of its competitors' 10% to more than 20% annual loss in their book of business. "USAA treats customer defection as a huge issue," said Fred Reich-held, a Bain fellow for the global business consultants Bain and Co. and author of Loyalty Rules! How Today's Leaders Build Lasting Relationships. In his book, Reich-held features USAA as one of the leading companies to build superior quality service with customers. He says the company is unique in that it surveys members who leave the company to understand their reason for defection. "They don't put on a hard sale, but rather listen to see what's wrong and what they can do to remedy the situation."

The company's decision not to go public also sets it apart from competitors. "Becoming a publicly owned company could potentially be one of the things that would hurt us as a company because we would have to shift our emphasis from our members to Wall Street," said Davis. Instead, he believes USAA is able to engage in more strategic planning by not having to concentrate on earnings per share. He also fears the company would be too small to defend itself against hostile takeovers. "When companies go public, management's attention is diverted to those kinds of efforts rather than running the business."

USAA's management team believes the company's current structure will enable it to be a 21st century competitor. "At one time we were probably exclusive in the way we structured our business model, such as being a direct writer without agents, which has given us an advantage and allowed us to operate at a fairly low OER [operating expense ratio]," said Gen. Henry Viccellio Jr., president of the USAA Property and Casualty Group. Over the past 20 years, however, a number of competitors have designed business models similar to USAA, which puts the company in a more competitive environment.

"However, this is a business challenge that I think the company will both meet and exceed," he said.

Analysts following the company also believe USAA's unique approach to reaching its niche market gives it an advantage over its competition. "USAA fits the ideal full financial-services picture," said Stephanie Guethlein McElroy, an A.M. Best Co. life/health analyst. "Its noncommissioned insurance sales approach and the fact that its representatives place customers' best interests first, suggesting only those products and services they need, sets them apart in the industry." Richard Attanasio, an A.M. Best Co. property/casualty analyst, added that the company's strong capitalization and unique business model, in addition to the many touch-points it has with its customers, are the winning combination that makes USAA a top-rated company.

Financial Outlook

Although the company was rocked by a few minor financial challenges over the past several years, USAA's 2002 financial results have been fairly aggressive thus far, said Robles. While it was hit hard by this year's drop in the stock market, which resulted in not meeting its goals for investment income since the beginning of the year, USAA continues to have strong operational results, he added. USAA's $15 billion in investment portfolios is spread across several areas--generally about 20% in stock-market investments, 10% in real estate and 70% in bonds.

In 2001, the company felt some of the pressures caused by the economic recession, particularly in its limited revenue growth. However, this was offset by aggressive expense management, Robles said. Also, USAA suffered less than $20 million in losses from the events of Sept. 11, 2001. The majority of its claims came from clean-up reimbursements of New York City members' apartments and several cars that were destroyed in New York City and Washington, D.C. About 200 USAA members died during the attacks, and many had life insurance policies with the company.

USAA anticipates that this year's results will surpass those in 2001, including last year's pretax income of $737 million and $604 million in net income. "If we aren't struck by any major catastrophes--weather or market-related--we should have a good year," said Robles. A big piece of USAA's financials is driven by what happens during the June through November hurricane season. "If we have a big, invasive storm, some of our financial performance may erode, but we have some provisions in place to handle this, plus our diversified family of companies will help keep our operational earnings strong," he added.

The company also is enjoying growth of its owned and managed assets. USAA currently owns about $36 billion in assets and manages another $29 billion, most of which are in unaffiliated mutual funds. "One thing we are proud of is that we're not having huge disintermediations," said Robles. "We aren't having people yank money out of the company and move it somewhere else. They trust us and our products and know we will steer them in the right direction."

Robles also expects to see steady growth in revenue, income and net worth in the next several years. "I am pretty optimistic about the future--not saying it won't be hard--but we're certainly going to stay on our flight plan in terms of our financial security." USAA expects continued membership growth over the next several years also will contribute to this financial stability.

