Unitrin, Inc. (NYSE: UTR) reported today net income of $62.9
million ($1.03 per unrestricted common share) for the fourth
quarter of 2010, compared to $66.3 million ($1.06 per unrestricted
common share) for the fourth quarter of 2009.
Net income for the full year of 2010 was $184.6 million ($2.98
per unrestricted common share), compared to $164.7 million ($2.64
per unrestricted common share) for the full year of 2009.
Income from continuing operations was $61.5 million ($1.00 per
unrestricted common share) for the fourth quarter of 2010, compared
to $66.1 million ($1.06 per unrestricted common share) for the
fourth quarter of 2009.
Income from continuing operations was $183.8 million ($2.97 per
unrestricted common share) for the full year of 2010 and included
an after-tax charge of $14.8 million to write off goodwill related
to the Company’s health insurance operation, Reserve National,
compared to $162.2 million ($2.60 per unrestricted common share)
for the full year of 2009.
Three Months Ended Year Ended Dec. 31,
Dec. 31, Dec. 31, Dec. 31,
(Dollars in millions, except per share
amounts)
2010 2009 2010 2009 Income from
Continuing Operations $ 61.5 $ 66.1 $ 183.8 $ 162.2 Income from
Discontinued Operations 1.4 0.2 0.8 2.5
Net Income $ 62.9 $ 66.3 $ 184.6 $ 164.7 Basic Net Income
Per Unrestricted Share: Continuing Operations $ 1.00 $ 1.06 $ 2.97
$ 2.60 Discontinued Operations 0.03 - 0.01
0.04 Total $ 1.03 $ 1.06 $ 2.98 $ 2.64
Don Southwell, Unitrin’s Chairman, President and Chief Executive
Officer commented, “Unitrin demonstrated solid overall operating
performance during the fourth quarter. The business lines continue
to take a disciplined approach to growth amidst an ongoing soft
property and casualty market.”
“The current period was impacted by some unusual weather events,
though underlying these events, our actions to reduce certain
exposures, maintain margins and efficiently manage capital are
delivering positive results. Collectively, these actions position
Unitrin well for 2011,” said Mr. Southwell.
Fourth Quarter
Highlights
- Kemper’s underlying combined ratio1
declined to 95.1% in the current quarter, a 2.0 percentage point
improvement versus the fourth quarter of 2009
- Unitrin Specialty introduced an
enhanced version of its personal auto product which is designed to
deliver better risk and pricing segmentation
- Unitrin Direct launched Insurance for
the i Generation™ using its innovative social networking, insurance
platform - iMingle™
- As a result of ongoing efforts to
improve agency performance, the Life and Health segment reduced the
percentage of open agencies2 to 5%, the lowest percentage in the
last twelve quarters
- Fireside Bank earned net income of $5.8
million during the fourth quarter. The tier 1 capital ratio to
average assets at December 31, 2010 was 37%; a 16 percentage point
improvement over December 31, 2009
- Successful offering of $250 million,
5-year, 6% senior notes
- Common stock repurchases for the fourth
quarter were 0.4 million shares at a cost of $9.9 million,
completing Unitrin’s prior stock repurchase program; a new $300
million stock repurchase program was announced on February 2,
2011
- Book value per share at December 31,
2010 was $34.61; an increase of 13% over December 31, 2009
Segment Results
The segment results discussed below are presented on an after
tax basis unless otherwise noted. Catastrophe losses exclude the
impact of prior year development unless otherwise noted.
Three Months Ended
Year Ended
Dec. 31,
Dec. 31,
Dec. 31,
Dec. 31,
(Dollars in Millions)
2010
2009
2010
2009
Segment Net Income (Loss): Kemper $ 9.0 $ 18.0 $ 50.6 $ 63.7
Unitrin Specialty 2.2 6.7 20.2 23.5 Unitrin Direct (1.9 ) 4.4 (1.1
) (5.3 ) Life and Health Insurance 34.6 34.4 94.9 112.1 Fireside
Bank 5.8 2.0 14.7 (5.3 )
Total Segment Net Income 49.7 65.5 179.3 188.7 Unallocated Net
Income (Loss) 11.8 0.6 4.5
(26.5 ) Income from Continuing Operations $ 61.5 $
66.1 $ 183.8 $ 162.2
Unallocated Net Income consists of realized gains (losses) on
sales of investments, net impairment losses recognized in earnings,
other expenses, dividend income and equity in net income (loss) of
Investee. A more detailed reconciliation of Total Segment Net
Income to Income from Continuing Operations is provided at the end
of this press release.
