Union Acceptance Corporation Announces New Business Initiatives

    INDIANAPOLIS--April 17, 2002--Building upon its strength and experience in the industry, Union Acceptance Corporation ("UAC") today announced the launch of two new strategic business initiatives. The first is the establishment of a third party servicing operation which will utilize UAC's excess capacity to generate third party fee income. The second is the creation of Union Acceptance Insurance Services, Inc. as UAC's wholly-owned insurance agency. These business initiatives are further steps toward UAC's goal of enhancing revenues and reducing the volatility of earnings through predictable and stable fee income. Management expects revenues generated through these ventures will have a positive impact beginning in the third quarter of 2002.
    UAC's vision is to provide world-class automotive-related financial services while focusing on its core business of purchasing and servicing automobile sales contracts. To achieve this vision, UAC will diversify its product line with the expansion of third party servicing of automobile sales contracts. The third party servicing product will leverage UAC's existing business and technical processes and procedures while taking advantage of UAC's state of the art technology and management expertise to continue its outstanding servicing record.
    To ensure efficient implementation, an experienced management and project team has been assembled, including Lee Ervin, President and Chief Operating Officer. Mr. Ervin has extensive experience with third party servicing. At his previous employer, Mr. Ervin was instrumental in third party servicing, increasing the servicing portfolio of sub-prime mortgage loans from $900 million to over $20 billion in a matter of 3 years.
    The dedicated project team is currently working with several organizations to evaluate and analyze potential portfolios. The target time frame to finalize conversion of the first client's portfolio to UAC's technical and operational systems is the third quarter of 2002.
    UAC also announced today that it has entered into an agreement with Balboa Insurance Company for collateral protection insurance, through UAC's wholly-owned subsidiary, Union Acceptance Insurance Services, Inc.
    UAC established an insurance agency to offer auto-related insurance products to UAC's customer base. Mr. Brett Hughes has been named Manager of the insurance agency and will be responsible for management and development of all products and services to be offered. Mr. Hughes has a background in auto-related insurance services and credit analysis. He is licensed in property and casualty insurance as well as life, and accident and health.
    UAC management intends that auto-related services offered through the insurance agency and other potential services being considered by UAC will be value-added to the Company's customers. In addition, with the implementation of collateral protection insurance, the Company expects to reduce losses that result from un-insured customers. Union Acceptance Insurance Services, Inc. was licensed in April 2002 and management expects it to be operational by the fourth quarter of 2002.
    "As we analyzed our organization for significant fee income opportunities, these two business initiatives were our first choice as they leveraged the talent, experience, and expertise of our existing staff," stated Mr. Ervin. "Enhancing fee income is one of our strategic initiatives that we believe is critical in our effort to enhance profitability and reduce the volatility of earnings. Therefore, we are pleased to be announcing our entry into the third party servicing market and the insurance agency business and believe that shareholders will soon begin to see the results of these ventures. We look forward to continuing to report on the success of all of our new initiatives."

    Corporate Description

    UAC is one of the nation's largest independent, indirect automobile finance companies. The Company's primary business is purchasing and servicing prime automobile retail installment sales contracts. These contracts are originated by dealerships affiliated with major domestic and foreign manufacturers, nationally recognized rental car outlets, and used car superstores. UAC focuses on acquiring receivables related to late model used and, to a lesser extent, new automobiles purchased by customers who exhibit favorable credit profiles. Union Acceptance Corporation commenced business in 1986 and currently acquires receivables from over 5,800 manufacturer-franchised dealerships in 40 states. By using state-of-the-art technology in a highly centralized underwriting and servicing environment, Union Acceptance Corporation enjoys one of the lowest cost operating structures in the independent prime automobile finance industry.

    Forward Looking Information

    This news release contains forward-looking statements regarding matters such as profitability, receivable acquisitions, the impact of new initiatives described on revenues and profits, and other issues. Readers are cautioned that actual results may differ materially from such forward-looking statements. Forward-looking statements involve risks and uncertainties including, but not limited to, the difficulty inherent in predicting changes in delinquency and credit loss rates, changes in acquisition volume, the ability of the Company to collect newly implemented fees, general economic conditions that affect consumer loan performance and consumer borrowing practices and other important factors detailed in the Company's annual report on Form 10-K for the six months ended December 31, 2001 which was filed with the Securities and Exchange Commission.