Warrantech Announces Premium Increase to Major Client

23 June 1999

Warrantech Announces Premium Increase to Major Client

    STAMFORD, Conn.--June 22, 1999--Warrantech Corporation (NASDAQ NMS: WTEC) announced today that CompUSA, Inc. has indicated that it will not accept a premium increase imposed by CIGNA Property and Casualty Insurance Company (CIGNA) with respect to the insurance underlying the extended service plans (ESPs) sold by CompUSA and administered by Warrantech Help Desk, Inc. (WHDI), a wholly owned subsidiary of Warrantech Corporation.
    The increase by CIGNA, which in many instances exceeds existing rates by more than 100%, resulted from a loss experience in the current ESP program that was much higher than anticipated by CIGNA. In his May 28th letter to Warrantech, Mark Walker, Senior Vice President and General Counsel of CompUSA, stated that "CompUSA is totally dissatisfied with the proposed increase" and that a new course of action must be considered.
    WHDI has proposed a new ESP program to CompUSA which it believes would significantly improve loss experience, thereby preserving an acceptable premium rate structure. If this new program is not accepted by CompUSA, however, Warrantech may take a one-time charge to earnings.
    In discussing this action, Joel San Antonio, Chairman and Chief Executive Officer of Warrantech, stated, "Warrantech has made a major investment in time, money and management resources to provide CompUSA with world-class service throughout their relationship. We sincerely hope they elect to move forward with our new program but we are prepared to take the charge and refocus our efforts on higher margin business."
    Warrantech Corporation, through its subsidiaries, administers and markets service contracts and after-market warranties on automobiles, automotive components, recreational vehicles, appliances, consumer electronics, homes, computer and computer peripherals for retailers, distributors and manufacturers. The Company continues to expand its domestic and global penetration, and now provides its services in the United States, Canada, Mexico, the United Kingdom, Puerto Rico and Latin America.

    The information contained in this news release, other than historical information, consists of forward-looking statements that are subject to risks and uncertainties, including, but not limited to, the effectiveness of cost containment measures and the continuation of current levels of business activity, the impact of competitive products, product demand and market acceptance risks, reliance on key strategic alliances, fluctuations in operating results and other risks detailed from time to time in the Company's filings with the Securities and exchange Commission. These risks could cause the Company's actual results for the current fiscal year and beyond to differ materially from those expressed in any forward looking statements made by, or on behalf of, the Company.

    This release and prior releases, are available on the KCSA PublicRelations Worldwide website at www.kcsa.com.