CHICAGO--(BUSINESS WIRE)--Feb. 1, 2006--Unitrin, Inc. (NYSE:UTR)
reported today net income of $86.7 million ($1.26 per common share)
for the fourth quarter of 2005, compared to $73.3 million ($1.07 per
common share) for the fourth quarter of 2004. For the year ended
December 31, 2005, Unitrin reported net income of $255.5 million
($3.70 per common share), compared to $240.2 million ($3.51 per common
share) in the same period in 2004. Net income increased due primarily
to improved operating results, partially offset by lower net realized
investment gains.
Dick Vie, Unitrin Chairman and Chief Executive Officer, commented,
"We are pleased to report record fourth quarter and full year
operating results. This year's fourth quarter was impacted by several
significant items. Consolidated favorable after-tax loss and loss
adjustment expenses (LAE) reserve development was $13.9 million for
the fourth quarter of 2005 compared to $4.9 million for the same
period in 2004. The impact of positive reserve development was
partially offset by $4.2 million higher after-tax catastrophe losses,
largely the result of Hurricane Wilma. We also recognized a tax
benefit of about $14 million in the fourth quarter of 2005 related to
prior years Federal Income Taxes. Our operating results exclude gains
on sales of investments and net income from our Investee - Intermec
(formerly known as UNOVA)." Vie also commented that "We repurchased
approximately $19 million of Unitrin common stock during the fourth
quarter bringing our repurchases up to $49 million for the year."
Total Revenue
Total Revenue was $755.9 million for the fourth quarter of 2005,
compared to $759.7 million for the fourth quarter of 2004. Earned
premiums declined slightly as higher earned premiums at Unitrin Direct
were offset by lower earned premiums at Unitrin Specialty. Net
realized investment gains were $3.4 million for the fourth quarter of
2005, compared to $11.3 million for the fourth quarter of 2004. Net
realized investment gains for the fourth quarters of 2005 and 2004
included pre-tax gains of $4.0 million and $8.8 million, respectively,
from the sale of a portion of the Company's investment in Northrop
Grumman common stock. The 2005 and 2004 net realized investment gains
also includes pre-tax losses of $4.1 million and $1.3 million,
respectively, to write down certain investments where the decline in
the fair value of the investment was determined to be other than
temporary. The Company cannot anticipate when or if similar investment
gains and losses may occur in the future.
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: Unitrin Kemper Auto and Home, Unitrin Specialty, Unitrin
Direct, Unitrin Business Insurance, Life and Health Insurance and
Consumer Finance.
Effective January 1, 2005, the personal lines operations of
Unitrin's former Multi Lines Insurance segment were combined into the
Kemper Auto and Home segment, forming one business that we now call
Unitrin Kemper Auto and Home. The remaining commercial lines
operations of the former Multi Lines Insurance segment have been
renamed "Unitrin Business Insurance" and continue to operate as a
separate business segment. Amounts for the prior period have been
restated to conform to the current management reporting structure.
Unitrin Kemper Auto and Home
Earned premiums in the Unitrin Kemper Auto and Home segment
increased by $2.5 million for the fourth quarter of 2005, compared to
the same period in 2004. Automobile insurance earned premiums
decreased by $0.9 million due primarily to lower volume of insurance
from assigned risk and involuntary market pools. Homeowners insurance
earned premiums increased by $4.2 million due primarily to higher
premium rates and higher volume. Net investment income increased by
$1.4 million due primarily to higher levels of investments.
