Unitrin Sees Improved Q1 Numbers

April 28, 2005

Chicago-based Unitrin Inc. reported net income of $67.9 million ($0.99 per common share) for the first quarter of 2005, compared to net income of $48.0 million ($0.71 per common share) for the same period in 2004. Net Income increased due primarily to improved operating results in the company’s business segments, partially offset by lower Net Realized Investment Gains.

Dick Vie, Unitrin chairman and CEO, commented, “We are pleased to report record first quarter operating results, which excludes investment gains. The combination of our personal lines operations into our Kemper Auto and Home segment and the launch of our Unitrin Business Insurance segment both are off to strong starts.”

Total revenue

Total Revenue was $747.1 million for the first quarter of 2005, compared to $745.3 million for the first quarter of 2004, an increase of $1.8 million. Net Investment Income increased by $11.8 million due primarily to a higher level of investments. Total Earned Premiums for the first quarter of 2005 were $615.2 million, an increase of $1.0 million compared to the first quarter of 2004. Earned Premiums increased in the Unitrin Direct segment, mostly offset by decreased Earned Premiums in the Unitrin Specialty segment.

Net Realized Investment Gains were $5.7 million for the first quarter of 2005, compared to $18.5 million for the first quarter of 2004. Net Realized Investment Gains for the first quarter of 2005 includes pre-tax gains of $2.2 million from the sales of a portion of the company’s investment in Baker Hughes common stock and pre-tax gains of $1.7 million resulting from the sales of a portion of the company’s investment in Hartford Financial Services Group, Inc. common stock. The company cannot anticipate when or if similar investment gains 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: Kemper Auto and Home, Unitrin Specialty, Unitrin Direct, Unitrin Business Insurance, Life and Health Insurance and Consumer Finance.

Effective Jan. 1, 2005, the personal lines operations of Unitrin’s former Multi Lines Insurance segment were combined into the Kemper Auto and Home segment and the remaining commercial lines operations of the former Multi Lines segment have been renamed “Unitrin Business Insurance” and will continue to operate as a separate business segment. Amounts for the prior period have been restated to conform to the current management reporting structure.

Kemper Auto and Home

Earned Premiums in the combined Kemper Auto and Home segment decreased by $0.5 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower volume, partially offset by higher rates. Net Investment Income increased by $3.5 million for the three months ended March 31, 2005, compared to the same period in 2004, due primarily to higher levels of investments and higher yields on investments.

Operating Profit in the Kemper Auto and Home segment increased by $17.0 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower incurred losses and loss adjustment expenses (“LAE”) and the higher net investment income, partially offset by higher insurance expenses.

The Kemper Auto and Home segment recognized favorable loss and LAE reserve development of $15.3 million for the first quarter of 2005, compared to favorable development of $7.3 million for the same period in 2004. Restructuring costs recognized in the Kemper Auto and Home segment were $0.8 million for the first quarter of 2005.

Unitrin Specialty

Earned Premiums in the Unitrin Specialty segment decreased by $8.0 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower premium volume in personal automobile insurance, partially offset by higher premium volume in commercial automobile insurance. Net Investment Income increased by $1.2 million, due primarily to higher yields on investments and higher levels of investments.

Operating Profit in the Unitrin Specialty segment decreased slightly for the first quarter of 2005, compared to the same period in 2004. Operating profit from personal automobile insurance decreased by $1.6 million due primarily to the lower premium volume, higher losses and LAE and higher insurance expenses as a percentage of earned premiums, partially offset by the higher investment income. Operating profit from commercial automobile insurance increased by $1.3 million for the first quarter of 2005, compared to the same period in 2004, due primarily to the higher premium volume and higher investment income.

Unitrin Business Insurance

On Jan. 1, 2005, the company launched its new stand-alone commercial lines business segment – Unitrin Business Insurance. The Unitrin Business Insurance segment includes the commercial lines operations and certain commercial reinsurance programs of the former Multi Lines Insurance segment.

Earned Premiums in the Unitrin Business Insurance segment decreased by $2.6 million for the first quarter of 2005, compared to the same period in 2004. Commercial automobile insurance and commercial property and liability insurance earned premiums decreased due primarily to lower premium volume, partially offset by higher premium rates. Net Investment Income in the Unitrin Business Insurance segment increased by $1.5 million for the first quarter of 2005, compared to the same period in 2004, due to higher yields on investments and, to a lesser extent, higher levels of investments.

Operating Profit in the Unitrin Business Insurance segment increased by $3.5 million for the first quarter of 2005, compared to the same period in 2004, due primarily to lower incurred losses and LAE and the higher net investment income, partially offset by higher insurance expenses partly due to certain restructuring costs.

Incurred losses and LAE decreased due to improved underwriting and the favorable effects of reserve development. Reserve development was $4.2 million favorable for the first quarter of 2005, compared to $3.2 million favorable for the same period in 2004. Catastrophe losses and LAE were $0.2 million for the first quarter of 2005, compared to $0.7 million for the same period in 2004. Restructuring costs recognized in the Unitrin Business Insurance segment were $1.1 million for the first quarter of 2005.

Topics Auto Profit Loss Excess Surplus

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