Trinity Universal Insurance Company, a subsidiary of Unitrin Inc., has reached an agreement in principle to acquire the personal lines property and casualty insurance business of the Kemper Insurance Companies in a cash transaction.
Kemper’s Individual and Family Group business unit (IFG) specializes in the sale of personal automobile and homeowners’ insurance through independent agents. Trinity will purchase the assets of the IFG unit but all pre-closing liabilities of IFG, including policy reserves and unearned premium reserves, will remain with Kemper. Unitrin will also acquire the stock of Kemper’s direct distribution personal lines’ subsidiaries, which sell personal automobile insurance to consumers over the Internet.
The purchase price will be approximately $45 million, plus 1 percent of premiums written over a three-year period beginning Jan. 1, 2003. As further consideration, Kemper will be eligible for performance bonuses if the business meets certain loss ratio criteria over the same three years. Kemper will retain all liabilities for policies issued prior to the closing, while Trinity will be entitled to premiums written for substantially all policies issued or renewed after the closing and would be liable for losses and expenses incurred thereon. Kemper’s personal lines’ net written premiums were approximately $700 million in 2001. In addition, Trinity will administer on behalf of Kemper all policies issued prior to the closing.
The transaction is subject to the execution of definitive agreements, approvals by insurance regulators and other third parties and other customary closing conditions, and is expected to close during this summer.
Unitrin’s subsidiaries are engaged in three businesses: property and casualty insurance, life and health insurance and consumer finance. Unitrin has in excess of $7 billion in assets, nearly 7,700 employees and had consolidated revenues in 2001 of more than $2.5 billion.
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