Unitrin, Inc. (NYSE: UTR) reported today a net loss of $0.5
million ($0.01 per share) for the second quarter of 2011, compared
to net income of $37.8 million ($0.61 per share) for the second
quarter of 2010. Net income was $53.6 million ($0.88 per share) for
the six months ended June 30, 2011, compared to $86.0
million ($1.38 per share) for the six months ended
June 30, 2010.
Loss from continuing operations was $1.5 million ($0.03 per
share) for the second quarter of 2011, compared to income from
continuing operations of $39.1 million ($0.63 per share) for the
second quarter of 2010. Income from continuing operations was $54.3
million ($0.89 per share) for the six months ended
June 30, 2011, compared to $86.8 million ($1.39 per
share) for the six months ended June 30, 2010.
Three Months Ended Six Months Ended Jun 30,
Jun 30, Jun 30, Jun 30, (Dollars in millions, except per
share amounts) 2011 2010 2011 2010 Income (Loss) from Continuing
Operations $ (1.5 ) $ 39.1 $ 54.3 $ 86.8 Income (Loss) from
Discontinued Operations 1.0 (1.3 ) (0.7 ) (0.8 ) Net Income
(Loss) $ (0.5 ) $ 37.8 $ 53.6 $ 86.0
Basic Net Income (Loss) Per Share: Continuing Operations $ (0.03 )
$ 0.63 $ 0.89 $ 1.39 Discontinued Operations 0.02 (0.02 )
(0.01 ) (0.01 ) Total $ (0.01 ) $ 0.61 $ 0.88 $ 1.38
Don Southwell, Unitrin's Chairman, President and Chief Executive
Officer, commented, “It was truly an unprecedented quarter for
catastrophe losses, particularly those related to tornadoes, hail
and high winds. Unitrin's dedicated first response teams were on
the ground within hours to provide customers with emergency funding
and to expedite the claims process. Collectively these events had
an after-tax impact of approximately $65 million.
Overall, we were pleased to see that the diversity of Unitrin's
operating businesses and the strong performance of our investment
portfolio collectively offset the impact of these catastrophes.
We continue to make meaningful progress on the wind-down of
Fireside Bank. During the quarter, we redeemed all deposits, loan
charge-offs were well below expectations while recoveries of loans
previously charged-off were ahead of expectations. We remain
focused on continuing to accelerate this process and anticipate
that at least $265 million of excess capital will be returned to
the holding company.”
Highlights
- Unitrin further diversified its
investment portfolio with the sale of 1.1 million shares of
Intermec, Inc. and as of June 30, 2011 its remaining
Intermec investment was $97.1 million, or 1.6 percent of the total
investment portfolio.
- Book value per share at
June 30, 2011 was $35.33; an increase of 6 percent,
compared to June 30, 2010.
- In April of 2011, Fireside Bank
redeemed all outstanding deposits as part of its accelerated plan
to relinquish its banking charter by the end of the first quarter
of 2012, nine months sooner than previously planned.
- Annualized agent retention at Career
Agency improved, driving the percentage of open agencies down to
3.6%.
- Reserve National reported near-record
earnings during the quarter and expanded its supplemental product
offerings to better serve its customers' needs. The business
continues to proactively respond to changes required as part of the
national health care legislation.
Segment Results
Unless otherwise noted, (i) the segment results discussed below
are presented on an after-tax basis, (ii) prior-year reserve
development includes both catastrophe and non-catastrophe losses
and (iii) catastrophe losses exclude the impact of prior-year
reserve development.
Three Months Ended Six Months Ended Jun 30,
Jun 30, Jun 30, Jun 30, (Dollars in Millions) 2011 2010 2011
2010 Segment Net Income (Loss): Kemper $ (33.0 ) $ 13.5 $ (21.7 ) $
28.1 Unitrin Specialty 4.9 6.0 9.1 11.8 Unitrin Direct (4.7 ) 0.4
(8.5 ) 0.5 Life and Health Insurance 20.9 21.5 53.6 47.9 Fireside
Bank 5.0 2.7 13.0 5.7 Total Segment Net
Income (Loss) (6.9 ) 44.1 45.5 94.0 Unallocated Net Income (Loss)
5.4 (5.0 ) 8.8 (7.2 ) Income (Loss) from Continuing
Operations $ (1.5 ) $ 39.1 $ 54.3 $ 86.8
Unallocated Net Income (Loss) in the preceding table consists of
realized gains (losses) on sales of investments, net impairment
losses recognized in earnings, other expenses, dividend income and
equity in net income (loss) of investee. A more detailed
reconciliation of Total Segment Net Income (Loss) to Income (Loss)
from Continuing Operations is provided at the end of this press
release.