Kemper® reported net income of $9.0 million for the
fourth quarter of 2010 compared to $18.0 million for 2009. The
current quarter included $12.9 million unfavorable impact of
accident year catastrophe losses, $8.4 million of which was from an
unusual hail event in Arizona. Catastrophe losses of $0.5 million
were reported in the fourth quarter of 2009. Partially offsetting
the impact of catastrophe losses was favorable improvement in the
underlying combined ratio of 2.0 percentage points or $2.7 million.
This improvement is the result of actions taken to optimize certain
geographic exposures and shift the business mix toward Kemper’s
packaged auto and home product offerings. Favorable reserve
development3 for the fourth quarter of 2010 was $3.0 million, or
$0.7 million less favorable than 2009.
Unitrin Specialty reported net income of $2.2 million for the
fourth quarter of 2010, a decline of $4.5 million from 2009. This
decline is partially attributable to a net unfavorable change in
reserve development of $1.1 million ($3.4 million unfavorable
change in prior year development, when compared to prior year
development in 2009, partially offset by $2.3 million favorable
change in current year development, when compared to current year
development in 2009). The remaining decline in net income was
primarily driven by unusual non-catastrophe weather related events
in the fourth quarter.
Unitrin Direct reported a net loss of $1.9 million for the
fourth quarter of 2010, compared to net income of $4.4 million for
2009. In the fourth quarter of 2010, Unitrin Direct experienced an
increase in claim frequency in its liability lines of insurance,
without a corresponding increase in its physical damage lines. This
increase was outside the normal range of expected frequency for
these lines, and resulted in an 11 percentage point increase in the
underlying combined ratio.
Life and Health reported net income of $34.6 million for the
fourth quarter of 2010, essentially flat compared to 2009. Net
investment income benefitted in both periods due to above average
returns for equity method investments. These investments generated
$4.2 million and $6.0 million of net income for the three months
ended December 31, 2010 and 2009, respectively.
Fireside Bank reported net income of $5.8 million for the fourth
quarter of 2010, compared to $2.0 million for 2009. The current
quarter benefitted from a $6.8 million reduction in loan loss
reserves, partially offset by incentives paid to close certain
deposit accounts early. The reduction in loan loss reserves
reflects both improved current period recoveries on previously
charged off loans and lower estimated future losses in the
portfolio. (See the “Fireside Bank Key Metrics” table at the end of
this release for information related to Fireside Bank's run-off
plan.)
Consolidated results of operations for
the three months and years ended December 31, 2010 and 2009 are
presented below:
Three Months Ended Year Ended Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Dollars in millions, except per share
amounts)
2010 2009 2010 2009 Revenues: Earned Premiums $ 561.6 $ 600.5 $
2,289.4 $ 2,455.5 Automobile Finance Revenues 19.1 36.1 99.0 178.5
Net Investment Income 85.1 88.0 327.6 322.7 Other Income 0.3 0.5
1.3 2.5 Net Realized Gains on Sales of Investments 28.0 7.0 42.6
24.6 Other-than-temporary Impairment Losses: Total
