USAA Investing in a Better Auto-Buying Experience

Equity stake in Zag will help customers find and finance a car at discounts

SAN ANTONIO, Texas, Feb. 4 -- Based on tens of thousands of positive member experiences over the past two years, USAA today announced it is taking an equity position in privately-held Zag, the nation's premier online auto-buying service, based in California. Terms of the transaction were not disclosed.

Zag, created in 2005, provides an end-to-end buying service that enables customers to research and comparison shop the vehicle of their choice online from their home or office, and then buy it through a certified network dealer for an upfront guaranteed low price. The buying process is integrated with USAA's other offerings so USAA members can finance and insure their new vehicle in the same online transaction. And by streamlining the process, consumers routinely realize savings of several thousand dollars per car.

"Our number one mission at USAA is to provide highly competitive products and outstanding service to our members," said David Bohne, president of USAA Federal Savings Bank. "Zag is a true partner in that mission -- enabling us to give our members a car-buying process that actually puts them first and keeps them in the driver's seat."

With Zag, Bohne said, USAA is able to offer its members:

-- Substantial savings on each purchase, compared to those who do not use the car-buying service.

-- A departure from the typical auto-buying experience. Members avoid the hassle of the traditional back and forth negotiation, and receive a low upfront price while they're still online, guaranteed in writing.

-- Connection to certified dealers around the country who have been pre- screened to provide an outstanding member buying experience.

USAA began making Zag's services available to USAA members in 2007. Since that time, more than 25,000 USAA members have taken advantage of the offering. Last year, members who used the car buying service saved nearly $19 million off the average price paid by car buyers nationwide.

"We started Zag to create a better way to buy a car, by making the entire transaction convenient and transparent," said Scott Painter, CEO of Zag. "The relationship with USAA is perfect for us, because they believe in the importance of upfront pricing and transparency to save their members valuable time and money."

"We're both passionate about what we do and how we do it to benefit our members," said Bohne. "We're pleased to join Zag to help put that passion into practice."

About USAA

USAA, a diversified financial services group of companies, is a leading provider of financial planning, insurance, investments, and banking products to members of the U.S. military and their families. Named by BusinessWeek as No. 1 Customer Service Champ in 2007 and 2008, USAA provides highly competitive financial products to its 6.8 million members. For more information about USAA, or to learn more about membership, visit http://www.usaa.com/.