Growth of the company's information technology, which at one time cut into bottom-line dollars, is also expected to prove profitable this year. The USAA Information Technology Co., which operates as a separate for-profit entity under the USAA umbrella, expects its IT spending will be less than in 1997, said Stephen E. Yates, president of the IT company. "While costs have gone up, we have turned back the spending clock five to six years as the company has grown its revenue by more than one-fourth its size." Business volumes also have increased by roughly 33% during that time, and members' increased interest in using the usaa.com Web site as a point of contact with the company will likely result in added growth. Yates anticipates expansion of wireless devices and online services, including the opportunity for members to move monies between accounts at the click of the mouse.

Serving a Niche

USAA says accessibility to affordable insurance and diversified financial services are two ways in which the company expresses its appreciation of the military.

"USAA is and continues to be committed to the military and its families," said Davis. USAA stands firm in its dedication to its military niche, with no plans to expand membership to outside markets.

Management believes a move into the "civilian" market would be detrimental to the company structure and not in the best interest of its members. "We were established by a small group of Army officers for a very specific purpose, and even though we are much larger today and diversified in what we offer members, that commitment to the military community is still a big part of our culture and business commitment," Viccellio said.

Over the years, the company has extended its membership eligibility requirements. During the early 1970s, USAA members expressed an interest in coverage for family members, including children and grandchildren. Since that time, ex-dependents have become a growing book of business, and currently more than 1.7 million family members are part of the USAA Property and Casualty Group. "These members assimilate a sense of responsibility, accountability and dependability that makes a military family something special, and that pays off for us in a business sense," said Viccellio.

Another eligibility change in 1997, however, generated some controversy. Gen. Robert T. Herres, who served as chief executive officer from 1993 to 2000 and chairman from 1993 to his retirement this year, proposed that membership be extended to enlisted personnel. While some members and staff resisted breaking USAA's tradition of serving officers only, the majority believed it was the right move for the changing times. "Those of us in the military and in combat know that the military community is comprised of both officers and enlisted personnel, so we were delighted with this decision," said Davis. Today, one in three active-duty enlisted personnel is a USAA member.

The company is also paying close attention to military population. Despite a fluctuation in the number of individuals joining the U.S. military over the years, USAA has never questioned serving only its niche market. The number of military personnel since the Cold War has remained stable, and many believe this trend will continue for the next several years.

Currently, 335,000 officers and 1.9 million enlisted personnel make up the U.S. military market. The U.S. government recruits 21,000 new officers and 260,000 enlisted personnel each year. In addition, about 84,000 USAA members' children reach independence and need coverage, said Viccellio. "If world events result again in a reduced military, then that's the military we're here to serve. If world events turn sour and danger appears on the horizon, then we're here to serve a larger military," he added. "We'll take it as it comes, making sure we are positioned to meet their needs, whether we are at peace or at war."

Accommodating Members

USAA has made a strong commitment to serve members stationed in the United States and overseas.

"We continually look for ways to take the burden off members because they are protecting us and we don't want them to worry about ATM fees or other expenses when they are moving or are across international borders," said Karen B. Presley, senior vice president of marketing.

The company has recently developed several services to accommodate deployed members. For example, USAA credit card holders deployed overseas are offered a lower interest rate of 6%, while interest rates are removed for individuals involved in combat or placed in harm's way as designated by the U.S. Department of Defense.

Continued coverage during members' deployment is another service offering. The company created USAA Limited to ensure that its more than 90,000 customers stationed in Europe don't suffer a lapse in coverage during their overseas assignment. USAA also has an alliance with an Asian carrier to assist members stationed in the Far East. "We are licensed to write insurance through local agents in South Korea, and we write them on a direct relationship basis in a number of other Far East countries," said Viccellio.

To case the burden of moving expenses, USAA recently implemented a permanent change-of-station program reducing credit card interest rates to 6% for 90 days for military members on the move.

Creating a Military Environment

Military awareness is an important part of the company's culture and its staff. About 10% of USAA's employees have military backgrounds, which help create a deeper appreciation and understanding of USAA members and their families. Davis, the son of a career naval officer and the most highly decorated combat veteran to lead the company, believes his exposure to military life has helped him better understand the parallel between the core values of the military and the company.