Other-than-temporary Impairment Losses (3.8 ) (0.7 ) (17.7 ) (50.6
) Portion of Losses Recognized in Other Comprehensive Income
- (0.5 ) 1.2 0.2 Net
Impairment Losses Recognized in Earnings (3.8 ) (1.2
) (16.5 ) (50.4 ) Total Revenues 690.3
730.9 2,743.4 2,933.4
Expenses: Policyholders’ Benefits and Incurred Losses
and Loss Adjustment Expenses 407.1 411.2 1,647.2 1,739.5 Insurance
Expenses 168.7 177.5 675.5 721.2 Automobile Finance Expenses 3.2
24.6 48.1 136.2 Interest Expense on Certificates of Deposits 6.4
8.9 28.2 43.5 Write-off of Goodwill - - 14.8 1.5 Interest and Other
Expenses 18.4 14.4 68.3
61.9 Total Expenses 603.8 636.6
2,482.1 2,703.8 Income
from Continuing Operations before Income Taxes and Equity in Net
Income (Loss) of Investee 86.5 94.3 261.3 229.6 Income Tax Expense
(25.0 ) (28.3 ) (77.4 ) (66.4 ) Income
from Continuing Operations before Equity in Net Income (Loss) of
Investee 61.5 66.0 183.9 163.2 Equity in Net Income (Loss) of
Investee - 0.1 (0.1 )
(1.0 ) Income from Continuing Operations 61.5
66.1 183.8 162.2
Discontinued Operations: Income from Discontinued Operations before
Income Taxes 2.2 0.3 1.2 4.0 Income Tax Expense (0.8 )
(0.1 ) (0.4 ) (1.5 ) Income from
Discontinued Operations 1.4 0.2
0.8 2.5 Net Income $ 62.9 $ 66.3
$ 184.6 $ 164.7 Dividends
Paid to Shareholders Per Share $ 0.22 $ 0.20 $ 0.88
$ 1.07
Business segment revenues for the three months and years ended
December 31, 2010 and 2009 are presented below:
Three Months Ended Year Ended Dec. 31, Dec.
31, Dec. 31, Dec. 31, (Dollars in Millions) 2010 2009 2010
2009
Revenues: Kemper: Earned Premiums $ 220.9 $
230.9 $ 888.0 $ 931.8 Net Investment Income 14.2 13.4 52.8 42.1
Other Income 0.1 0.1 0.4
0.4 Total Kemper 235.2 244.4
941.2 974.3
Unitrin
Specialty: Earned Premiums 115.0 128.6 474.9 527.5 Net
Investment Income 6.3 6.6 24.8 20.8 Other Income 0.1
0.2 0.6 0.4 Total Unitrin
Specialty 121.4 135.4 500.3
548.7
Unitrin Direct: Earned
Premiums 64.8 80.9 282.4 345.6 Net Investment Income 5.4 5.9 21.4
18.5 Other Income - 0.2 0.1
0.9 Total Unitrin Direct 70.2
87.0 303.9 365.0
Life and Health Insurance: Earned Premiums 160.9 160.1 644.1
650.6 Net Investment Income 55.9 57.9 214.3 225.3 Other Income
0.1 - 0.2 0.7
Total Life and Health Insurance 216.9
218.0 858.6 876.6
Fireside Bank: Interest, Loan Fees and Earned Discounts 18.7
35.6 97.6 175.0 Other Automobile Finance Revenues 0.4
0.5 1.4 3.5 Automobile
Finance Revenues 19.1 36.1 99.0 178.5 Net Investment Income
0.4 0.5 1.9 2.8
Total Fireside Bank 19.5 36.6
100.9 181.3
Total Segment
Revenues 663.2 721.4 2,704.9 2,945.9 Unallocated
Dividend Income 0.2 0.2 0.5 1.3 Net Realized Gains on Sales of
Investments 28.0 7.0 42.6 24.6 Net Impairment Losses Recognized in
Earnings (3.8 ) (1.2 ) (16.5 ) (50.4 ) Other 2.7
3.5 11.9 12.0
Total
Revenues $ 690.3 $ 730.9 $ 2,743.4 $
2,933.4
Unitrin, Inc. and Subsidiaries
Consolidated Balance Sheets
(Dollars in Millions)
December 31, December 31, 2010
2009 Assets: Investments: Fixed Maturities at Fair
Value $ 4,475.3 $ 4,561.4 Equity Securities at Fair Value 550.4
195.4 Equity Method Limited Liability Investments at Cost Plus
Cumulative Undistributed Earnings 328.0 285.5 Investee (Intermec)
at Cost Plus Cumulative Undistributed Comprehensive Income - 98.4
Short-term Investments at Cost which Approximates Fair Value 402.9
397.0 Other Investments 494.2 486.1
Total
Investments 6,250.8 6,023.8
