CHICAGO--(BUSINESS WIRE)--Jan. 30, 2004--Unitrin, Inc. (NYSE:UTR)
reported today net income of $44.4 million ($0.66 per common share)
for the three months ended December 31, 2003, compared to a net loss
of $3.7 million ($0.05 per common share) for the same period in 2002.
For the year ended December 31, 2003, Unitrin reported net income of
$123.6 million ($1.83 per common share), compared to a total net loss
of $8.2 million ($0.12 per common share) for the same period in 2002.
Net Income increased primarily due to higher segment operating profit
and higher realized investment gains.
Earned Premiums were $624.1 million for the three months ended
December 31, 2003, an increase of $71.6 million, compared to the same
period in 2002. Earned premiums increased due primarily to an increase
of $83.3 million in earned premiums in the Kemper Auto and Home
segment and an increase of $8.7 million in earned premiums in the
Unitrin Direct segment, partially offset by a decrease of $22.9
million in earned premiums in the Multi Lines Insurance segment.
Earned Premiums were $2,457.2 million for the year ended December
31, 2003, an increase of $579.2 million, compared to the same period
in 2002. Earned premiums increased due primarily to an increase of
$486.3 million in earned premiums in the Kemper Auto and Home segment,
an increase of $76.3 million in earned premiums in the Unitrin Direct
segment and an increase of $59.1 million in earned premiums in the
Specialty Lines Insurance segment, partially offset by a decrease of
$50.8 million in earned premiums in the Multi Lines Insurance segment.
Unitrin closed its acquisition of the personal lines property and
casualty insurance business ("Kemper Auto and Home") of the Kemper
Insurance Companies ("KIC") and the purchase of the stock of KIC's
direct distribution personal lines subsidiaries at the end of the
second quarter of 2002. The results of the purchased businesses are
included in the Company's results of operations from the date of
acquisition.
Consumer Finance Revenues increased by $4.8 million and $23.9
million for the three months and year ended December 31, 2003,
respectively, compared to the same periods in 2002, due primarily to a
higher level of loans outstanding.
Net Investment Income increased by $8.7 million and $10.0 million
for the three months and year ended December 31, 2003, respectively,
compared to the same periods in 2002, due to higher levels of
investments, partially offset by lower yields on investments. Other
Income decreased by $11.1 million and $14.7 million for the three
months and year ended December 31, 2003, compared to the same periods
in 2002, due primarily to lower administration fees earned from KIC to
administer certain run-off business.
Net Realized Investment Gains (Losses) totaled $8.4 million
pre-tax for the three months ended December 31, 2003, compared to $0.5
million for the same period in 2002. Net Realized Investment Gains
(Losses) for the three months ended December 31, 2003 includes gains
on sales of fixed maturities of $3.3 million, gains of $7.2 million
from sales of a portion of the Company's investment in Northrop
Grumman common stock, gains of $1.9 million from sales of a portion of
the Company's investment in Hartford Financial Services Group, Inc.
common stock, and gains from sales of investments in equity securities
of 9 other issuers. Net Realized Investment Gains (Losses) for the
three months ended December 31, 2002 includes a pre-tax gain of $1.0
million resulting from sales of various equity securities.
Net Realized Investment Gains (Losses) for the three months ended
December 31, 2003 and 2002 includes pre-tax losses of $6.2 million and
$0.4 million, respectively, resulting from other than temporary
declines in the fair value of investments. The Company cannot
anticipate when or if similar investment losses may occur in the
future.
Net Realized Investment Gains (Losses) totaled a gain of $33.9
million pre-tax for the year ended December 31, 2003, compared to a
loss of $13.3 million pre-tax for the same period in 2002. Net
Realized Investment Gains (Losses) for the year ended December 31,
2003 includes pre-tax gains on sales of fixed maturities of $13.6
million, including recoveries from sales of fixed maturities written
down in prior years. Net Realized Investment Gains (Losses) for the
year ended December 31, 2003 also includes pre-tax gains of $12.0
million resulting from the sale of the Company's investment in ITT
Industries, Inc. common stock, pre-tax gains of $7.2 million from
sales of a portion of the Company's investment in Northrop Grumman
common stock, pre-tax gains of $6.6 million from sales of the
Company's investments in Insurance Services Office, Inc. common stock,
pre-tax gains of $5.7 million from sales of a portion of the Company's
investment in Hartford Financial Services Group, Inc. common stock and
pre-tax gains of $4.4 million resulting from sales of a portion of the
Company's investment in Baker Hughes common stock. The other gains and
losses from sales of equity securities included in Net Realized
Investment Gains (Losses) come from sales of investments in 54
different issuers. Net Realized Investment Gains (Losses) for the year
ended December 31, 2002 includes a pre-tax gain of $8.1 million from
the sale of certain investment real estate and pre-tax gains of $1.5
million from sales of a portion of the Company's investment in Baker
Hughes common stock.
