Fitch Affirms Unitrin's Debt and IFS Ratings; P/C Ops Outlook Revised to Positive.CHICAGO -- Fitch Ratings Fitch Ratings An international rating agency for financial institutions, insurance companies, and corporate, sovereign, and municipal debt. Fitch Ratings has headquarters in New York and London and is wholly owned by FIMALAC of Paris. has affirmed af·firm v. af·firmed, af·firm·ing, af·firms v.tr. 1. To declare positively or firmly; maintain to be true. 2. To support or uphold the validity of; confirm. v.intr. the 'BBB' long-term and senior debt ratings on Unitrin, Inc. (Unitrin). Additionally, Fitch has affirmed the 'A-' insurer financial strength (IFS) ratings on Unitrin's lead property/casualty subsidiary, Trinity Universal (Trinity), and 'A+' IFS ratings on Unitrin's life/health subsidiaries: United Insurance Company of America (United), Union National Life (Union), and Reliable National Life (Reliable). Fitch has revised Trinity's Outlook to Positive from Stable, while United, Union, and Reliable's Rating Outlooks remain Stable. Positive factors supporting Unitrin's ratings include the company's diversified diversified (di·verˑ·s business profile, moderate financial leverage, and reasonable financial flexibility. The ratings also reflect the life insurance subsidiaries' stable earnings, and Trinity's improving underwriting Underwriting 1. The process by which investment bankers raise investment capital from investors on behalf of corporations and governments that are issuing securities (both equity and debt). 2. The process of issuing insurance policies. results. Partially offsetting these positives is the potential impact of the company's concentrated investment focus primarily in Northrop Grumman Northrop Grumman Corporation (NYSE: NOC) is an aerospace and defense conglomerate that is the result of the 1994 purchase of Grumman by Northrop. The company is the third largest defense contractor for the U.S. and UNOVA equity investments and the mature nature and limited growth opportunities of its life insurance operations. Unitrin is a holding company with subsidiaries that conduct operations in property/casualty insurance, life insurance, and consumer finance. Trinity's Positive Rating Outlook reflects the increased scale and profitability due in part to the successful integration of Kemper's book of business onto Unitrin's paper, a substantial re-underwriting of the commercial book of business, and the recent favorable fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. market. Fitch believes that the profitability and stability of the home service life products sold by Unitrin's life operations are favorable from a credit perspective. However, Fitch also believes that the home service market's growth potential is limited. Fitch views Unitrin's consumer-finance operation's consistent operating earnings Operating Earnings Profits after subtracting expenses such as marketing, cost of goods sold, administration and general operating costs from revenue. Notes: Tax and interest expenses are not subtracted - operating earnings are synonymous with EBIT (earnings before and its ability to self-fund loan originations The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. favorably fa·vor·a·ble adj. 1. Advantageous; helpful: favorable winds. 2. Encouraging; propitious: a favorable diagnosis. 3. . However, a significant portion of the consumer finance operation's loan originations are made in the sub-prime market and Fitch generally views the consumer finance industry as having lower credit quality than the insurance industry. As a result, Fitch believes that support for Unitrin's ratings from its consumer-finance operation is limited. Unitrin utilizes a moderate amount of financial leverage and Fitch believes the company has reasonable financial flexibility. The company has approximately $503 million of debt outstanding, which equates to a debt-to-capital ratio of 19% as of June 30, 2005. Operating earnings-based interest coverage was 8.4x through June 30, 2005. Fitch's ratings anticipate that Unitrin's near-term debt-to-capital ratio will be approximately 18%-23% and operating earnings based interest coverage will be in a range of 7-12 times (x). Unitrin, Inc. -- Long-term affirmed at 'BBB', with a Stable Outlook; -- 5.75% senior debt due 2007 affirmed at 'BBB', with a Stable Outlook; -- 4.875% senior debt due 2010 affirmed at 'BBB', with a Stable Outlook. Trinity Universal -- IFS affirmed at 'A-'; -- Outlook Revised to Positive. United Insurance Co of America -- IFS affirmed at 'A+' with a Stable Outlook. Union National Life -- IFS affirmed at 'A+', with a Stable Outlook. Reliable National Life -- IFS affirmed at 'A+', with a Stable Outlook. Fitch's rating definitions and the terms of use Terms of Use are rules set up by the owner of an intellectual property or service to govern how they may be legally used. In many cases, terms of service are used as a contractual agreement between a company and users of a service they provide. of such ratings are available on the agency's public site, www.fitchratings.com. Published ratings, criteria and methodologies are available from this site, at all times. Fitch's code of conduct, confidentiality, conflicts of interest, affiliate firewall, compliance and other relevant policies and procedures Policies and Procedures are a set of documents that describe an organization's policies for operation and the procedures necessary to fulfill the policies. They are often initiated because of some external requirement, such as environmental compliance or other governmental are also available from the 'Code of Conduct' section of this site. The ratings above have been initiated by Fitch as a service to investors. The issuer did not participate in the rating process other than through the medium of its public disclosure. |
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