USAA is working to instill military values into its entire employee base. All employees go through an orientation process to introduce them to facets of the U.S. military, including ranks, service branches and history. Employees also learn about members and their military experiences through a member spotlight video featured at the company's monthly management meetings.

The celebration of military holidays, including special Memorial Day and Veterans Day observances, has become an important part of the company's culture. In addition, the headquarters building displays military posters and memorabilia, such as an original 1943 Norman Rockwell drawing of U.S. soldiers from 1776 to 1943, vintage flags from the Revolutionary War era and an enormous replica of the Statue of Liberty's hand holding the torch. "We try to create a good environment and appreciation for what the military really does for us and our country;' Davis said.

Trust Is Key

For military members engaged in combat, trust is key. USAA recognizes that trust and has made it No. 1 strategy for connecting with customers.

"We try to understand individuals' needs and offer appropriate solutions rather than trying to sell them products and services that aren't in their best interest," said Davis. It's not uncommon for a USAA representative to inform a member that he or she has too much insurance or offer alternative products that can save added dollars. "As long as we continue that bond with them, that's the difference between us and most other companies," he said.

Trust is also tied into the company motto--"We know what it means to serve." When consultants were searching for the ideal motto, they found from surveying members and competitors that USAA owned both the service and trust equations, Presley said. "The fact that members can come to us and we won't sell them something they don't need is proof of this trust.

"Our mission is very clear and we don't plan on changing that," Presley said. "It directs us to be the provider of choice for the military community and it clearly defines our objectives so we don't violate members' trust in the service, integrity and ethics that we hold true."


USAA Top Products
Private-passenger auto liability still commands the largest percentage
of total net premiums written.
Private Passenger Auto Liability 39.6%
Auto Physical 34.7%
Homeowners 20.8%
All Other 4.9%
Source: A.M. Best Co.
Note: Table made from pie chart
Major USAA P/C Direct Premium Writings By State--2001
($ Thousands)
Texas $862,175
California 701,512
Florida 601,684
Virginia 411,053
Georgia 245,837
Source: A.M. Best State/Line Products.


RELATED ARTICLE: USAA at a Glance

United Services Automobile Association (USAA)

Headquarters: San Antonio

Chairman, President and Chief Executive Officer: Robert G. Davis

Established: 1922 by a group of 25 Army officers who had difficulty obtaining reliable automobile insurance coverage because they were considered transient and bad risks. The company, then named the United States Army Automobile Insurance Association, became a member-owned association in which members insured each other. Maj. William H. Garrison, U.S. Army Signal corps, was the company's founder and first president of the board.

Number of members: 4.8 million (includes 95% active-duty military officers and one in three active-duty enlisted personnel)

Number of employees: More than 22,000 Major office locations: Phoenix; Norfolk, Va.; Colorado Springs, Cob.; Tampa, Fla.; Sacramento, Calif.; London and Frankfurt, Germany.

Ranking: Eleventh largest property/casualty insurer in the United States based on 2001 net premiums written.

Group members: USAA Casualty Insurance Co., USAA General Indemnity Co., USAA Limited, USAA Texas Lloyd's Co., United Services Auto Association, USAA County Mutual Insurance Co.

Financials: In 2001, USAA's owned and managed assets were S63.7 billion; net worth increased by nearly $350 million, or 5%; pretax income was S737 million; total revenue was $9 billion.

Major products: Property/casualty (private passenger automobile, dwelling fire, homeowners, boat owners, comprehensive personal liability, household goods and personal effects, personal articles floater and personal umbrella policies); life/health; annuities; no-load mutual funds; discount brokerage; credit cards; banking and alliance services.

Company motto: "We know what it means to serve."

Web site: http://www.usaa.com/

On Alert

"Nothing can stop us now" is a fitting motto for the USAA Information Technology Co.'s recent move to make the company fully operational in the event of a natural disaster or major catastrophe.

The IT company is now in the process of turning an existing testing facility into a back-up computer center located approximately 200 miles from USAA's San Antonio headquarters.

While the company's IT functions weren't directly impacted by the events of Sept. 11, the disaster signaled the need for implementing a back-up facility to keep USAA operational in the event of downtime caused by a major catastrophe. The creation of an off-site back-up facility became a key IT strategy this year.