Net Realized Investment Gains (Losses) for the years ended
December 31, 2003 and 2002 also includes pre-tax losses of $20.5
million and $27.4 million, respectively, resulting from other than
temporary declines in the fair value of investments. The Company
cannot anticipate when or if similar investment losses may occur in
the future.
After adjusting for sales of a portion of the Company's investment
in Northrop Grumman common stock, the fair value of Unitrin's
Corporate Investments (Northrop Grumman common and preferred stock and
the common stocks of Baker Hughes Inc. and UNOVA, Inc.) increased by
$192.8 million for the three months ended December 31, 2003. The
changes in fair values of Unitrin's Corporate Investments are
summarized below:
Fair Value Increase Fair Value
(Dollars in Millions) September 30, in Fair December 31,
2003 Values Dispositions 2003
---------------------- ------------ --------- ------------ -----------
Northrop Grumman Common
Stock $660.9 $69.5 $(96.5) $633.9
Northrop Grumman
Preferred Stock 209.3 11.6 - 220.9
Baker Hughes Inc.
Common Stock 75.6 6.6 - 82.2
UNOVA, Inc. Common
Stock 185.4 105.1 - 290.5
------------ --------- ----------- ------------
Total Fair Value $1,131.2 $192.8 $(96.5) $1,227.5
============ ========= =========== ============
Quarterly Segment Results
Unitrin is engaged, through its subsidiaries, in the property and
casualty insurance, life and health insurance and consumer finance
businesses. The Company conducts its operations through six operating
segments: Multi Lines Insurance, Specialty Lines Insurance, Kemper
Auto and Home, Unitrin Direct, Life and Health Insurance and Consumer
Finance.
Earned Premiums in the Multi Lines Insurance segment decreased by
$22.9 million for the three months ended December 31, 2003, compared
to the same period in 2002. Commercial lines earned premiums decreased
by $22.2 million due primarily to lower volume, partially offset by
higher premium rates. Net Investment Income in the Multi Lines
Insurance segment increased by $2.6 million, due primarily to higher
levels of investments.
Operating results in the Multi Lines Insurance segment improved by
$41.5 million for the three months ended December 31, 2003, compared
to the same period in 2002. Total loss reserve development (which
reflects changes in estimates of prior year reserves in the current
period, including development on catastrophes) had a favorable effect
of approximately $4 million for the three months ended December 31,
2003, compared to an adverse effect of approximately $14 million for
the same period in 2002. Catastrophe losses were $1.7 million for the
three months ended December 31, 2003, a decrease of $5.3 million
compared to the same period in 2002. Excluding reserve development and
catastrophes, operating results improved, due primarily to improved
premium rate adequacy and the effects of the Company's efforts to
re-underwrite its commercial lines business.
Earned Premiums in the Specialty Lines Insurance segment increased
$2.8 million for the three months ended December 31, 2003, compared to
the same period in 2002, due to higher premium rates, partially offset
by lower volume. Operating Profit in the Specialty Lines Insurance
segment increased by $11.8 million for the three months ended December
31, 2003, compared to the same period last year, due primarily to
improved premium rate adequacy.
Earned Premiums in the Kemper Auto and Home segment increased by
$83.3 million for the three months ended December 31, 2003, compared
to the same period in 2002, due primarily to the inclusion of a full
quarter of premiums from policies with annual renewal dates in the
first and second quarters of 2003.
The Kemper Auto and Home segment is administering on behalf of KIC
all policies issued prior to the closing and certain policies issued
or renewed after the closing, but excluded from the acquisition. Other
Income in the Kemper Auto and Home segment decreased by $10.9 million
for the three months ended December 31, 2003, compared to the three
months ended December 31, 2002, due to lower volume of administered
policies and related claims. The Company anticipates that the volume
of administered policies and related claims will continue to decrease.
The Kemper Auto and Home segment recorded an Operating Loss of
$0.3 million for the three months ended December 31, 2003. Operating
results in the Kemper Auto and Home segment improved for the third
consecutive quarter due primarily to improved premium rate adequacy.
