Fitch Affirms Unitrin's IDR & IFS Ratings; P/C Ops Outlook to Stable

Business Wire, May 10, 2007

NEW YORK -- Fitch Ratings has affirmed the 'BBB ' Issuer Default Rating (IDR) and 'BBB' senior debt ratings on Unitrin, Inc. (NYSE:UTR) (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 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, Intermec, and Baker Hughes 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 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 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 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.