USAA initially planned to rent a back-up computer center in Philadelphia. The long distance from its headquarters, however, and the possibility that travel could shut down in the event of a national disaster or major catastrophe prompted the company to turn to a closer locale.

"Since options in Philadelphia are on a first-come, first-serve basis and a risk-sharing pool, we decided we couldn't take that kind of risk. So we made a major investment to move into full capacity in our Texas center," said Stephen E. Yates, president of the IT company.

Because the testing center operates on water and power systems separate from those in San Antonio, USAA felt the facility was the solution to its needs.

In May, the company completed a test of the center. Representatives from each line of business were on hand to man operations, and both production and routine traffic were moved to the site. The company is continuing to build the center to a much more robust level, and it recently fully tested its bank capabilities, Yates said. "In addition, we're halfway through testing the life and property and casualty companies and plan on having the rest of the business tested before the end of the year."

The back-up center is designed to recover IT operations within two to 36 hours during a downtime, depending on the type of application, Yates said. "The creation of the center is focused on the company's dedication to its members and their need for continued high-quality customer service during an event."

USAA assists sept. 11 survivor efforts

Just as the U.S. military works to protect the nation, USAA was there when the country needed it on Sept. 11.

The only "civilian" company invited to help with survivor assistance at the Pentagon immediately following the attacks, USAA assembled and deployed several survivor assistance teams to Washington, D.C. These teams were responsible for aiding survivors with immediate insurance and financial concerns. The company received accolades from both the U.S. Navy and the Department of Defense for its efforts.

USAA also deployed several survivor assistance teams to New York City to assess damage and assist members at or near the World Trade Center. "As soon as the teams identified themselves as being with USAA, they were immediately allowed into the area to assess damages," said Robert G. Davis, president, chief executive officer and chairman.

Back in its San Antonio headquarters and its seven other worldwide locations, the company moved into high gear to ensure that operations remained fully functional and that members continued to be served in a timely and efficient manner. "A period of crisis allows you to see just how good you really are," said Davis. When USAA's efforts were put to the test, he believes the company came through with flying colors.

USAA's strong connection with members was important to the work. Denise Beeson, a USAA policy service representative, played a vital role in sharing good news with family members on Sept. 11. With phone service down throughout much of the greater New York City area immediately following the events, a USAA member and employee of the World Trade Center turned to the company for help. After the member contacted the company's toll-free number, Beeson connected her with family members to let them know she was alive. "If I do one good thing in my whole life, and perhaps this was the good deed, it was worthwhile," Beeson said in a company videotape that recounted the phone call.

The strong military experience of more than 10% of USAA employees and the company's understanding of how the military operates were evident in its actions immediately following Sept. 11.

One of its initial efforts was to set up an operations center, which was transitioned within an hour. At no time during the events did the company experience any downtime in service, Davis said. "We went into a 'combat' mode very quickly, and I was able to communicate with employees and members across the country through a variety of media, including our Web site."

The company also made every effort to assist members affected by the events as quickly as possible. Claims were processed immediately, and checks for damages were sent out within hours of being processed.

In addition, USAA made sure its various companies remained frilly functional. For example, the USAA Information Technology Co. ran remote test operations of its computer systems, and was able to run operations fully for more than 48 hours without any human connections to the systems. The company also implemented two off-site locations where IT functions could be performed, both within easy driving distance from its headquarters.

"We would expect this kind of continuation of service because many employees came from the Department of Defense and the military, and they have all been trained to remain fully operational in times of crisis," said Davis. The focus remained on continuing to serve its 4.8 million members and assist them throughout the ordeal, he added.

Marketing strategies were also revised immediately following Sept. 11. The company ceased all direct mail marketing to members for about three months out of "respect for the situation," said Karen B. Presley, senior vice president of marketing. Only messages about deployment and the availability of life insurance coverages were sent to members during that time. USAA believes it was the only company to increase life insurance limits for military personnel immediately following Sept. 11, in addition to continuing its commitment not to implement a war clause into life insurance policies.

