IAA's dual bidding strategy has continued to drive more buyers to the Company's auctions than ever before, resulting in increased bidding activity and higher vehicle returns for its insurance company suppliers.

"Combining the feedback we have been receiving from our customers with our internal data, we believe our vehicle returns were the highest in the industry during the quarter, which we feel is a direct result of our dual bidding platform and improved levels of customer service," said Tom O'Brien, CEO. "On average, our returns have increased more than $300 per unit compared to 2003, providing a significantly better return for our insurance company suppliers. Our live auctions, most of which feature Run & Drive(R) auction lanes, are supplemented with our state-of-the-art Internet bidding capability, giving our growing customer base the flexibility to see and bid on our vehicles up close or through the Internet from anywhere in the world in a real-time setting. Enthusiastic buyer support of our auction model is clearly evident from the increase in buyer participation we have experienced, both at live auctions and via the Internet. By encouraging more buyers to come on to our bidding platform than ever before, we believe that during the quarter we were able to generate more bidding activity and the highest vehicle returns in the industry."

Commenting further on the Company's recent operating performance, O'Brien said, "We haven't missed a beat throughout the organization since the close of the Kelso & Company acquisition in late May. The transaction has allowed us to focus even more of our time and energy on improving our operations and service levels to our customers, translating into much higher returns for our suppliers and higher profits for IAA. The Company generated revenues of $71.9 million in the second quarter, compared with $60.0 million in the same quarter of 2004. Gross profit margins improved to 26% in the second quarter, up from 22% in the same quarter of last year. We also continued to strategically expand during the quarter, specifically in

S-4 Filing: Insurance Auto Auctions also filed an S-4 today that provides supplemental financial information to the results provided herein. Please refer to this document for additional financial information about the Company and its quarterly results.

About Insurance Auto Auctions, Inc.: Insurance Auto Auctions, Inc., founded in 1982, a leader in automotive total loss and specialty salvage services in the United States, provides insurance companies with cost-effective, turnkey solutions to process and sell total-loss and recovered-theft vehicles. The Company currently has 80 sites across the United States.

Additional information about Insurance Auto Auctions is available on the World Wide Web at:

http://www.CarLackey.com
http://www.AutoLackey.com
http://www.RichLackey.com

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