Kemper reported a net loss of $33.0 million for the second
quarter of 2011, compared to net income of $13.5 million in 2010.
The primary driver of the decline in earnings was $42.2 million of
increased catastrophe losses. The Underlying Combined Ratio was
93.7%, or 2.8 percentage points higher than last year, which
impacted earnings by $3.9 million. This increase was driven by 1.9
percentage points of higher non-catastrophe weather losses and a
higher insurance expense ratio, which was within a normal range of
fluctuation. In addition, higher large-loss fire and homeowners
liability claims were partially offset by lower claim frequency in
the personal auto line. Overall, excluding catastrophe losses and
reserve development, Kemper's income was $21.1 million.
Unitrin Specialty reported net income of $4.9 million for the
second quarter of 2011, compared to $6.0 million in 2010. The
current quarter included $2.3 million of higher favorable reserve
development, partially offset by $0.5 million of higher catastrophe
losses, compared to the prior year. The Underlying Combined Ratio
was 99.9%, or an increase of 3.7 points, compared to prior year,
driven primarily by higher claims severity of personal lines
liability insurance in California and Texas and a favorable expense
reduction in the prior year that did not recur in the current year.
The Underlying Combined Ratio improved by 2.7 percentage points,
compared to the first quarter of 2011, as the benefit of previous
pricing actions began taking effect and expenses were lower as a
percentage of earned premiums.
Unitrin Direct reported a net loss of $4.7 million for the
second quarter of 2011 and a combined ratio of 124.0% which
included 6.8 percentage points due to catastrophe losses, partially
offset by 1.4 percentage points of favorable prior year
development. The Underlying Combined Ratio was 118.6% in the
current quarter, largely driven by unfavorable loss performance in
three large markets, Florida, Michigan and New York, which have
presented challenges for the auto insurance industry. Unitrin
Direct has been impacted in these markets by an increase in large
losses on auto liability coverages. Several steps have been taken
to address the operating results in these markets, including; rate
actions, adjustments to underwriting guidelines and a reduction of
marketing spend. In addition, the Underlying Combined Ratio was
impacted by 2.1 percentage points related to restructuring
costs.
Life and Health Insurance reported net income of $20.9 million
for the second quarter of 2011, compared to $21.5 million for the
same period in 2010. The net effect of catastrophes, including
development, was $2.7 million higher, compared to last year. The
unfavorable catastrophe impact was partially offset by favorable
mortality and morbidity compared to the prior year.
Fireside Bank reported net income of $5.0 million for the second
quarter of 2011, compared to $2.7 million for 2010. The higher
earnings were attributable to favorable performance in its seasoned
loan portfolio, a favorable reduction in estimated future loan
losses and recoveries on loans previously charged-off. Recoveries
during the quarter were $9.3 million pre-tax on a portfolio of
approximately $475 million.
Total Revenues for Unitrin were $660.7 million for the second
quarter of 2011, compared to $684.9 million in 2010. Earned
Premiums declined 5 percent, resulting primarily from specific
product actions taken to target customers with more favorable risk
characteristics and the impact of ongoing soft market conditions.
These impacts were partially offset by higher premium rates. The
decline in Fireside's revenues was in line with its run-off plan.
Net Realized Investment Gains increased by $15 million pre-tax as
the Company sold certain equity securities and further diversified
its investments with the sale of 1.1 million shares of Intermec
during the quarter.