Cash 117.2 143.7 Automobile Loan Receivables at Cost and Net of
Reserve for Loan Losses 337.6 660.8 Other Receivables 606.7 642.0
Deferred Policy Acquisition Costs 525.2 521.1 Goodwill 311.8 331.8
Current and Deferred Income Tax Assets 39.6 107.6 Other Assets
169.6 142.7
Total Assets $
8,358.5 $ 8,573.5 Liabilities and
Shareholders’ Equity: Insurance Reserves: Life and Health $
3,063.7 $ 3,028.0 Property and Casualty 1,118.7
1,211.3
Total Insurance Reserves 4,182.4
4,239.3 Certificates of Deposits at Cost 321.4
682.4 Unearned Premiums 678.6 724.9 Liabilities for Income Taxes
15.1 11.7 Notes Payable at Amortized Cost 609.8 561.4 Accrued
Expenses and Other Liabilities 437.8 436.2
Total
Liabilities 6,245.1 6,655.9
Shareholders’ Equity: Common Stock 6.1 6.2 Paid-in Capital
751.1 765.9 Retained Earnings 1,198.8 1,086.7 Accumulated Other
Comprehensive Income 157.4 58.8
Total
Shareholders’ Equity 2,113.4
1,917.6 Total Liabilities and Shareholders’ Equity
$ 8,358.5 $ 8,573.5
Selected financial information for the Kemper segment
follows:
Results of
Operations
Three Months Ended Year Ended Dec. 31,
Dec. 31, Dec. 31, Dec. 31, (Dollars in Millions) 2010 2009
2010 2009 Earned Premiums: Automobile $ 134.8 $ 143.5 $ 544.7 $
584.6 Homeowners 72.8 74.1 290.0 294.0 Other Personal 13.3
13.3 53.3 53.2
Total Earned Premiums 220.9 230.9 888.0 931.8 Net Investment Income
14.2 13.4 52.8 42.1 Other Income 0.1 0.1
0.4 0.4 Total Revenues
235.2 244.4 941.2 974.3
Incurred Losses and LAE 164.2 157.3 633.6 627.8 Insurance
Expenses 61.1 62.0 243.7
260.3 Operating Profit 9.9 25.1 63.9 86.2 Income Tax
Expense (0.9 ) (7.1 ) (13.3 ) (22.5 )
Net Income $ 9.0 $ 18.0 $ 50.6 $ 63.7
Ratios Based On
Earned Premiums
Three Months Ended Year Ended Dec. 31, Dec. 31, Dec. 31,
Dec. 31, 2010 2009 2010
2009 Incurred Loss and LAE Ratio 74.3 % 68.1 % 71.4 %
67.4 % Incurred Expense Ratio 27.7 % 26.9 %
27.4 % 27.9 % Combined Ratio 102.0 % 95.0 %
98.8 % 95.3 %
Underlying
Combined Ratio
Three Months Ended Year Ended Dec.
31, Dec. 31, Dec. 31, Dec.
31, 2010 2009 2010 2009 Combined
Ratio as Reported 102.0 % 95.0 % 98.8 % 95.3 % Accident Year
Catastrophes -9.0 % -0.3 % -7.9 % -5.2 % Effect of Prior Year
Catastrophe Development 0.3 % 0.3 % 0.5 % 2.0 % Effect of Prior
Year Non-Catastrophe Reserve Development 1.8 % 2.1 % 2.2 % 4.6 %
Underlying Combined Ratio 95.1 % 97.1 % 93.6 % 96.7 %
Selected financial information for the Unitrin Specialty
segment follows:
Results of
Operations
Three Months Ended Year Ended Dec. 31,
Dec. 31, Dec. 31, Dec. 31, (Dollars in Millions) 2010 2009
2010 2009 Earned Premiums: Personal Automobile $ 104.7 $ 115.9 $
431.3 $ 471.5 Commercial Automobile 10.3 12.7
43.6 56.0 Total Earned Premiums
115.0 128.6 474.9 527.5 Net Investment Income 6.3 6.6 24.8 20.8
Other Income 0.1 0.2 0.6
0.4 Total Revenues 121.4 135.4
500.3 548.7 Incurred Losses and
LAE 96.4 101.0 383.0 418.8 Insurance Expenses 23.4
25.2 92.7 99.4 Operating
Profit 1.6 9.2 24.6 30.5 Income Tax (Expense) Benefit 0.6
(2.5 ) (4.4 ) (7.0 ) Net Income $ 2.2
$ 6.7 $ 20.2 $ 23.5
Ratios Based On
Earned Premiums
Three Months Ended Year Ended Dec. 31, Dec. 31, Dec. 31,
Dec. 31, 2010 2009 2010 2009 Incurred Loss and LAE Ratio 83.8 %
78.5 % 80.6 % 79.4 % Incurred Expense Ratio 20.3 %
19.6 % 19.5 % 18.8 % Combined Ratio 104.1 %
98.1 % 100.1 % 98.2 %
Underlying
Combined Ratio
Three Months Ended Year Ended Dec.
