Universal Underwriters Acceptance Corp. will continue to service its outstanding subprime car loans even though it is no longer buying paper.
The 7-year-old subprime lending specialist is a subsidiary of Universal Underwriters Group.
The subprime lending business was unprofitable for Universal, says Ed Worobe, director of Universal Underwriters Acceptance Corp.
Zurich Financial, Universal Underwriters' parent company, is trying to streamline its operations.
"Zurich Financial decided to regroup and refocus on core products. Subprime finance is not one of their core products," says Worobe, pointing out that Universal Underwriters is a large, A-rated insurance company.
Worobe declined to disclose the dollar value of the finance company's portfolio or the number of dealership clients.
He would say only that it served "hundreds" of dealerships.
The finance arm stopped writing new loans on June 2 but will continue to service 22,000 outstanding loans. The shutdown is expected to be complete within four years, Worobe says.
Universal Underwriters Group of Overland Park, Kan., was founded by a group of auto dealers in 1922.
The company, acquired by Zurich Financial Services in 1982, provides insurance products to businesses that sell or service cars, trucks, motorcycles and related equipment, as well as automotive recyclers.