Condensed consolidated statements of operations for the three
and six months ended June 30, 2011 and 2010 are presented
below:
Three Months Ended Six Months Ended Jun 30,
Jun 30, Jun 30, Jun 30, (Dollars in millions, except per
share amounts) 2011 2010 2011 2010
Revenues: Earned Premiums
$ 548.1 $ 578.1 $ 1,094.1 $ 1,159.6 Automobile Finance Revenues
12.8 26.7 28.3 57.3 Net Investment Income 83.0 81.8 164.6 162.6
Other Income 0.2 0.3 0.4 0.6 Net Realized Gains on Sales of
Investments 17.9 2.9 32.4 7.4 Other-than-temporary Impairment
Losses: Total Other-than-temporary Impairment Losses (1.3 ) (4.1 )
(1.7 ) (10.3 ) Portion of Losses Recognized in Other Comprehensive
Income —
(0.8
) — 2.2 Net Impairment Losses Recognized in Earnings
(1.3 ) (4.9 ) (1.7 ) (8.1 )
Total Revenues 660.7
684.9 1,318.1 1,379.4
Expenses:
Policyholders’ Benefits and Incurred Losses and Loss Adjustment
Expenses 477.1 419.1 869.4 836.2 Insurance Expenses 166.3 169.4
328.2 337.9 Automobile Finance Expenses (Recoveries) (2.3 ) 15.2
(5.2 ) 33.6 Interest Expense on Certificates of Deposits 7.5 7.4
14.6 15.3 Interest and Other Expenses 20.9 17.4 40.6
33.8
Total Expenses 669.5 628.5
1,247.6 1,256.8 Income (Loss) from Continuing
Operations before Income Taxes and Equity in Net Income (Loss) of
Investee (8.8 ) 56.4 70.5 122.6 Income Tax Benefit (Expense) 7.3
(16.8 ) (16.2 ) (36.0 ) Income (Loss) from Continuing
Operations before Equity in Net Income (Loss) of Investee (1.5 )
39.6 54.3 86.6 Equity in Net Income (Loss) of Investee —
(0.5 ) — 0.2
Income (Loss) from Continuing
Operations (1.5 ) 39.1 54.3 86.8
Discontinued Operations: Income (Loss) from Discontinued Operations
before Income Taxes 1.5 (2.1 ) (1.1 ) (1.3 ) Income Tax Benefit
(Expense) (0.5 ) 0.8 0.4 0.5 Income (Loss)
from Discontinued Operations 1.0 (1.3 ) (0.7 ) (0.8 )
Net
Income (Loss) $ (0.5 ) $ 37.8 $ 53.6 $ 86.0
Income (Loss) from Continuing Operations Per Unrestricted
Share: Basic $ (0.03 ) $ 0.63 $ 0.89 $ 1.39
Diluted $ (0.03 ) $ 0.63 $ 0.89 $ 1.39
Net Income (Loss) Per Unrestricted Share: Basic $ (0.01 ) $
0.61 $ 0.88 $ 1.38 Diluted $ (0.01 ) $ 0.61
$ 0.88 $ 1.38
Dividends Paid to
Shareholders Per Share $ 0.24 $ 0.22 $ 0.48
$ 0.44
Business segment revenues for the three and six months ended
June 30, 2011 and 2010 are presented below:
Three Months Ended Six Months Ended Jun 30,
Jun 30, Jun 30, Jun 30, (Dollars in Millions) 2011 2010 2011
2010
Revenues: Kemper: Earned Premiums $ 214.4 $
222.9 $ 426.3 $ 445.3 Net Investment Income 15.6 13.9 29.7 26.3
Other Income — 0.1 0.1 0.2 Total Kemper
230.0 236.9 456.1 471.8
Unitrin
Specialty: Earned Premiums 113.3 120.5 225.7 242.9 Net
Investment Income 6.8 6.7 13.1 12.8 Other Income 0.1 0.1
0.2 0.3 Total Unitrin Specialty 120.2
127.3 239.0 256.0
Unitrin Direct:
Earned Premiums 57.5 73.0 117.4 149.0 Net Investment Income 5.6 5.9
11.0 11.2 Other Income — 0.1 — 0.1
Total Unitrin Direct 63.1 79.0 128.4 160.3
Life and Health Insurance: Earned Premiums 162.9
161.7 324.7 322.4 Net Investment Income 52.4 51.3 105.4 104.6 Other
Income 0.1 — 0.1 — Total Life and
Health Insurance 215.4 213.0 430.2 427.0
Fireside Bank: Automobile Finance Revenues 12.8 26.7