31, Dec. 31, Dec. 31, Dec.
31, 2010 2009 2010 2009 Combined
Ratio as Reported 104.1 % 98.1 % 100.1 % 98.2 % Accident Year
Catastrophes -0.2 % -0.4 % -0.6 % -0.8 % Effect of Prior Year
Catastrophe Development 0.0 % 0.0 % 0.0 % 0.0 % Effect of Prior
Year Non-Catastrophe Reserve Development -2.2 % 2.2 % -0.8 % 1.5 %
Underlying Combined Ratio 101.7 % 99.9 % 98.7 % 98.9 %
Selected financial information for the Unitrin Direct segment
follows:
Results of
Operations
Three Months Ended Year Ended Dec. 31,
Dec. 31, Dec. 31, Dec. 31, (Dollars in Millions) 2010 2009
2010 2009 Earned Premiums: Automobile $ 62.6 $ 79.3 $ 273.5 $ 338.0
Homeowners 2.2 1.5 8.7 7.1 Other - 0.1
0.2 0.5 Total Earned Premiums 64.8 80.9
282.4 345.6 Net Investment Income 5.4 5.9 21.4 18.5 Other Income
- 0.2 0.1 0.9
Total Revenues 70.2 87.0
303.9 365.0 Incurred Losses and LAE 55.7 57.7
223.9 269.1 Insurance Expenses 19.9 23.5 87.1 107.0 Write-off of
Goodwill - - - 1.5
Operating Profit (Loss) (5.4 ) 5.8 (7.1 ) (12.6 ) Income Tax
(Expense) Benefit 3.5 (1.4 ) 6.0
7.3 Net Income (Loss) $ (1.9 ) $ 4.4 $ (1.1 )
$ (5.3 )
Ratios Based On
Earned Premiums
Three Months Ended Year Ended Dec. 31, Dec. 31, Dec. 31,
Dec. 31, 2010 2009 2010 2009 Incurred Loss and LAE Ratio 86.0 %
71.3 % 79.3 % 77.9 % Incurred Expense Ratio 30.7 %
29.0 % 30.8 % 31.4 % Combined Ratio 116.7 %
100.3 % 110.1 % 109.3 %
Underlying
Combined Ratio
Three Months Ended Year Ended Dec.
31, Dec. 31, Dec. 31, Dec.
