USAA's rate reduction this year will affect 44 out of 50 states where it offers the coverage.

"Our company was able to operate more efficiently, and we wanted to pass on the savings to our members," said USAA spokesman Paul Berry, commenting on the company's announcement.

USAA's move could affect many of its 3.6 million auto policyholders in the United States. Mr. Berry said the company estimates the 7 percent rate cut could result in total savings of more than $900 million in premiums over the next five years for its policyholders.

The elimination of monthly fees will further save policyholders nearly $42 million annually, according to USAA.

Commenting on the company's auto rate reductions, Henry Viccellio, president of USAA Property and Casualty Insurance Group, said, "USAA's mission is to provide the best products at the best possible price for our members."

"By improving operational efficiencies and establishing a range of insurance rates based on the individual risk, we're able to pass on savings to members," Mr. Viccellio said.

USAA currently offers insurance and other financial products to some 5 million customers, primarily to U.S. military personnel and their families.

The company's offerings include property-casualty and life insurance, banking, and discount brokerage, as well as investment-management services. For full-year 2003, the company reported net income of $1.5 billion with $10.6 billion in sales.