28.3 57.3 Net Investment Income 0.1 0.5 0.5
1.0 Total Fireside Bank 12.9 27.2 28.8
58.3
Total Segment Revenues 641.6 683.4 1,282.5
1,373.4 Net Realized Gains on Sales of Investments 17.9 2.9 32.4
7.4 Net Impairment Losses Recognized in Earnings (1.3 ) (4.9 ) (1.7
) (8.1 ) Other 2.5 3.5 4.9 6.7
Total
Revenues $ 660.7 $ 684.9 $ 1,318.1 $
1,379.4
UNITRIN, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS (Dollars in
millions) Jun 30, Dec 31, 2011 2010
(Unaudited)
Assets: Investments: Fixed Maturities at Fair
Value $ 4,573.2 $ 4,475.3 Equity Securities at Fair Value 503.0
550.4 Equity Method Limited Liability Investments at Cost Plus
Cumulative Undistributed Earnings 325.3 328.0 Short-term
Investments at Cost which Approximates Fair Value 274.5 402.9 Other
Investments 497.2 494.2 Total Investments 6,173.2
6,250.8 Cash 123.8 117.2 Automobile Loan Receivables at Cost and
Net of Reserve for Loan Losses 232.6 337.6 Other Receivables 591.9
606.7 Deferred Policy Acquisition Costs 536.1 525.2 Goodwill 311.8
311.8 Current and Deferred Income Tax Assets 40.9 39.6 Other Assets
171.6 169.6 Total Assets $ 8,181.9 $ 8,358.5
Liabilities and Shareholders’ Equity: Insurance Reserves:
Life and Health $ 3,085.6 $ 3,063.7 Property and Casualty 1,101.2
1,118.7 Total Insurance Reserves 4,186.8 4,182.4
Certificates of Deposits at Cost — 321.4 Unearned Premiums 675.6
678.6 Liabilities for Income Taxes 25.1 15.1 Notes Payable at
Amortized Cost 610.2 609.8 Accrued Expenses and Other Liabilities
548.0 437.8 Total Liabilities 6,045.7 6,245.1
Shareholders’ Equity: Common Stock 6.0 6.1 Paid-in Capital
744.2 751.1 Retained Earnings 1,210.5 1,198.8 Accumulated Other
Comprehensive Income 175.5 157.4 Total Shareholders’ Equity
2,136.2 2,113.4 Total Liabilities and Shareholders’ Equity $
8,181.9 $ 8,358.5
Selected financial information for the
Kemper segment follows:
Three Months Ended Six Months Ended Jun 30, Jun 30, Jun 30,
Jun 30, (Dollars in Millions) 2011 2010 2011 2010
Results of
Operations
Net Premiums Written $ 224.7 $ 226.4 $ 424.3
$ 433.7 Earned Premiums: Automobile $ 127.6 $ 136.9 $
254.5 $ 274.3 Homeowners 73.4 72.2 145.3 144.3 Other Personal 13.4
13.8 26.5 26.7 Total Earned Premiums
214.4 222.9 426.3 445.3 Net Investment Income 15.6 13.9 29.7 26.3
Other Income — 0.1 0.1 0.2 Total
Revenues 230.0 236.9 456.1 471.8
Incurred Losses and LAE related to: Current Year: Non-catastrophe
Losses and LAE 141.4 142.5 286.9 289.5 Catastrophe Losses and LAE
87.9 23.0 96.9 38.6 Prior Years: Non-catastrophe Losses and LAE
(2.6 ) (4.1 ) (3.7 ) (10.7 ) Catastrophe Losses and LAE (2.0 ) (2.3
) (2.3 ) (3.9 ) Total Incurred Losses and LAE 224.7 159.1 377.8
313.5 Insurance Expenses 59.5 60.2 118.3 121.4
Operating Profit (Loss) (54.2 ) 17.6 (40.0 ) 36.9 Income Tax
Benefit (Expense) 21.2 (4.1 ) 18.3 (8.8 ) Net Income
(Loss) $ (33.0 ) $ 13.5 $ (21.7 ) $ 28.1
Ratios Based On
Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio 65.9 %
63.9 % 67.3 % 65.0 % Current Year Catastrophe Losses and LAE Ratio
41.0 10.3 22.7 8.7 Prior Years Non-catastrophe Losses and LAE Ratio
(1.2 ) (1.8 ) (0.9 ) (2.4 ) Prior Years Catastrophe Losses and LAE
Ratio (0.9 ) (1.0 ) (0.5 ) (0.9 ) Total Incurred Loss and LAE Ratio
