Fitch Affirms Unitrin's IDR & IFS Ratings; P/C Ops Outlook to Stable.NEW YORK New York, state, United States New York, Middle Atlantic state of the United States. It is bordered by Vermont, Massachusetts, Connecticut, and the Atlantic Ocean (E), New Jersey and Pennsylvania (S), Lakes Erie and Ontario and the Canadian province of -- 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 the 'BBB+' Issuer Default Rating (IDR IDR In currencies, this is the abbreviation for the Indonesian Rupiah. Notes: The currency market, also known as the Foreign Exchange market, is the largest financial market in the world, with a daily average volume of over US $1 trillion. ) and 'BBB' senior debt ratings on Unitrin, Inc. (NYSE NYSE See: New York Stock Exchange :UTR UTR Untranslated Region (genetics) UTR Unicode Technical Report UTR Unique Taxpayer Reference (UK Inland Revenue) UTR Unable to Reach UTR Unable to Reproduce UTR University Technical Representative ) (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 Stable from Positive, while United, Union, and Reliable's Rating Outlooks remain Stable. A list of ratings follows at the end of this release. The decision to revise Trinity's Rating Outlook reflects Fitch's view that although Trinity's results have improved, its overall performance continues to lag 'A' rated insurers, and other personal lines underwriters. Although Unitrin appears to have successfully integrated its 2002 acquisition of Kemper's book of business onto Trinity's paper, Fitch expected that the resulting increase in scale would have led to greater improvement in Trinity's expense ratio and 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. profitability nearly five years after the acquisition. Separately, Fitch has assigned a rating of 'BBB' to Unitrin's $300 million senior debt offering due May 2017. Fitch expects that Unitrin will use the majority of the proceeds of this offering to redeem $300 million of senior notes due July 1, 2007. Positive factors supporting Unitrin's ratings include the company's diversified business profile, moderate financial leverage, and reasonable financial flexibility. The ratings also reflect the life insurance subsidiaries' stable earnings, and Trinity's improving underwriting 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. , Intermec, and Baker Hughes Baker Hughes NYSE: BHI is the world's third-largest oilfield services company behind Schlumberger & Halliburton, its main competitors. Baker Hughes provides the world's oil & gas industry with products and services for drilling, formation evaluation, completion and production. equity investments, on Trinity's capitalization, and the mature nature and limited growth opportunities of its life insurance operations. Unitrin utilizes a reasonable amount of financial leverage, and Fitch believes the company has reasonable financial flexibility. Unitrin has approximately $505 million of debt outstanding which equates to a debt-to-capital ratio of 18% as of March 31, 2007. Following the $300 million senior notes issuance discussed above, Fitch expects Unitrin's financial leverage to briefly increase to the mid-20%'s before the $300 million of existing debt is redeemed in July 2007. 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 based interest coverage was a solid 5.6 times (x) in 2006 and Fitch expects Unitrin's interest coverage to remain at or near this level in the near term. Unitrin, Inc. --Issuer Default Rating (IDR) affirmed at 'BBB+'; --5.75% senior debt due 2007 affirmed at 'BBB'; --4.875% senior debt due 2010 affirmed at 'BBB'; --$300 million senior debt due May 2017 assigned at 'BBB'. The Rating Outlook is Stable. Trinity Universal --Insurer Financial Strength (IFS) affirmed at 'A-'; The Rating Outlook is revised to Stable from Positive. United Insurance Co of America --IFS affirmed at 'A+'. Union National Life --IFS affirmed at 'A+'. Reliable National Life --IFS affirmed at 'A+'. The Rating Outlook is Stable. 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 issuer did not participate in the rating process other than through the medium of its public disclosure. |
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