Kelso & Company Acquires Insurance Auto Auctions

February 23, 2005

Insurance Auto Auctions Inc., based in Westchester, Ill., has signed a definitive merger agreement to be acquired by affiliates of Kelso & Company, a New York based private equity investment firm. The aggregate value of the merger transaction is approximately $385 million.

IAA entered into the merger agreement following the unanimous recommendation of the members of IAA’s Board of Directors.

Michael B. Goldberg, managing director of Kelso & Company, said, “We look forward to our partnership with IAA and its management team, which will continue to be led by CEO, Tom O’Brien. Our firm is committed to providing the resources necessary for IAA to drive improved automotive salvage services for its customers and suppliers and expand into new geographic markets.”

Tom O’Brien, CEO of IAA, stated, “We are extremely pleased to enter into this merger agreement with Kelso & Company and believe that the transaction brings significant value to our stockholders. It enables us to continue maintaining our focus on improving our products and customer service as well as generating higher returns for our customers.”

The closing of the transaction is subject to certain terms and conditions customary for transactions of this type, including stockholder approval and the completion of financing. The transaction is expected to close during the second quarter of 2005.

Insurance Auto Auctions Inc., founded in 1982, is a total loss and specialty salvage services company that provides insurance companies with solutions to process and sell total-loss and recovered-theft vehicles. The Company currently has 78 sites across the United States.

Kelso & Company is a private equity firm located in New York City.

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