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Q3 Earnings for Insurance Auto Auctions

31 August 2000

Third Quarter Earnings Expected to be Below Expectations
    SCHAUMBURG, Ill., Aug. 30 Insurance Auto Auctions, Inc.
, a leading provider of automotive salvage and claims processing
services in the United States, today announced that its net earnings in the
third quarter will be below analysts' expectations of $0.32 per share.  The
Company has revised its internal estimates of third quarter earnings downward
by approximately 35% from original expectations, and now expects earnings for
the third quarter to be $0.20 to 0.22 per share.  Earnings for the third
quarter of 1999 were $0.27 per share.

    Earnings Shortfall Reasons Varied

    The primary reasons for a lower-than-expected quarter include:

    -- Slower title processing, reducing the volume of units sold in key
       areas, despite the fact that new volumes are at record levels.

    Incoming volume remains at record levels.  Units, however, are not being
processed and sold as quickly as in the prior year.  This problem results, in
part, from one of the Company's largest customers which is reorganizing its
salvage processing, as well as from one significant state which is changing
its DMV processes, causing a slowdown in titles processed.
    "Based on our inventory build, we would have expected to see more units
sell through during the third quarter," said Christopher Knowles, CEO.  "We
will be anxious to see if the title processing time for insurers and others
speeds up as school resumes, vacation time is reduced and the workforce
returns, or whether the apparent slowdown is a more permanent business
condition."

    -- Gross profit per unit is less than planned.

    The reasons include:

    -- an increase in actual cash values (ACVs), without a corresponding or
       proportional increase in average sales prices.
    -- changes in the mix of vehicles, caused by, among other things, an
       unusually dry spring and summer in the Western U.S.
    -- the effect of the early stages of certain new purchase agreement
       contracts wherein newer cars take longer to feed through because of
       lien releases and other time-consuming processing.
    -- increased tow charges from outside contract towers due to higher fuel
       and labor costs.

    The Company is undertaking an effort to pass through the increase in
towing costs and to renegotiate certain of its purchase agreement contracts
which are not meeting target levels of profitability.

    -- The Company's towing initiative is ramping up at a slower than expected
rate due to driver shortages and high fuel costs.

    These problems are slowing the implementation of our towing initiative and
are pushing the earnings ramp up for this business to future quarters,
although the Company is working aggressively to make towing an important
earnings contributor as quickly as possible.

    -- 'Bunching' of several key greenfields and refacilitations.

    New facilities generally have a loss period before they become profitable.
Therefore, the Company schedules new site openings ''to spread costs and early
losses.  However, two of these facilities have opened later than originally
planned and two have opened sooner, causing a 'bunching' of new sites in the
third quarter and a reduction in expected earnings in the short run.

    -- Acquisition Cost Write-off

    The Company also wrote off approximately $500,000 or $0.025 per share for
costs associated with a significant acquisition which it did not complete.

    "We expect that the Company's fourth quarter earnings will be
approximately 20% lower than forecast and that 2001 earnings will increase by
approximately 30% above revised 2000 levels," commented Stephen Green, CFO.
"Fourth quarter EPS was expected to be $0.33 per share versus $0.29 per share
in 1999.  We are now forecasting that our fourth quarter earnings will be
closer to $0.26 per share, bringing the revised earnings estimate for 2000 to
$1.25 to $1.27 per share.  This would revise our estimate of 2001 earnings to
approximately $1.63 per share."

    Conference Call
    A conference call will be held on Thursday, August 31 at 1:00 PM Central
Daylight Time.  The call in number is 800-952-4707.  The call will be open to
the general public.  A replay will be available through September 7, 2000, by
dialing 888-266-2086, code 4572280.  The call will be webcast at
http://www.vcall.com.