A.M. Best Affirms Ratings of Unitrin Inc. and Its Subsidiaries.

OLDWICK, N.J. -- A.M. Best Co. has affirmed the financial strength rating (FSR) of A (Excellent) and the issuer credit ratings (ICR) of "a" of Unitrin Property and Casualty Insurance Group (Unitrin) and its members. A.M. Best has also affirmed the FSR of A (Excellent) and the ICRs of "a" of United Insurance Company of America (UICA) (Chicago, IL), Union National Life Insurance Company (Baton Rouge, LA) and The Reliable Life Insurance Company (St. Louis, MO), the three career agent life/health insurance subsidiaries of Unitrin's publicly-traded parent, Unitrin, Inc. (Chicago, IL) [NYSE: UTR]. Additionally, A.M. Best has affirmed the FSR of A- (Excellent) and ICR of "a-" of Reserve National Insurance Company (RNIC) (Oklahoma City, OK), Unitrin, Inc.'s independent agent life/health insurance subsidiary. Concurrently, A.M. Best has affirmed the ICR of "bbb" and the debt ratings of Unitrin, Inc.'s outstanding senior notes and its $300 million shelf registration. The outlook for all ratings is stable. (Please see link below for a detailed listing of the companies and ratings.)

Unitrin's ratings reflect its strong capitalization, improved underwriting performance and geographic and product spread of risk. The group's outlook is based on its improved operating performance in recent years and the successful assimilation of the book of business acquired from Kemper.

Unitrin's positive rating factors are derived from a diversified product offering, strong market presence, long-standing independent agency relationships and prudent catastrophe exposure management. The underwriting focus remains centered on providing private passenger automobile and homeowners coverages and commercial policies for "main street" businesses.

The ratings also acknowledge management's commitment to improve profitability by implementing rate increases, geographically diversifying its business and re-underwriting select books of business. In addition, loss and loss adjustment expense reserves have developed favorably in recent years. As a result of these actions and firm market conditions, operating results improved in recent years. Also, Unitrin benefits from the financial flexibility and operational support from Unitrin Inc., which maintains moderate financial leverage and solid fixed-charge coverage.

Negative rating factors include Unitrin's significant underwriting losses in the earlier years, which were attributable to inadequate rates and weather related losses, and exposure to market risk and potential volatility in surplus balances because of the group's large, concentrated common stock portfolio. However, the group's operating results improved in recent years, primarily due to corrective actions that were implemented by management and firm market conditions.

The ratings of the life/health career agent subsidiaries reflect their strategic role within the Unitrin, Inc. organization, strong niche presence in the home service life insurance market, well established career agency force and favorable operating performance. Furthermore, A.M. Best believes that the risk-adjusted capitalization of the three life/health subsidiaries, both on a combined and stand-alone basis, remains sufficient despite large dividend payments made to Unitrin, Inc. over the last several years.

Partially offsetting these positive rating factors is A.M. Best's belief that the life/health subsidiaries may be challenged to sustain premium growth and operating performance given the limited growth potential in the mature home service market and to sustain historical levels of earnings given the reduced levels of invested assets and the continuing low interest rate environment.

The rating actions on RNIC reflect its improved accident and health premium trends, favorable operating performance and adequate stand-alone risk-adjusted capitalization. Partially offsetting these positive rating factors is the challenge for RNIC to sustain its operating performance given its limited business profile marketing accident and health insurance products and Medicare supplement insurance to individuals and small business owners living in rural areas.

For a complete list of Unitrin, Inc.'s FSRs, ICRs and debt ratings, visit www.ambest.com/press/040601unitrin.pdf.

Founded in 1899, A.M. Best Company is a full-service credit rating organization dedicated to serving the financial services industries, including the banking and insurance sectors. For more information, visit www.ambest.com.