31, 2010 2009 2010 2009 Combined
Ratio as Reported 116.7 % 100.3 % 110.1 % 109.3 % Accident Year
Catastrophes
-0.9
% -0.5 % -0.6 % -0.9 % Effect of Prior Year Catastrophe Development
0.0
% -0.1 % -0.1 % -0.1 % Effect of Prior Year Non-Catastrophe Reserve
Development -1.2 % 4.0 % 2.5 % 3.6 % Underlying Combined Ratio
114.6
% 103.7 % 111.9 % 111.9 %
Selected financial information for the Life and Health
Insurance segment follows:
Results of
Operations
Three Months Ended Year Ended Dec. 31,
Dec. 31, Dec. 31, Dec. 31, (Dollars in Millions) 2010 2009
2010 2009 Earned Premiums: Life $ 98.4 $ 98.6 $ 396.7 $ 399.7
Accident and Health 41.4 40.3 161.9 159.2 Property 21.1
21.2 85.5 91.7
Total Earned Premiums 160.9 160.1
644.1 650.6 Net Investment Income 55.9
57.9 214.3 225.3 Other Income 0.1 -
0.2 0.7 Total Revenues 216.9
218.0 858.6 876.6
Policyholders’ Benefits and Incurred Losses and LAE 91.0 95.2 406.8
423.8 Insurance Expenses 72.8 73.2 283.0 284.3 Write-off of
Goodwill - - 14.8
- Operating Profit 53.1 49.6 154.0 168.5 Income Tax Expense
(18.5 ) (15.2 ) (59.1 ) (56.4 ) Net
Income $ 34.6 $ 34.4 $ 94.9 $ 112.1
Selected financial information for the Fireside Bank segment
follows:
Results of
Operations
Three Months Ended Year Ended Dec. 31,
Dec. 31, Dec. 31, Dec. 31, (Dollars in Millions) 2010 2009
2010 2009 Interest, Loan Fees and Earned Discounts $ 18.7 $ 35.6 $
97.6 $ 175.0 Other Automobile Finance Revenues 0.4
0.5 1.4 3.5 Total
Automobile Finance Revenues 19.1 36.1 99.0 178.5 Net Investment
Income 0.4 0.5 1.9
2.8 Total Revenues 19.5 36.6
100.9 181.3 Provision for Loan Losses
(10.5 ) 10.1 (14.2 ) 60.2 Interest Expense on Certificates of
Deposits 6.4 8.9 28.2 43.5 Incentives to Close Deposit Accounts
Early 1.6 - 4.6 0.1 General and Administrative Expenses 12.1
14.5 57.7 75.9
Operating Profit 9.9 3.1 24.6 1.6 Income Tax Expense (4.1 )
(1.1 ) (9.9 ) (6.9 ) Net Income (Loss) $ 5.8
$ 2.0 $ 14.7 $ (5.3 ) Automobile Loan
Originations $ - $ - $ - $ 77.0
Fireside Bank Key
Metrics
Dec. 31, Dec. 31, At Plan (Dollars in
Millions) 2010 2009 Inception Net Automobile Loan
Receivables Outstanding $ 381.3 $ 744.1 $ 1,125.2 Loans 30
or more days delinquent: Dollars $ 19.3 $ 76.1 $ 103.4 As a
percentage of Reserve for Loan Losses 44.2 % 91.4 % 91.0 %
Reserve for Loan Losses: Dollars $ 43.7 $ 83.3 $ 113.6 As a
percentage of Net Automobile Receivables Outstanding 11.5 % 11.2 %
10.1 % Cash and U.S. Treasury and Agency Investments $ 224.8
$ 214.0 $ 204.7 Certificates of Deposits: Maturing in One
Year or Less $ 180.6 $ 245.4 $ 425.3 Maturing in More than One Year
140.8 437.0 629.1 Total $
321.4 $ 682.4 $ 1,054.4 Cash and U.S.
Treasury and Agency Investments as a percentage of Certificates of
Deposits 69.9 % 31.4 % 19.4 % Total Capital $ 249.4 $ 233.4
$ 229.6 Tier 1 Capital $ 228.9 $ 201.2 $ 207.2 Tier 1 Capital to
Total Average Assets 37.3 % 21.3 % 15.6 % Tier 1 Capital to Net
Automobile Loan Receivables Outstanding 60.0 % 27.0 % 18.4 %
Use of Non-GAAP Measures
Underlying Combined Ratio is a non-GAAP measure, which is
computed as the difference between three operating ratios: the
combined ratio, the effect of catastrophes (excluding development
of prior year catastrophes) on the combined ratio and the effect of
prior year reserve development (including development on prior year
catastrophes) on the combined ratio. The most directly comparable
GAAP measure is the combined ratio. We believe the underlying
combined ratio is useful to investors and is used by management to
reveal the trends in our Property and Casualty business that may be
obscured by catastrophe losses and prior year reserve development.