104.8 71.4 88.6 70.4 Incurred Expense Ratio 27.8 27.0
27.8 27.3 Combined Ratio 132.6 % 98.4 % 116.4 % 97.7
%
Underlying
Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio 65.9 %
63.9 % 67.3 % 65.0 % Incurred Expense Ratio 27.8 27.0
27.8 27.3 Underlying Combined Ratio 93.7 % 90.9 %
95.1 % 92.3 %
Non-GAAP Measure
Reconciliation
Underlying Combined Ratio 93.7 % 90.9 % 95.1 % 92.3 %
Current Year Catastrophe Losses and LAE Ratio 41.0 10.3 22.7 8.7
Prior Years Non-catastrophe Losses and LAE Ratio (1.2 ) (1.8 ) (0.9
) (2.4 ) Prior Years Catastrophe Losses and LAE Ratio (0.9 ) (1.0 )
(0.5 ) (0.9 ) Combined Ratio as Reported 132.6 % 98.4 % 116.4 %
97.7 %
Selected financial information for the
Unitrin Specialty segment follows:
Three Months Ended Six Months Ended Jun 30, Jun 30, Jun 30,
Jun 30, (Dollars in Millions) 2011 2010 2011 2010
Results of
Operations
Net Premiums Written $ 105.8 $ 110.5 $ 228.9
$ 237.1 Earned Premiums: Personal Automobile $ 103.4
$ 109.4 $ 206.0 $ 220.3 Commercial Automobile 9.9 11.1
19.7 22.6 Total Earned Premiums 113.3 120.5
225.7 242.9 Net Investment Income 6.8 6.7 13.1 12.8 Other Income
0.1 0.1 0.2 0.3 Total Revenues 120.2
127.3 239.0 256.0 Incurred Losses and
LAE related to: Current Year: Non-catastrophe Losses and LAE 91.3
93.6 184.1 189.4 Catastrophe Losses and LAE 2.9 2.2 3.0 2.3 Prior
Years: Non-catastrophe Losses and LAE (1.9 ) 1.7 (3.8 ) 3.0
Catastrophe Losses and LAE — — 0.1 0.1
Total Incurred Losses and LAE 92.3 97.5 183.4 194.8 Insurance
Expenses 21.9 22.3 44.5 46.2 Operating
Profit 6.0 7.5 11.1 15.0 Income Tax Expense (1.1 ) (1.5 ) (2.0 )
(3.2 ) Net Income $ 4.9 $ 6.0 $ 9.1 $ 11.8
Ratios Based On
Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio 80.6 %
77.7 % 81.7 % 78.1 % Current Year Catastrophe Losses and LAE Ratio
2.6 1.8 1.3 0.9 Prior Years Non-catastrophe Losses and LAE Ratio
(1.7 ) 1.4 (1.7 ) 1.2 Prior Years Catastrophe Losses and LAE Ratio
— — — — Total Incurred Loss and LAE
Ratio 81.5 80.9 81.3 80.2 Incurred Expense Ratio 19.3 18.5
19.7 19.0 Combined Ratio 100.8 % 99.4 % 101.0
% 99.2 %
Underlying
Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio 80.6 %
77.7 % 81.7 % 78.1 % Incurred Expense Ratio 19.3 18.5
19.7 19.0 Underlying Combined Ratio 99.9 % 96.2 %
101.4 % 97.1 %
Non-GAAP Measure
Reconciliation
Underlying Combined Ratio 99.9 % 96.2 % 101.4 % 97.1 %
Current Year Catastrophe Losses and LAE Ratio 2.6 1.8 1.3 0.9 Prior
Years Non-catastrophe Losses and LAE Ratio (1.7 ) 1.4 (1.7 ) 1.2
Prior Years Catastrophe Losses and LAE Ratio — — —
— Combined Ratio as Reported 100.8 % 99.4 % 101.0 %
99.2 %
Selected financial information for the
Unitrin Direct segment follows:
Three Months Ended Six Months Ended Jun 30,
Jun 30, Jun 30, Jun 30, (Dollars in Millions) 2011 2010 2011
2010
Results of
Operations
Net Premiums Written $ 50.6 $ 65.8 $ 111.5
$ 140.6 Earned Premiums: Automobile $ 55.2 $ 70.6 $
112.8 $ 144.5 Homeowners 2.3 2.3 4.5 4.3 Other Personal —
0.1 0.1 0.2 Total Earned Premiums 57.5 73.0
117.4 149.0 Net Investment Income 5.6 5.9 11.0 11.2 Other Income —
0.1 — 0.1 Total Revenues 63.1
79.0 128.4 160.3 Incurred Losses and LAE
related to: Current Year:
Non-catastrophe Losses and LAE
48.5 58.1 100.8 120.1 Catastrophe Losses and LAE 3.9 0.5 4.0 0.7
Prior Years: Non-catastrophe Losses and LAE (0.9 ) (3.5 ) (1.0 )
(7.3 ) Catastrophe Losses and LAE 0.1 — 0.4
0.2 Total Incurred Losses and LAE 51.6 55.1 104.2 113.7
Insurance Expenses 19.7 23.0 39.8 46.8
Operating Profit (Loss) (8.2 ) 0.9 (15.6 ) (0.2 ) Income Tax
Benefit (Expense) 3.5 (0.5 ) 7.1 0.7 Net
Income (Loss) $ (4.7 ) $ 0.4 $ (8.5 ) $ 0.5
Ratios Based On
Earned Premiums
Current Year Non-catastrophe Losses and LAE Ratio 84.3 %
79.6 % 86.0 % 80.6 % Current Year Catastrophe Losses and LAE Ratio
6.8 0.7 3.4 0.5 Prior Years Non-catastrophe Losses and LAE Ratio
(1.6 ) (4.8 ) (0.9 ) (4.9 ) Prior Years Catastrophe Losses and LAE
Ratio 0.2 — 0.3 0.1 Total Incurred Loss
and LAE Ratio 89.7 75.5 88.8 76.3 Incurred Expense Ratio 34.3
31.5 33.9 31.4 Combined Ratio 124.0 %
107.0 % 122.7 % 107.7 %
Underlying
Combined Ratio
Current Year Non-catastrophe Losses and LAE Ratio 84.3 %
79.6 % 86.0 % 80.6 % Incurred Expense Ratio 34.3 31.5
33.9 31.4 Underlying Combined Ratio 118.6 % 111.1 %
119.9 % 112.0 %
Non-GAAP Measure
Reconciliation
Underlying Combined Ratio 118.6 % 111.1 % 119.9 % 112.0 %
Current Year Catastrophe Losses and LAE Ratio 6.8 0.7 3.4 0.5 Prior
Years Non-catastrophe Losses and LAE Ratio (1.6 ) (4.8 ) (0.9 )
(4.9 ) Prior Years Catastrophe Losses and LAE Ratio 0.2 —
0.3 0.1 Combined Ratio as Reported 124.0 %
107.0 % 122.7 % 107.7 %
Selected financial information for the
Life and Health Insurance segment follows:
Three Months Ended Six Months Ended Jun 30,
Jun 30, Jun 30, Jun 30, (Dollars in Millions) 2011
2010 2011 2010
Results of
Operations
Earned Premiums: Life $ 99.7 $ 100.0 $ 199.1 $ 199.5
Accident and Health 41.5 40.1 82.7 80.0 Property 21.7 21.6
42.9 42.9 Total Earned Premiums 162.9 161.7
324.7 322.4 Net Investment Income 52.4 51.3 105.4 104.6 Other
Income 0.1 — 0.1 — Total Revenues 215.4
213.0 430.2 427.0 Policyholders’
Benefits and Incurred Losses and LAE 108.6 107.4 204.1 214.2
Insurance Expenses 74.1 72.1 142.6 138.8
Operating Profit 32.7 33.5 83.5 74.0 Income Tax Expense
(11.8 ) (12.0 ) (29.9 ) (26.1 ) Net Income $ 20.9 $ 21.5
$ 53.6 $ 47.9
Selected financial information for the
Fireside Bank segment follows:
Three Months Ended Six Months Ended Jun 30, Jun 30, Jun 30,
Jun 30, (Dollars in Millions) 2011 2010 2011 2010
Results of
Operations
Interest, Loan Fees and Earned Discounts $ 12.6 $ 26.3 $
28.0 $ 56.5 Other Automobile Finance Revenues 0.2 0.4
0.3 0.8 Total Automobile Finance Revenues 12.8 26.7
28.3 57.3 Net Investment Income 0.1 0.5 0.5
1.0 Total Revenues 12.9 27.2 28.8 58.3
Provision for Loan Losses (14.4 ) — (28.2 ) 2.9 Interest
Expense on Certificates of Deposits 7.5 7.4 14.6 15.3 Incentives to
Close Deposit Accounts Early — 1.2 0.6 1.5 General and
Administrative Expenses 12.2 14.0 22.5 29.2
Operating Profit 7.6 4.6 19.3 9.4 Income Tax Expense (2.6 )
(1.9 ) (6.3 ) (3.7 ) Net Income $ 5.0 $ 2.7 $ 13.0
$ 5.7
Use of Non-GAAP Measures
Underlying Combined Ratio
Underlying Combined Ratio is a non-GAAP measure, which is
computed by adding the Current Year Non-catastrophe Losses and LAE