Operating profit in the Unitrin Kemper Auto and Home segment
increased by $15.5 million for the fourth quarter of 2005, compared to
same period in 2004, due primarily to lower losses and LAE as a
percentage of earned premiums and higher net investment income,
partially offset by higher insurance expenses. Loss and LAE decreased
due primarily to favorable loss and LAE reserve development. The
Unitrin Kemper Auto and Home segment recognized favorable loss and LAE
reserve development of $18.6 million for the fourth quarter of 2005,
compared to favorable loss and LAE reserve development of $4.8 million
in 2004. Unitrin Kemper Auto and Home reported catastrophe losses of
$3.9 million, primarily due to Hurricane Wilma, in the fourth quarter
of 2005, compared to the favorable net impact of positive development
on prior-period catastrophes of $1.3 million for the fourth quarter of
2004. Insurance expenses increased by $1.6 million due primarily to
higher restructuring expenses, partially offset by lower expenses
related to claims administered for third parties.
Unitrin Specialty
Earned premiums in the Unitrin Specialty segment decreased by $7.2
million for the fourth quarter of 2005, compared to the same period in
2004. Personal automobile insurance earned premiums decreased by $8.5
million due to both lower volume and lower premium rates. Commercial
automobile insurance earned premiums increased by $1.3 million due
primarily to higher volume.
Operating profit in the Unitrin Specialty segment decreased by
$2.0 million for the fourth quarter of 2005, compared to the same
period in 2004, due primarily to higher severity of losses in personal
automobile insurance and the effects of reserve development, partially
offset by lower losses and LAE as a percentage of earned premiums in
commercial automobile insurance.
Unitrin Direct
Earned premiums in the Unitrin Direct segment were $56.0 million
for the fourth quarter of 2005, compared to $51.6 million for the
fourth quarter of 2004. Earned premiums increased due to both higher
premium rates and volume.
Unitrin Direct operating profit was breakeven for the fourth
quarter of 2005, compared to an operating profit of $0.5 million for
the fourth quarter of 2004. Unitrin Direct reported catastrophe losses
and LAE of $2.1 million before-tax from Hurricane Wilma in the fourth
quarter of 2005, compared to catastrophe losses and LAE of $0.3
million for the same period in 2004.
Unitrin Business Insurance
Earned premiums in the Unitrin Business Insurance segment
decreased by $0.3 million for the fourth quarter of 2005, compared to
the same period in 2004. Operating profit decreased by $0.8 million
due primarily to higher insurance expenses, partially the result of
certain restructuring and system migration costs, partially offset by
lower incurred losses and LAE.
Life and Health Insurance
Earned premiums in the Life and Health Insurance segment decreased
by $2.6 million for the fourth quarter of 2005, compared to the fourth
quarter of 2004, due primarily to lower volume of life insurance and
lower volume of accident and health insurance, partially offset by
higher premium rates on accident and health insurance. Net investment
income in the Life and Health Insurance segment decreased by $0.8
million due to lower yields on investments, partially offset by higher
levels of investments.
Operating Profit in the Life and Health Insurance segment
decreased by $8.2 million for the fourth quarter of 2005 compared to
the same period in 2004, due primarily to higher insurance expenses
and higher policyholders' benefits. Insurance expenses increased
primarily due to the write off of certain deferred policy acquisition
costs related to the policies that lapsed following Hurricanes Katrina
and Rita. Policyholders' benefits increased due to higher mortality
and morbidity, partially offset by reserve releases related to the
policies that lapsed following Hurricanes Katrina and Rita.
Consumer Finance
Consumer Finance revenues increased by $5.9 million for the fourth
quarter of 2005, compared to the same period in 2004, due primarily to
higher levels of loans outstanding, partially offset by lower loan
portfolio interest rates. Operating profit in the Consumer Finance
segment increased by $2.2 million in 2005, compared to the same period
in 2004, primarily due to the higher level of loans outstanding.