These catastrophe losses cause our loss trends to vary
significantly between periods as a result of their incidence of
occurrence and magnitude, and can have a significant impact on the
combined ratio. Prior year reserve developments are caused by
unexpected loss development on historical reserves. We believe it
is useful for investors to evaluate these components separately and
in the aggregate when reviewing our underwriting performance. The
underlying combined ratio should not be considered a substitute for
the combined ratio and does not reflect the overall underwriting
profitability of our business.
A reconciliation of Total Segment Net Income to Income from
Continuing Operations is as follows:
Three Months Ended Year Ended Dec. 31, Dec.
31, Dec. 31, Dec. 31, (Dollars in Millions) 2010 2009 2010
2009 Total Segment Net Income
$
49.7
$
65.5
$
179.3
$
188.7 Unallocated Net Income (Loss) From: Unallocated Dividend
Income 0.1 0.1 0.4 1.1 Net Realized Gains on Sales of Investments
18.4 4.5 27.9 16.0 Net Impairment Losses Recognized in Earnings
(2.4 ) (0.8 ) (10.7 ) (32.8 ) Other Expense, Net (4.3 )
(3.3 ) (13.0 ) (9.8 ) Income from Continuing
Operations before Equity in Net Income (Loss) of Investee 61.5 66.0
183.9 163.2 Equity in Net Income (Loss) of Investee -
0.1 (0.1 ) (1.0 ) Income from
Continuing Operations
$
61.5 $ 66.1 $ 183.8 $ 162.2 1
Underlying combined ratio is a non-GAAP
measure. See the discussion under heading "use of
non-GAAP measures."
2
Open agencies are those agency service
territories not assigned to an active agent but rather are serviced
by field management. Minimizing the percentage of open agencies
leads to improved sales and policyholder retention.
3
Represent reserve development on
catastrophe and non-catastrophe losses for prior year reserve
estimates unless otherwise noted.
Cautionary Note Regarding Forward-Looking Statements
This press release may contain or incorporate by reference
information that includes or is based on forward-looking statements
within the meaning of Section 27A of the Securities Act of 1933 and
Section 21E of the Securities Exchange Act of 1934. Forward-looking
statements give expectations or forecasts of future events. The
reader can identify these statements by the fact that they do not
relate strictly to historical or current facts. They use words such
as “believe(s),” “goal(s),” “target(s),” “estimate(s),”
“anticipate(s),” “forecast(s),” “project(s),” “plan(s),”
“intend(s),” “expect(s),” “might,” “may” and other words and terms
of similar meaning in connection with a discussion of future
operating financial performance or financial condition.
Forward-looking statements, in particular, include statements
relating to future actions, prospective services or products,
future performance or results of current and anticipated services
or products, sales efforts, expenses, the outcome of contingencies
such as legal proceedings, trends in operations and financial
results.
Any or all forward-looking statements may turn out to be wrong,
and, accordingly, readers are cautioned not to place undue reliance
on such statements, which speak only as of the date of this press
release. These statements are based on current expectations and the
current economic environment. They involve a number of risks and
uncertainties that are difficult to predict. These statements are
not guarantees of future performance; actual results could differ
materially from those expressed or implied in the forward-looking
statements. Forward-looking statements can be affected by
inaccurate assumptions or by known or unknown risks and
uncertainties. Many such factors will be important in determining
the Company’s actual future results and financial condition. The
reader should consider the following list of general factors that
could affect the Company’s future results and financial condition,
as well as those discussed under Item 1A., Risk Factors, in the
Company’s 2010 Annual Report on Form 10-K.