Ratio with the Incurred Expense Ratio. The most directly comparable
GAAP financial measure is the combined ratio, which uses total
incurred losses and LAE, including the impact of catastrophe
losses, and loss and LAE reserve development. We believe the
Underlying Combined Ratio is useful to investors and is used by
management to reveal the trends in our Property and Casualty
businesses that may be obscured by catastrophe losses and
prior-year reserve development. These catastrophe losses may cause
our loss trends to vary significantly between periods as a result
of their incidence of occurrence and magnitude, and can have a
significant impact on incurred losses and LAE and the Combined
Ratio. Prior-year reserve developments are caused by unexpected
loss development on historical reserves. Because reserve
development relates to the re-estimation of losses from earlier
periods, it has no bearing on the performance of our insurance
products in the current period. We believe it is useful for
investors to evaluate these components separately and in the
aggregate when reviewing our underwriting performance. The
Underlying Combined Ratio should not be considered a substitute for
the Combined Ratio and does not reflect the overall underwriting
profitability of our business.
Total Segment Net Income (Loss)
A reconciliation of Total Segment Net Income (Loss) to Income
(Loss) from Continuing Operations is as follows:
Three Months Ended Six Months Ended Jun 30,
Jun 30, Jun 30, Jun 30, (Dollars in Millions) 2011 2010 2011
2010 Segment Net Income (Loss): Kemper $ (33.0 ) $ 13.5 $ (21.7 ) $
28.1 Unitrin Specialty 4.9 6.0 9.1 11.8 Unitrin Direct (4.7 ) 0.4
(8.5 ) 0.5 Life and Health Insurance 20.9 21.5 53.6 47.9 Fireside
Bank 5.0 2.7 13.0 5.7 Total Segment Net
Income (Loss) (6.9 ) 44.1 45.5 94.0 Unallocated Net Income (Loss)
From: Net Realized Gains on Sales of Investments 11.6 1.9 21.0 4.8
Net Impairment Losses Recognized in Earnings (0.7 ) (3.2 ) (1.0 )
(5.3 ) Other Expense, Net (5.5 ) (3.2 ) (11.2 ) (6.9 ) Income
(Loss) from Continuing Operations before Equity in Net Income
(Loss) of Investee (1.5 ) 39.6 54.3 86.6 Equity in Net Income
(Loss) of Investee — (0.5 ) — 0.2 Income
(Loss) from Continuing Operations $ (1.5 ) $ 39.1 $ 54.3
$ 86.8
Caution Regarding Forward-Looking Statements
This press release may contain or incorporate by reference
information that includes or is based on forward-looking statements
within the meaning of the safe-harbor provisions of the Private
Securities Litigation Reform Act of 1995. 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 financial performance or financial condition.
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. 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. 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 and financial condition. The
reader should consider the following list of general factors that
could affect the Company's future results and financial condition,
as well as those discussed under Item 1A., Risk Factors, in
the Company's 2010 Annual Report on Form 10-K, as updated by Item
1A., Risk Factors, to Part II - Other Information of the Company's
subsequent Quarterly Reports on Form 10-Q.