Results for Unitrin, Inc. for the three months and years ended
December 31, 2005 and 2004 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) 2005 2004 2005 2004
------------------------------ --------- --------- --------- ---------
Revenues:
Earned Premiums $619.5 $622.7 $2,478.3 $2,485.2
Consumer Finance Revenues 58.1 52.2 221.3 202.8
Net Investment Income 73.0 72.1 282.1 261.2
Other Income 1.9 1.4 9.5 13.1
Net Realized Investment
Gains 3.4 11.3 56.9 78.5
--------- --------- --------- ---------
Total Revenues 755.9 759.7 3,048.1 3,040.8
--------- --------- --------- ---------
Expenses:
Policyholders' Benefits and
Incurred Losses and Loss
Adjustment Expenses 387.2 402.1 1,665.3 1,668.2
Insurance Expenses 205.3 198.5 817.5 824.0
Consumer Finance Expenses 43.3 39.6 168.4 155.7
Interest and Other Expenses 17.3 13.9 64.0 57.4
--------- --------- --------- ---------
Total Expenses 653.1 654.1 2,715.2 2,705.3
--------- --------- --------- ---------
Income before Income Taxes and
Equity in Net Income of
Investee 102.8 105.6 332.9 335.5
Income Tax Expense 16.7 33.3 82.7 98.9
--------- --------- --------- ---------
Income before Equity in Net
Income of Investee 86.1 72.3 250.2 236.6
Equity in Net Income of
Investee 0.6 1.0 5.3 3.6
--------- --------- --------- ---------
Net Income $86.7 $73.3 $255.5 $240.2
========= ========= ========= =========
Net Income Per Share $1.26 $1.07 $3.70 $3.51
========= ========= ========= =========
Net Income Per Share Assuming
Dilution $1.26 $1.06 $3.67 $3.48
========= ========= ========= =========
Weighted Average Common Shares
Outstanding 68.7 68.7 69.0 68.4
========= ========= ========= =========
Weighted Average Common Shares
and Equivalent Shares
Outstanding
Assuming Dilution 69.0 69.3 69.5 68.9
========= ========= ========= =========
Business segment revenues for the three months and years ended
December 31, 2005 and 2004 are as follows:
Three Months Ended Year Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Dollars in Millions) 2005 2004 2005 2004
------------------------------ --------- --------- --------- ---------
Revenues:
Segment Revenues:
Unitrin Kemper Auto and
Home:
Earned Premiums $239.9 $237.4 $945.7 $945.8
Net Investment Income 13.1 11.7 48.1 39.6
Other Income 0.2 0.3 0.6 7.0
--------- --------- --------- ---------
Total Unitrin Kemper Auto
and Home 253.2 249.4 994.4 992.4
--------- --------- --------- ---------
Unitrin Specialty:
Earned Premiums 111.6 118.8 453.2 486.8
Net Investment Income 5.5 5.2 20.6 18.0
--------- --------- --------- ---------
Total Unitrin Specialty 117.1 124.0 473.8 504.8
--------- --------- --------- ---------
Unitrin Direct:
Earned Premiums 56.0 51.6 221.3 188.6
Net Investment Income 2.2 2.1 8.6 6.9
Other Income 0.1 - 0.2 -
--------- --------- --------- ---------
Total Unitrin Direct 58.3 53.7 230.1 195.5
--------- --------- --------- ---------
Unitrin Business
Insurance:
Earned Premiums 48.0 48.3 190.6 196.0
Net Investment Income 7.2 7.2 28.2 25.7
--------- --------- --------- ---------
Total Unitrin Business
Insurance 55.2 55.5 218.8 221.7
--------- --------- --------- ---------
Life and Health Insurance:
Earned Premiums 164.0 166.6 667.5 668.0
Net Investment Income 40.4 41.2 157.1 150.0
Other Income 1.0 0.6 6.2 3.6
--------- --------- --------- ---------
Total Life and Health
Insurance 205.4 208.4 830.8 821.6