USAA's deployment guide, developed prior to Sept. 11,. was one of the most sought-after publications immediately following the events. The guide, which includes checklists, a simple power of attorney, information about online worldwide products and services, and other valuable information for those being deployed overseas, was mailed to hundreds of thousands of members and bulk shipped to installations from which members typically deploy.

The company also set up a deployment center on its Web site. The online center allowed members to receive much of the same information found in the printed guide, including a downloadable checklist to help them and their families prepare for deployment. USAA also set up a toll-free telephone line, manned by staff highly trained in deployment situations.

Historical Highlights

This year marks USAA's 80th anniversary Events of the eight-decade history mark the company's development into the leading insurer and financial services provider of the U.S. military Several historical highlights include:

* The company was founded in 1922 by 25 Army officers who self-insured themselves for automobile coverage.

* USAA's first home office was located in a World War I barracks at Kelly Field in San Antonio.

* The company changed its name from the United States Army Automobile Insurance Association to the United Services Automobile Association in 1924.

* In 1925, USAA received its first Texas state license.

* In 1952, its first overseas office was established in Frankfurt, Germany. Ten years later, the London office opened its doors, and both continue to serve thousands of members stationed overseas.

* In 1956, the first U.S. branch office opened in New York City, with approximately 15 members and about 50 calls coming into the office each day

* In 1957, the company installed its first IBM computers. Today computers handle more than 23 million online transactions per day, and store an equivalent of 1.6 billion pages on more than 300,000 tapes. If unraveled, the tapes would stretch around the Earth 2.5 times.

* In 1960, homeowners insurance was offered.

* The USAA Life Insurance Co. was formed in 1963. Five years later, USAA Casualty Insurance Co. opened its doors.

* In 1969, the company purchased 286 acres of land to build its current headquarters in San Antonio. Today, this is one of the largest single-occupancy buildings in the United States, rivaling the Sears Tower and the Pentagon.

* In 1978, USAA began relying on toll-free numbers to connect with members.

* The USAA Federal Savings Bank began in 1985.

* In 1997, USAA began including enlisted military personnel as members.

* In 1999, the company Web site, http://www.usaa.com/, was launched, currently handling more than 100 million online transactions per year.

* In 2001, members owned more than 16 million total products.

* In May 2001, USAA was named the best financial services provider in America by American Banker survey respondents. It was ranked 224th on Fortune magazine's annual list of "America's 500 Largest Companies," and was included in its list of "America's Most Admired Companies."

* Also in 2001, USAA was named to Working Mother magazine's list of the "100 Best Companies for Working Mothers," Computerworld magazine's top 10 of "100 Best Places to Work in Information Technology," and Latina Style magazine's "The 50 Best Companies for Latinas to Work for in the United States."

* In 2002, USAA was ranked 215th on Fortune magazine's annual list of 'America's 500 Largest Companies."

* In 2002, at its 80th anniversary celebration, J.D. Power and Associates awarded USAA its Chairman's Award, in recognition of its excellent performance in customer satisfaction within the financial services and insurance industries.

Meet the Members

Most USAA members point to high-quality customer service, timely payment of claims, diversification of products and services, and dedication to the military and its families as the driving forces behind maintaining the company's satisfied and loyal customer base.

Laura Peet, a USAA policyholder in New York City, said her coverage with USAA has been "top-notch" and interaction with the company's customer-service representatives has been nothing less than satisfying. An automobile policyholder since age 16, Peet also has renters coverage and a newly purchased homeowners policy with USAA. "The company is all about customer service. With experiences I've had with other insurers, I sometimes felt as if I was getting water out of a stone, but with USAA I always feel like they're on my side and help me through whatever situation I'm in."

She believes the diversification of products and services that creates a "one-stop shop" is also contributing to her high-level satisfaction with the company.

Another New York City policyholder, Phil Nourie, said affordable rates and positive interactions with the company's customer-service department have made him a loyal customer. "[USAA's] quality products are incredibly affordable, and while you usually step away from things that seem too good to be true, they actually are with this company." He also believes USAA's commitment to its military members is a reflection of its patriotism and appreciation for the millions of individuals who serve and protect the country. "It's a very good benefit for people who give their time to our country, and a lot of people don't do that and don't get any type of benefit from this service. It's nice to see that there's a company out there that upholds their promises."

