Unitrin, Inc. Posts Record Fourth Quarter and Full Year Operating Results and Increases Quarterly Dividend

Business Wire, Feb 3, 2005

CHICAGO -- Unitrin, Inc. (NYSE:UTR) reported today net income of $73.3 million ($1.07 per common share) for the three months ended December 31, 2004, compared to net income of $44.4 million ($0.66 per common share) for the same period in 2003. For the year ended December 31, 2004, Unitrin reported net income of $240.2 million ($3.51 per common share), compared to net income of $123.6 million ($1.83 per common share) for the same period in 2003. Net Income increased due to improved operating results in each of the Company's business segments for both the quarter and full year.

Dick Vie, Unitrin Chairman and Chief Executive Officer, commented, "We are very pleased to report record fourth quarter results. In fact, the fourth quarter of 2004 is the strongest operating quarter in the 15 year history of Unitrin. Net income in each of our business segments increased compared to both the fourth quarter and the full year of 2003. Our Unitrin Direct segment posted its first discrete period of operating profit in the fourth quarter, well ahead of our original business model."

Earlier today Unitrin announced that its Board of Directors had declared a quarterly dividend of $0.425 per share payable on February 25, 2005 to its shareholders of record as of February 14, 2005. This represents an increase of $0.01 over the prior quarterly dividend of $0.415 per share.

Dick Vie, further commented, "Along with our record fourth quarter earnings, we are pleased to report that, today, our Board of Directors increased the quarterly dividend to $0.425 per share, compared to the previous quarterly rate of $0.415 per share."

Total Revenue

Total Revenue was $759.7 million for the fourth quarter of 2004, compared to $751.5 million for the fourth quarter of 2003, an increase of $8.2 million. Net Investment Income increased by $7.4 million due primarily to a higher level of investments. Total Earned Premiums for the fourth quarter of 2004 were $622.7 million, a decline of $1.4 million compared to the fourth quarter of 2003. Earned Premiums decreased in the Multi Lines and Unitrin Specialty segments, mostly offset by increased Earned Premiums in the Unitrin's Kemper Auto and Home and Unitrin Direct segments. Net Realized Investment Gains were $11.3 million for the fourth quarter of 2004, compared to $8.4 million for the fourth quarter of 2003.

Net Realized Investment Gains

Net Realized Investment Gains totaled $11.3 million before-tax for the fourth quarter of 2004, compared to $8.4 million before-tax for the fourth quarter of 2003. Net Realized Investment Gains for the fourth quarter of 2004 included pre-tax gains of $8.8 million and $0.7 million from sales of a portion of the Company's investment in Northrop Grumman common stock and Baker Hughes common stock, respectively. The Company cannot anticipate when or if similar investment gains may occur in the future.

Corporate Investments

After adjusting for fourth quarter 2004 sales of a portion of the Company's investments in Northrop Grumman common stock and Baker Hughes common stock, the fair value of Unitrin's Corporate Investments (Northrop Grumman preferred and common stock and the common stocks of Baker Hughes and UNOVA, Inc.) increased by $152.8 million for the fourth quarter of 2004. The changes in fair values of Unitrin's Corporate Investments are summarized below:

Holding
                                         Gain
                             Fair       (Loss)
                             Value     Arising              Fair Value
                           Sept. 30,    During     Dis-      Dec. 31,
(Dollars in Millions)        2004       Period  positions      2004
-------------------------- ---------  --------- ---------   ----------
Northrop Grumman Preferred
 Stock                       $232.5       $1.8        $-       $234.3
Northrop Grumman Common
 Stock                        459.6        9.8     (39.1)       430.3
Baker Hughes, Inc. Common
 Stock                         50.9       (1.1)     (1.4)        48.4
UNOVA, Inc. Common Stock      177.8      142.3         -        320.1
                           ---------  --------- ---------   ----------
Total Fair Value of
  Corporate Investments      $920.8     $152.8    $(40.5)    $1,033.1
                           =========  ========= =========   ==========

Quarterly Segment Results

Unitrin is engaged, through its subsidiaries, in the property and casualty insurance, life and health insurance and consumer finance businesses. Through the year ended December 31, 2004, the Company conducted its operations through six operating segments: Multi Lines Insurance, Unitrin Specialty, Kemper Auto and Home, Unitrin Direct, Life and Health Insurance and Consumer Finance.

Effective January 1, 2005, the personal lines operations of Unitrin's Multi Lines segment have been consolidated into the Kemper Auto and Home segment and the commercial lines operations of the Multi Lines segment have been renamed "Unitrin Business Insurance" and will continue as a separate segment. All results reported in this release are presented on the basis of the segments in place through the end of 2004. Beginning with the first quarter of 2005, Unitrin's segment results will be reported based on the new organizational structure.