--------- --------- --------- ---------
Consumer Finance 58.1 52.2 221.3 202.8
--------- --------- --------- ---------
Total Segment Revenues 747.3 743.2 2,969.2 2,938.8
Unallocated Dividend Income 5.3 5.0 20.9 21.9
Net Realized Investment
Gains 3.4 11.3 56.9 78.5
Other (0.1) 0.2 1.1 1.6
--------- --------- --------- ---------
Total Revenues $755.9 $759.7 $3,048.1 $3,040.8
========= ========= ========= =========
Business segment operating profit for the three months and years
ended December 31, 2005 and 2004 is as follows:
Three Months Ended Year Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Dollars in Millions) 2005 2004 2005 2004
------------------------------ --------- --------- --------- ---------
Segment Operating Profit
(Loss):
Unitrin Kemper Auto and
Home $43.8 $28.3 $79.4 $76.5
Unitrin Specialty 10.5 12.5 42.7 44.8
Unitrin Direct - 0.5 1.5 (5.1)
Unitrin Business Insurance 5.3 6.1 16.3 19.1
Life and Health Insurance 27.3 35.5 91.7 97.3
Consumer Finance 14.8 12.6 52.9 47.1
--------- --------- --------- ---------
Total Segment Operating Profit 101.7 95.5 284.5 279.7
Unallocated Dividend Income 5.3 5.0 20.9 21.9
Net Realized Investment Gains 3.4 11.3 56.9 78.5
Other Expense, Net (7.6) (6.2) (29.4) (44.6)
--------- --------- --------- ---------
Income before Income Taxes and
Equity in Net Income of
Investee $102.8 $105.6 $332.9 $335.5
========= ========= ========= =========
During the third quarter of 2004, the Company and the Kemper
Insurance Companies ("KIC") settled certain matters in connection with
the Company's previous acquisition of certain business from KIC.
Operating profit in the Unitrin Kemper Auto and Home segment for the
year ended December 31, 2004 includes a gain of $3.5 million
before-tax recorded in connection with the KIC settlement. Other
expense, net for the year ended December 31, 2004 includes expense of
$18.4 million before-tax recorded in connection with the KIC
settlement.
Business segment net income for the three months and years ended
December 31, 2005 and 2004 is as follows:
Three Months Ended Year Ended
------------------- -------------------
Dec. 31, Dec. 31, Dec. 31, Dec. 31,
(Dollars in Millions) 2005 2004 2005 2004
------------------------------ --------- --------- --------- ---------
Segment Net Income (Loss):
Unitrin Kemper Auto and
Home $30.6 $20.1 $60.0 $56.2
Unitrin Specialty 7.7 8.6 31.3 31.9
Unitrin Direct 0.5 0.7 2.6 (1.6)
Unitrin Business Insurance 4.9 5.2 15.6 17.5
Life and Health Insurance 18.1 22.5 60.0 63.0
Consumer Finance 8.7 7.5 30.8 27.4
--------- --------- --------- ---------
Total Segment Net Income 70.5 64.6 200.3 194.4
Net Income (Loss) From:
Unallocated Dividend Income 4.6 4.5 18.4 19.3
Net Realized Investment
Gains 2.3 7.4 37.0 51.0
Other Income (Expense), Net 8.7 (4.2) (5.5) (28.1)
--------- --------- --------- ---------
Income Before Equity in
Net Income of Investee 86.1 72.3 250.2 236.6
Equity in Net Income of
Investee 0.6 1.0 5.3 3.6
--------- --------- --------- ---------
Net Income $86.7 $73.3 $255.5 $240.2
========= ========= ========= =========
Net income in the Unitrin Kemper Auto and Home segment for 2004
includes a gain of $2.3 million after-tax recorded in connection with
the KIC settlement. Other expense, net for the year ended December 31,
2004 includes expense of $12.0 million after-tax recorded in
connection with the KIC settlement.