Randall Kirsch of Atlanta said his experience in filing a claim with USAA was anything but unpleasant. After someone broke into his car and stole his stereo system and about 30 compact discs, USAA went above and beyond the call of duty, he said. Rather than just reimbursing him for the items, the company asked him to fax it a list of the stolen CDs and the stereo's user manual, and within days it sent him replacement CDs and a stereo upgrade because his system had been discontinued.

Little Marketing, Big Payoff

When asked why they joined USAA, 90% of the members say it's because someone told them about the company.

Word of mouth, in fact, is USAA's No. 1 marketing strategy. With a customer retention rate of nearly 97%, the military-niche insurer and financial-services provider relies on its members to spread positive messages about USAA to other military members and their families.

"Since the military is converged at installations and military bases across the world, this approach continues to serve us well," said Karen B. Presley, senior vice president of marketing.

Word of mouth and a concentrated reliance on the mail, telephone and the Internet to reach potential members are the company's key marketing strategies. While most insurers turn to agents to attract customers, USAA has forgone this approach. Instead, a worldwide membership base and the direct-writer model allow the company to pass savings that would otherwise be spent on agents on to members through lower rates, Presley said. "And the best way to do this is by going direct," she said.

Advertising comprises only a small portion of the company's marketing strategy USAA currently advertises products and services in a few military publications, such as Stars and Stripes and the Army, Navy and Air Force Times publications, and has no advertising exposure in television and radio due to the lack of military media outlets. USAA has recently begun extending its advertising reach to several military Web sites.

All marketing strategies are based on USAA's core values--loyalty, honesty, integrity and service--and its 80-year dedication to its nearly 4.8 million members, Presley said. "Our overall intent from a marketing strategy standpoint is to join members' conversations. Whatever is going on in their minds, such as their concerns, worries and joys, we want to help take them to the next logical solution to remove the burdens facing them," Presley said. This sequence, or "connect-the-dots" approach as Presley calls it, is also faring well for the company's Web site. While little advertising is found on the usaa.com site, members are able to enjoy the convenience of services, such as obtaining information on how to buy, finance and insure a car, at the click of a mouse.

"While we don't have big media campaigns, we try to customize and tailor messages for members in a given segment during a particular life event they may be experiencing," said Presley.

Cost containment also is driving a new marketing push. Last year, the company made what it calls a smart decision to remove all in-house printing of direct-mail materials. "Now that we're into highly targeted, segmented mail, spending money internally to keep up with available capabilities didn't make sense," Presley said. In addition, difficulty in obtaining proprietary software from printing companies made in-house printing an even greater challenge. "In order to stay competitive and keep up to speed with segmenting, we started to do complete outsourcing of these tasks, which involved selling in-house equipment and redeploying employees as much as possible," she added. Until that point, the company outsourced nearly 85% of its marketing print projects.

The company plans to continue with its current marketing strategies and is optimistic that word of mouth by millions of satisfied members will continue to drive its success. "Our motives are to cater to members--not to market to them. And as long as we continue to behave in that manner, this [approach] remains our biggest strength," said Presley.

Years of Eligibility Expansion

Times have changed, but the USAA's focus on its niche market with the U.S. military remains the same. Eligibility requirements have expanded throughout the company's 80-year history, opening up eligibility to new military branches and family members along the way.

1922: USAA created for active-duty Army officers

1923: Active-duty Navy and Marine officers were extended eligibility

1924: Retired officers

1928: Reserve and National Guard officers on extended active duty

1931: Cadets and midshipmen at service academies

1935: Unremarried widows and widowers of officers

1948: Air Force officers and full-time USAA employees

1951: Reserve and National Guard officers, if retaining commission

1961: Adoption of slogan, "once a member, always eligible"

1970: Retired reservist officers drawing retirement pay

1971: Advanced ROTC cadets

1973: Former dependents of members and Reserve and National Guard ready-reserve, inactive and standby officers

1997: Enlisted personnel (USAA Casualty Insurance Co.)