Unitrin Downgraded by A.M. Best

A.M. Best Co. downgraded the financial strength ratings of Dallas-based Unitrin Property and Casualty Insurance Group (Unitrin) to “A” (Excellent) from “A+” (Superior) and removed them from under review.

Additionally, an “a-” senior debt rating was assigned to Unitrin Corp.’s existing debt securities and the following indicative ratings to the remaining $200 million under the company’s $500 million shelf registration: senior debt “a-”; subordinate debt “bbb+” and preferred stock “bbb.” The rating outlooks are stable.

The downgrade of the ratings reflect Unitrin’s unfavorable operating earnings over recent years and decline in capitalization. Operating returns reflect rising underwriting losses across the group’s core business segments, which are attributable to inadequate premium rates, increasing loss cost trends, weather-related losses, elevated expenses and adverse loss reserve development.

Further, Unitrin faces execution risk that reflects the renewal rights acquisition of Kemper Insurance Companies’ personal lines business, which will add significant net written premium to the group’s operations. However, this risk will be limited since Kemper’s business will operate as a separate business segment and the operational infrastructure was acquired in the transaction.

The “excellent” ratings reflect Unitrin’s solid capitalization and balanced book of business among personal and commercial lines. These positive rating factors are derived from a diversified product offering, strong regional market presence, long-standing independent agency relationships and prudent catastrophe exposure management.

A.M. Best affirmed the financial strength ratings of the property/casualty affiliates of Unitrin Property and Casualty Insurance Group, including Capital County Mutual Fire Insurance Company, “A” (Excellent); Old Reliable Insurance Company, “A-” (Excellent); and United Casualty Insurance Company of America, “A” (Excellent).