Corporate Investments
---------------------
After adjusting for sales of a portion of the Company's investments in
Northrop common stock and Baker Hughes common stock during the fourth
quarter of 2005, the fair value of Unitrin's Corporate Investments
(Northrop Grumman preferred and common stock, Baker Hughes common
stock and Intermec, Inc. common stock) increased by $42.2 million
during the fourth quarter of 2005. The changes in fair values of
Unitrin's Corporate Investments are summarized below:
Three Months Ended Dec. 31, 2005
--------------------------------
Fair Value Fair Value
(Dollars in Sept. 30, Holding Gain Dec. 31,
Millions) 2005 (Loss) Dispositions 2005
----------------- ---------- --------------- -------------- ----------
Northrop
Preferred Stock $214.7 $11.0 $- $225.7
Northrop Common
Stock 430.2 45.3 (14.8) 460.7
Baker Hughes
Common Stock 49.2 0.9 (1.4) 48.7
Intermec Common
Stock 442.8 (15.0) - 427.8
---------- --------------- -------------- ----------
Total Fair Value
of Corporate
Investments $1,136.9 $42.2 $(16.2) $1,162.9
========== =============== ============== ==========
This press release may contain or incorporate by reference
information that includes or is based upon 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 or financial
performance. 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. 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. 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.
Among the general factors that could cause actual results to
differ materially from estimated results are:
-- Changes in general economic conditions, including performance
of financial markets, interest rates, unemployment rates and
fluctuating values of particular investments maintained by the
Company and its subsidiaries;
-- Heightened competition, including, with respect to pricing,
entry of new competitors and the development of new products
by new and existing competitors;
-- The number and severity of insurance claims (including those
associated with catastrophe losses) and their impact on the
adequacy of loss 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;
-- Changes in the financial condition of reinsurers and amounts
recoverable therefrom;
-- Changes in industry trends and significant industry
developments;
-- Regulatory approval of insurance rates, policy forms, license
applications and similar matters;
-- Developments related to insurance policy claims and coverage
issues;
-- Governmental actions, including new laws or regulations or
court decisions interpreting existing laws and regulations or
policy provisions;
-- Adverse outcomes in litigation or other proceedings involving
the Company or its subsidiaries;
-- Regulatory, accounting or tax changes that may affect the cost
of, or demand for, the Company's products or services;
-- Changes in distribution channels, methods or costs resulting
from changes in laws or regulations, lawsuits or market
forces;
-- Changes in ratings by credit rating agencies and/or A.M. Best
Co., Inc.;
-- Level of success and costs expended in realizing economies of
scale and implementing significant business consolidations and
technology initiatives;
-- 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
the Company's filings with the Securities and Exchange
Commission ("SEC").
Among the factors that could cause the Company's actual losses
from Hurricanes Katrina, Rita and Wilma to differ materially from
estimated results are:
-- 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;
-- Orders, interpretations or other actions by regulators that
impact the ability of the Company's insurance subsidiaries to
adjust and pay claims;
-- Interpretations or decisions by courts or regulators that may
govern or influence insurance policy coverage issues arising
with respect to losses incurred in connection with these
hurricanes; and
-- Impact of residual market assessments and assessments for
insurance industry insolvencies.
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 the
Company makes on related subjects in filings made with the SEC.
Unitrin is a $3 billion financial services company focused on
creating shareholder value by providing a diverse array of insurance
and consumer finance products and services for individuals, families
and small businesses.
Among the brands in Unitrin's Property and Casualty Insurance
businesses are Unitrin Kemper Auto and Home, Unitrin Specialty and
Unitrin Business Insurance, which sell personal and commercial
insurance through a network of independent agents, and Unitrin Direct,
which sells auto insurance directly to consumers. Unitrin's Life and
Health Insurance businesses bring a high-level of personalized service
to their customers. Unitrin's consumer finance subsidiary, Fireside
Bank, specializes in automobile loans for the purchase of pre-owned
vehicles. Additional information about Unitrin is available by
visiting its website (www.unitrin.com).
CONTACT: Unitrin, Inc.
Edward J. Konar, 312-661-4930
investor.relations@unitrin.com
SOURCE: Unitrin, Inc.