Earned Premiums in the Unitrin Direct segment increased by $8.7
million for the three months ended December 31, 2003, compared to the
same period in 2002, due to higher volume of insurance and higher
premium rates. For the three months ended December 31, 2003, the
Unitrin Direct segment recorded an Operating Loss of $2.7 million,
compared to an Operating Loss of $10.4 million for the same period in
2002. The Unitrin Direct segment continues its progress towards
achieving economies of scale. The Company expects that Unitrin Direct
will come close to achieving an operating profit in 2004.
Earned Premiums in the Life and Health Insurance segment decreased
by $0.3 million for the three months ended December 31, 2003, compared
to the same period in 2002. Operating Profit in the Life and Health
Insurance segment increased by $1.1 million for the three months ended
December 31, 2003, compared to the same period in 2002, primarily due
to improved results on property insurance sold by the Life and Health
Insurance segment's career agents, partially offset by higher benefits
as a percentage of premium on accident and health insurance.
Revenues in the Consumer Finance segment increased by $4.8 million
for the three months ended December 31, 2003, compared to the same
period in 2002, due primarily to a higher level of loans outstanding.
Operating Profit in the Consumer Finance segment decreased by $5.3
million for the three months ended December 31, 2003, compared to the
same period in 2002, due primarily to a higher provision for loan
losses.
Results for Unitrin, Inc. for the three months and years ended
December 31, 2003 and 2002 are as follows:
Three Months Ended Year Ended
(Dollars and Shares in ------------------- -------------------
Millions, Except Per Dec. 31, Dec. 31, Dec. 31, Dec. 31,
Share Amounts) 2003 2002 2003 2002
------------------------------ --------- --------- --------- ---------
Revenues:
Earned Premiums $624.1 $552.5 $2,457.2 $1,878.0
Consumer Finance Revenues 50.6 45.8 195.7 171.8
Net Investment Income 64.7 56.0 231.9 221.9
Other Income 3.7 14.8 25.1 39.8
Net Realized Investment
Gains (Losses) 8.4 0.5 33.9 (13.3)
--------- --------- --------- ---------
Total Revenues 751.5 669.6 2,943.8 2,298.2
--------- --------- --------- ---------
Expenses:
Insurance Claims and
Policyholders' Benefits 426.5 423.3 1,740.9 1,432.3
Insurance Expenses 207.0 213.5 844.1 730.7
Consumer Finance Expenses 44.3 34.2 154.6 132.9
Interest and Other Expenses 14.3 8.9 45.3 26.9
--------- --------- --------- ---------
Total Expenses 692.1 679.9 2,784.9 2,322.8
--------- --------- --------- ---------
Income (Loss) before Income
Taxes and Equity in Net
Income (Loss) of Investee 59.4 (10.3) 158.9 (24.6)
Income Tax (Benefit) Expense 15.1 (6.8) 34.1 (18.3)
--------- --------- --------- ---------
Income (Loss) before Equity in
Net Income (Loss) of Investee 44.3 (3.5) 124.8 (6.3)
Equity in Net Income (Loss) of
Investee 0.1 (0.2) (1.2) (1.9)
--------- --------- --------- ---------
Net Income (Loss) $44.4 $(3.7) $123.6 $(8.2)
========= ========= ========= =========
Net Income (Loss) Per Share $0.66 $(0.05) $1.83 $(0.12)
========= ========= ========= =========
Net Income (Loss) Per Share
Assuming Dilution $0.65 $(0.05) $1.82 $(0.12)
========= ========= ========= =========
Weighted Average Common Shares
Outstanding 67.7 67.6 67.6 67.7
========= ========= ========= =========
Weighted Average Common Shares
and Equivalent Shares
Outstanding
Assuming Dilution 68.0 67.6 67.7 67.7
========= ========= ========= =========
Selected business segment revenue information for Unitrin, Inc.