Among the general factors that could cause actual results and
financial condition to differ materially from estimated results and
financial condition are:
- The incidence, frequency, and severity
of catastrophes occurring in any particular reporting period or
geographic concentration, including natural disasters, pandemics
and terrorist attacks or other man-made events;
- The number and severity of insurance
claims (including those associated with catastrophe losses) and
their impact on the adequacy of loss reserves;
- Changes in facts and circumstances
affecting assumptions used in determining loss and LAE
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 or the financial condition of reinsurers and amounts
recoverable therefrom;
- Orders, interpretations or other
actions by regulators that impact the reporting, adjustment and
payment of claims;
- The impact of residual market
assessments and assessments for insurance industry
insolvencies;
- Changes in industry trends and
significant industry developments;
- Uncertainties related to regulatory
approval of insurance rates, policy forms, license applications and
similar matters;
- Developments related to insurance
policy claims and coverage issues, including, but not limited to,
interpretations or decisions by courts or regulators that may
govern or influence such issues arising with respect to losses
incurred in connection with hurricanes and other catastrophes;
- Changes in ratings by credit rating
agencies, including A.M. Best Co., Inc.;
- Adverse outcomes in litigation or other
legal or regulatory proceedings involving Unitrin or its
subsidiaries or affiliates;
- Regulatory, accounting or tax changes
that may affect the cost of, or demand for, the Company’s products
or services;
- Governmental actions, including, but
not limited to, implementation of the provisions of the Patient
Protection and Affordable Care Act, the Health Care and Education
Reconciliation Act of 2010 and the Dodd-Frank Act, new laws or
regulations or court decisions interpreting existing laws and
regulations or policy provisions;
- Changes in distribution channels,
methods or costs resulting from changes in laws or regulations,
lawsuits or market forces;
- Changes in laws or regulations
governing or affecting the regulatory status of industrial banks,
such as Fireside Bank, and their parent companies, including
minimum capital requirements and restrictions on the non-financial
activities and equity investments of companies that acquire control
of industrial banks;
- Changes in the estimated rates of
automobile loan receivables net charge-off used to estimate
Fireside Bank’s reserve for loan losses, including, but not limited
to, changes in general economic conditions, unemployment rates and
the impact of changes in the value of collateral held;
- The degree of success in effecting an
orderly wind-down of the operations of Fireside Bank and the
recovery of Unitrin’s investment in Fireside Bank;
- Changes in general economic conditions,
including performance of financial markets, interest rates,
unemployment rates and fluctuating values of particular investments
held by the Company;
- The level of success and costs expended
in realizing economies of scale and implementing significant
business consolidations and technology initiatives;
- Heightened competition, including, with
respect to pricing, entry of new competitors and the development of
new products by new and existing competitors;
- 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 Unitrin’s filings with the SEC.
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 Unitrin makes on related subjects in its
filings with the SEC.
Unitrin is a diversified insurance holding company, with
subsidiaries that principally provide life, auto, homeowners and
other insurance products for individuals and small businesses.
Unitrin's principal businesses are:
Kemper, which provides auto, homeowners and other
insurance products to individuals through a network of independent
agents,
Unitrin Direct, which markets auto, homeowners and
renters insurance to consumers via direct mail, the Internet and
employer-sponsored employee benefit programs and other affinity
relationships,
Unitrin Specialty, which provides auto insurance through
a network of independent agents and brokers to individuals and
small businesses which have had difficulty procuring insurance
through traditional channels, usually due to adverse driving
records or claim or credit histories, and
Life and Health Insurance, which specializes in the sale
of life and health insurance products to individuals through a
network of employee agents and exclusive, independent agents.
Kemper® is a registered service mark of Unitrin, Inc.
Additional information about Unitrin, including its Annual
Report, filings on Forms 10-K, 10-Q and 8-K and its investor
supplement, is available by visiting its website
(www.unitrin.com).
Unitrin (NYSE:UTR)
Historical Stock Chart
From Mar 2024 to Apr 2024
Unitrin (NYSE:UTR)
Historical Stock Chart
From Apr 2023 to Apr 2024