Among the general factors that could cause actual results and
financial condition to differ materially from estimated results and
financial condition are:
- The incidence, frequency, and severity
of catastrophes occurring in any particular reporting period or
geographic concentration, including natural disasters, pandemics
and terrorist attacks or other man-made events;
- The number and severity of insurance
claims (including those associated with catastrophe losses) and
their impact on the adequacy of loss reserves;
- Changes in facts and circumstances
affecting assumptions used in loss and LAE reserves;
- The impact of inflation on insurance
claims, including, but not limited to, the effects attributed to
scarcity of resources available to rebuild damaged structures,
including labor and materials and the amount of salvage value
recovered for damaged property;
- Changes in the pricing or availability
of reinsurance, or in the financial condition of reinsurers and
amounts recoverable therefrom;
- Orders, interpretations or other
actions by regulators that impact the reporting, adjustment and
payment of claims;
- Impact of residual market assessments /
assessments for insurance industry insolvencies;
- Changes in industry trends and
significant industry developments;
- Uncertainties related to regulatory
approval of insurance rates, policy forms, license applications and
similar matters;
- Developments related to insurance
policy claims and coverage issues including, but not limited to,
interpretations or decisions by courts or regulators that may
govern or influence such issues arising with respect to losses
incurred in connection with hurricanes and other catastrophes;
- Changes in ratings by credit rating
agencies, including A.M. Best Co., Inc.;
- Adverse outcomes in litigation or other
legal or regulatory proceedings involving Unitrin or its
subsidiaries or affiliates;
- Regulatory, accounting or tax changes
that may affect the cost of, or demand for, the Company’s products
or services;
- Governmental actions, including, but
not limited to, implementation of the provisions of the Patient
Protection and Affordable Care Act, the Health Care and Education
Reconciliation Act of 2010 and the Dodd-Frank Act, new laws or
regulations or court decisions interpreting existing laws and
regulations or policy provisions;
- Changes in distribution channels,
methods or costs resulting from changes in laws or regulations,
lawsuits or market forces;
- Changes in laws or regulations
governing or affecting the regulatory status of industrial banks,
such as Fireside Bank, and their parent companies, including
minimum capital requirements and restrictions on the non-financial
activities and equity investments of companies that acquire control
of industrial banks;
- Changes in the estimated rates of
automobile loan receivables net charge-off used to estimate
Fireside Bank’s reserve for loan losses, including, but not limited
to, changes in general economic conditions, unemployment rates and
the impact of changes in the value of collateral held;
- The degree of success in effecting an
orderly wind-down of the operations of Fireside Bank and the
recovery of Unitrin’s investment in Fireside Bank;
- Changes in general economic conditions,
including performance of financial markets, interest rates,
unemployment rates and fluctuating values of Company
investments;
- The level of success and costs expended
in realizing economies of scale and implementing significant
business consolidations and technology initiatives;
- Heightened competition, including, with
respect to pricing, entry of new competitors and the development of
new products by new and existing competitors;
- Increased costs and risks related to
data security;
- Absolute and relative performance of
the Company’s products or services; and
- Other risks and uncertainties described
from time to time in Unitrin’s filings with the U.S. Securities and
Exchange Commission (“SEC”).
No assurances can be given that the results contemplated in any
forward-looking statements will be achieved or will be achieved in
any particular timetable. The Company assumes no obligation to
publicly correct or update any forward-looking statements as a
result of events or developments subsequent to the date of this
press release. The reader is advised, however, to consult any
further disclosures Unitrin makes on related subjects in its
filings with the SEC.
Unitrin is a diversified insurance holding company, with
subsidiaries that principally provide life, auto, homeowners and
other insurance products for individuals and small businesses.
Unitrin’s principal businesses are:
- Kemper, which provides auto,
homeowners and other insurance products to individuals through a
network of independent agents,
- Unitrin Direct, which markets
auto, homeowners and renters insurance to consumers via direct
mail, the Internet and employer-sponsored employee benefit programs
and other affinity relationships,
- Unitrin Specialty, which
provides auto insurance through a network of independent agents and
brokers to individuals and small businesses which have had
difficulty procuring insurance through traditional channels,
usually due to adverse driving records or claim or credit
histories, and
- Life and Health Insurance, which
specializes in the sale of life and health insurance products to
persons of modest incomes through a network of employee
agents.
Kemper® is a registered service mark of Unitrin, Inc. The
terms iMingle™ and Insuring the i Generation™, and the logos
containing such terms, are service marks or trade marks of Unitrin
Direct Insurance Company.
Additional information about Unitrin, including a copy of its
Annual Report on Form 10-K for the year ended December 31, 2010, is
available by visiting its website (www.unitrin.com).
Unitrin (NYSE:UTR)
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