for the three months and years ended December 31, 2003 and 2002 is as
follows:
Three Months Ended Year Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Dollars in Millions) 2003 2002 2003 2002
------------------------------ --------- --------- --------- ---------
Revenues:
Segment Revenues:
Multi Lines Insurance:
Earned Premiums $125.0 $147.9 $533.4 $584.2
Net Investment Income 9.4 6.8 34.2 31.6
--------- --------- --------- ---------
Total Multi Lines
Insurance 134.4 154.7 567.6 615.8
--------- --------- --------- ---------
Specialty Lines Insurance:
Earned Premiums 125.6 122.8 512.0 452.9
Net Investment Income 4.1 3.5 15.9 14.8
--------- --------- --------- ---------
Total Specialty Lines
Insurance 129.7 126.3 527.9 467.7
--------- --------- --------- ---------
Kemper Auto and Home:
Earned Premiums 167.8 84.5 600.4 114.1
Net Investment Income 5.3 2.3 16.2 2.8
Other Income 2.0 12.9 17.8 31.9
--------- --------- --------- ---------
Total Kemper Auto and
Home 175.1 99.7 634.4 148.8
--------- --------- --------- ---------
Unitrin Direct:
Earned Premiums 40.6 31.9 149.9 73.6
Net Investment Income 1.3 0.4 3.3 0.9
--------- --------- --------- ---------
Total Unitrin Direct 41.9 32.3 153.2 74.5
--------- --------- --------- ---------
Life and Health Insurance:
Earned Premiums 165.1 165.4 661.5 653.2
Net Investment Income 34.9 33.6 134.9 151.6
Other Income 1.1 1.1 4.4 4.3
--------- --------- --------- ---------
Total Life and Health
Insurance 201.1 200.1 800.8 809.1
--------- --------- --------- ---------
Consumer Finance 50.6 45.8 195.7 171.8
--------- --------- --------- ---------
Total Segment Revenues 732.8 658.9 2,879.6 2,287.7
Dividend Income from
Corporate Investments 9.6 9.6 25.9 26.5
Other Investment Income 0.3 0.3 2.6 0.7
Net Realized Investment
Gains (Losses) 8.4 0.5 33.9 (13.3)
Other Income 0.6 0.8 2.9 3.6
Eliminations (0.2) (0.5) (1.1) (7.0)
--------- --------- --------- ---------
Total Revenues $751.5 $669.6 $2,943.8 $2,298.2
========= ========= ========= =========
Selected business segment financial information for Unitrin, Inc.
for the three months and years ended December 31, 2003 and 2002 is as
follows:
Three Months Ended Year Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Dollars in Millions) 2003 2002 2003 2002
------------------------------ --------- --------- --------- ---------
Segment Operating Profit
(Loss):
Multi Lines Insurance $14.1 $(27.4) $24.5 $(93.2)
Specialty Lines Insurance 10.8 (1.0) 38.9 (0.6)
Kemper Auto and Home (0.3) (7.9) (33.3) (19.0)
Unitrin Direct (2.7) (10.4) (19.4) (35.1)
Life and Health Insurance 20.1 19.0 68.9 87.8
Consumer Finance 6.3 11.6 41.1 38.9
--------- --------- --------- ---------
Total Segment Operating
Profit (Loss) 48.3 (16.1) 120.7 (21.2)
Dividend Income from
Corporate Investments 9.6 9.6 25.9 26.5
Net Realized Investment
Gains (Losses) 8.4 0.5 33.9 (13.3)
Other Income (Expense), Net (6.7) (3.8) (20.5) (9.6)
Eliminations (0.2) (0.5) (1.1) (7.0)
--------- --------- --------- ---------
Income (Loss) before Income
Taxes and Equity
in Net Income (Loss) of
Investee $59.4 $(10.3) $158.9 $(24.6)
========= ========= ========= =========
This press release contains forward-looking statements, which
usually include words such as "believe(s)," "goal(s)," "target(s),"
"estimate(s)," "anticipate(s)," "forecast(s)," "project(s),"
"plan(s)," "intend(s)," "expect(s)," "may," "might" and similar
expressions. 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. Forward-looking statements are subject to risks and
uncertainties which could cause actual results to differ materially
from those contemplated in such statements. Such risks and
uncertainties include, but are not limited to, changes in economic
factors (such as interest rates, unemployment rates and stock market
fluctuations), changes in competitive conditions (including
availability of labor with required technical or other skills), the
number and severity of insurance claims (including those associated
with catastrophe losses), changes in the financial condition of
reinsurers and amounts recoverable therefrom, changes in industry
trends, regulatory approval of insurance rates, policy forms, license
applications and similar matters, governmental actions (including new
laws or regulations or court decisions interpreting existing laws and
regulations), adverse judgments in litigation to which the Company or
its subsidiaries are parties, changes in ratings by credit rating
agencies and/or A.M. Best Co., Inc., realization of economies of
scale, the successful migration of the Kemper Auto and Home business,
and other risks and uncertainties described from time to time in the
Company's filings with the Securities and Exchange Commission. 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. Unitrin assumes no obligation to release
publicly any revisions to any forward-looking statements as a result
of events or developments subsequent to the date of this press
release.
Unitrin, Inc.'s subsidiaries are engaged in three businesses:
property and casualty insurance, life and health insurance, and
consumer finance. Additional information about Unitrin is available
for viewing by visiting its website (www.unitrin.com).
CONTACT: Unitrin, Inc.
Edward J. Konar, 312-661-4930
investor.relations@unitrin.com
SOURCE: Unitrin, Inc.