Unitrin Inc.
Unitrin Inc.
One East Wacker Drive Chicago, Illinois 60601 U.S.A. Telephone: (312) 661-4600 Fax: (312) 494-6995 Web site: http://www.unitrin.com
Public Company Incorporated: 1990 Employees: 8,400 Operating Revenues: $3.04 billion (2004) Stock Exchanges: New York Ticker Symbol: UTR NAIC: 524113 Direct Life Insurance Carriers; 524114 Direct Health and Medical Insurance Carriers; 524126 Direct Property and Casualty Insurance Carriers
Although Chicago-based Unitrin Inc. has only existed as a stand-alone company since 1990 when it was spun off from conglomerate Teledyne Inc., the firm has become a leader in the insurance industry with over $9 billion in assets, six million policies in force, and $2.5 billion in annual premium revenues. The company provides property and casualty insurance, life and health insurance, and consumer financial services to individuals, families, and small businesses. Unitrin's Property & Casualty Insurance Group, which includes Kemper Auto and Home, Unitrin Specialty, and Unitrin Business Insurance, accounts for 75 percent of the company's annual insurance premiums. Unitrin's Fireside Bank specializes in automobile loans and has 28 branches in California.
Unitrin was founded as a subsidiary of Teledyne Inc. Best known for the Water Pik dental aid and ubiquitous Shower Massage, Teledyne began business in 1960 as a semiconductor manufacturer. Before the decade was over, Teledyne began acquiring undervalued companies of various sizes; pursuing this strategy aggressively into the 1970s and 1980s, Teledyne became one the most successful and recognized corporations in the United States under the leadership of legendary entrepreneur Henry E. Singleton.
UNITRIN'S INSURANCE DIVISIONS
Unitrin's life and health division comprised three large wholly owned subsidiaries: United Insurance Company of America, rated A+ by A. M. Best; Union National Life Insurance Company, also rated A+ by Best; and the Pyramid Life Insurance Company, rated A− by Best. In addition to its high industry ratings, Unitrin differentiated itself from a slew of health and life insurance carriers (which numbered about 1,800 in the United States by 1995) not by offering an unusual mix of products, but instead by providing typical policies with an unusual method of marketing these products. Life insurance policies were offered in standard increments of up to $250,000 for individuals and groups (such as employees of large companies and credit unions) in permanent and term policies; health insurance was sold to both individuals and groups on either a limited-benefit or major medical coverage basis with a maximum risk of $500,000 in any one calendar year.
Yet what drew many customers to Unitrin's insurance packages was the old-fashioned concept of selling services door-to-door with some 4,000 sales representatives (out of a total of 5,300 in the division), who visited middle- and lower-income suburban and rural communities. As a convenience, agents then returned monthly to pick up premium payments, omitting postal services and delays. Although there were two-and-a-half dozen competitors in the "home service" market, Unitrin carved out a comfortable niche in 26 states and the District of Columbia, and within five years this segment generated almost 80 percent of the life and health insurance division's premiums.
Unitrin's second major insurance segment in property and casualty policies covered automobiles and motorcycles, homes, watercraft, and commercial businesses from fire, theft, and other property damage. Worker's compensation policies were also available to small and medium-sized companies. The property/casualty division worked through five subsidiaries: Financial Indemnity Company, rated A+ by Best; the Milwaukee Insurance Companies (including Alpha Property & Casualty, Milwaukee Guardian, and Milwaukee Safeguard Insurance companies—all part of a 1995 merger), rated A−; Trinity Universal Insurance Company, rated A++; Union National Fire Insurance Company, rated A; and United Casualty Insurance Company of America, rated A+ by Best, with 1,700 divisional employees and approximately 15,000 independent agents across the nation. Premium sales were concentrated in the South (predominantly Louisiana, with 6 percent of the division's sales), Midwest (especially Illinois, Minnesota, and Wisconsin for a combined total of 19 percent), Texas (32 percent), and California (12 percent of premiums). Geographic hazards included hurricanes in the South (generally worse in the fall), windstorms, tornadoes, and flooding in the Midwest (in the spring), and fires in the West. Much like the weather, profitability in the casualty and property insurance companies tended to be cyclical and easily driven by pricing competition and a flooded marketplace.
Unitrin's consumer finance division, which conducted business through the Fireside Thrift Company, located in Newark, California, was chiefly involved in financing used automobiles from dealerships. Fireside also sold consumers personal loans using automobiles as collateral, and offered timely service and flexible terms to win clients over its competition. Fireside's activities were financed by thrift investment certificates (ranging from 31 days to five years), money market accounts, and IRAs, products routinely offered by banks, savings and loans, and other industrial loan providers.
Following its earlier success while still part of Teledyne, Inc., Unitrin posted sales of $1 billion from premiums and consumer finance loans in its first independent year. Total revenue was over $1.25 billion for 1991, with net income of $136 million. The following year, premiums and consumer finance services increased to $1.1 billion and total revenues to $1.36 billion, but net income fell to $123 million due to a onetime accounting charge of $40 million.