EX-99.2 4 dex992.txt TEXT OF OVERHEAD SLIDES SLIDE 1 - [TITLE SLIDE] UNITRIN --------- SLIDE 2 Overview . Operations . Dividends . Stock Repurchase Program . Long-term Investment Strategy UNITRIN ----------- SLIDE 3 Core Operations . Growth in Existing Markets . Acquisitions of Complementary Businesses . Leverage Technology to Improve Efficiencies . Value of One-to-One Relationships UNITRIN ----------- SLIDE 4 Dividend Policy . Increase in Quarterly Dividend Every Year Since Spin-off . Dividends Paid Since Unitrin Spin-off . $965 Million in Cash Dividends . $196 Million - Curtiss-Wright Stock UNITRIN ----------- SLIDE 5 Repurchase Program . Over 54 Million Shares Repurchased Since Spin-off . Total Cost of Over $1.4 Billion . Average Cost of $26.52 Per Share UNITRIN ----------- SLIDE 6 Significant Investee Transactions .. Northrop-Litton Transaction Completed for a Realized Accounting Gain of $362 Million .. Maintained a Continuing Interest in Combined Companies in a Tax-free Manner .. Spun off Curtiss-Wright to Unitrin Shareholders in a Tax-free Transaction .. Focus on Core Insurance and Consumer Finance Operations UNITRIN ----------- SLIDE 7 Move to the Big Board . Commenced Trading on NYSE on May 24, 2001 . Ticker Symbol - UTR . Average Trading Volume of 45,000 Shares . Less Intra-day Volatility Unitrin ----------- SLIDE 8 UNITRIN UNITRIN --------- SLIDE 9 - [TITLE SLIDE] UNITRIN --------- SLIDE 10 - [TITLE SLIDE] UNITRIN --------- 2001 Results SLIDE 11 Revenues (In Millions) 2001 2000 ---------- ---------- Insurance Premiums $ 1,568 $ 1,448 Consumer Finance Revenues 159 142 Net Investment Income 239 223 Net Gains on Sales of Investments 568 140 ---------- ---------- Total Revenues $ 2,534 $ 1,953 UNITRIN ----------- SLIDE 12 Net Income (In Millions)
2001 2000 --------- --------- From Operations $ (12) $ 7 From Investees 29 (7) From Sales of Investments 364 91 --------- --------- Total $ 381 $ 91
UNITRIN --------- SLIDE 13 Net Income Per Share
2001 2000 ------------ ------------ From Operations $ (0.18) $ 0.10 From Investees 0.42 (0.10) From Sales of Investments 5.40 1.32 ------------ ------------ Total $ 5.64 $ 1.32
UNITRIN --------- SLIDE 14 - [TITLE SLIDE] UNITRIN --------- First Quarter Results SLIDE 15 Revenues (In Millions) First Quarter --------------------- 2002 2001 --------- --------- Insurance Premiums $ 416 $ 370 Consumer Finance Revenues 40 39 Net Investment Income 56 57 Net Gains on Sales of Investments - 2 --------- --------- Total Revenues $ 512 $ 468 UNITRIN ----------- SLIDE 16 Net Income (In Millions) First Quarter --------------- 2002 2001 ------ ------ From Operations $ 12 $ 11 From Investees (3) 5 From Sales of Investments - 1 ------ ------ Total $ 9 $ 17 UNITRIN --------- SLIDE 17 Net Income Per Share First Quarter --------------- 2002 2001 ------ ------ From Operations $ 0.17 $ 0.15 From Investees (0.04) 0.08 From Sales of Investments 0.01 0.02 ------ ------ Total $ 0.14 $ 0.25 UNITRIN --------- SLIDE 18 - [TITLE SLIDE] URITRIN -------------- Investments SLIDE 19 Investments at Market Value December 31, 2001 (In Millions)
Fixed Maturities: U.S. Government and Government Agencies $ 1,593 31% Corporate and Redemptive Preferred 1,106 22 Municipal Bonds 227 4 ------- ----- Total Fixed Maturities 2,926 57 Corporate Investments: Northrop Common and Preferred 993 20 Baker Hughes Common 113 2 UNOVA Common 73 1 ------- ----- Total Corporate Investments 1,179 23 Other Equity Securities 282 5 Short Term Investments 505 10 Other Investments 243 5 ------- ----- Total Investments $ 5,135 100% ======= =====
UNITRIN --------- SLIDE 20 Litton-Northrop Transaction (In Millions) Shares $ -------- ------- Shares Tendered 12.7 Received: Northrop Preferred Stock 1.8 $ 178 Northrop Common Stock 7.7 661 Cash 175 ------- Total 1,014 Litton Carrying Value at March 31, 2001 449 Taxes and Other 203 ------- After-tax Gain $ 362 UNITRIN --------- SLIDE 21 Northrop Investments (In Millions) Shares $ -------- ------- At Acquisition: --------------- Northrop Preferred Stock 1.8 $ 178 Northrop Common Stock 7.7 661 ------- Total $ 839 Today: ------ Northrop Preferred Stock 1.8 $ 244 Northrop Common Stock 7.7 925 ------- Total $ 1,169 ------- Increase in Fair Value $ 330 ------- UNITRIN --------- SLIDE 22 Curtiss-Wright Spin-off .. Tax free distribution of Unitrin's 4.4 million shares of Curtiss-Wright directly to Unitrin's shareholders. .. Transaction value $196.1 million or $2.91 per Unitrin share. .. Unitrin shareholders received approximately 6.5 shares of Curtiss-Wright stock for every 100 shares of Unitrin Stock owned. .. Value today of $330.0 million or $4.89 per Unitrin share. UNITRIN --------- SLIDE 23 Investment in UNOVA (In Millions) September 2000: --------------- Carrying Value Before Writedown $ 163 Writedown 94 ------- Carrying Value After Writedown $ 69 Today: ------ Carrying Value $ 61 Market Value $ 103 UNITRIN --------- SLIDE 24 Investment in Baker Hughes (In Millions) Number Net of Shares Proceeds --------- -------- Initial Holdings 34.2 Sales: 1999 18.7 $ 336 2000 11.7 253 2001 0.7 19 First Quarter 2002 0.1 2 --------- -------- Total Sales 31.2 $ 610 UNITRIN --------- SLIDE 25 - [TITLE SLIDE] UNITRIN --------- SLIDE 26 - [TITLE SLIDE] UNITRIN --------- Consumer Finance SLIDE 27 Consumer Finance Segment Fireside Thrift .. Chartered as a California Industrial Bank .. In business for over 50 years .. Headquartered in California .. 32 branches in California .. 4 loan production offices in Arizona, Oregon, Washington and Colorado .. Loans secured by automobiles .. We fund our loans with FDIC insured deposits UNITRIN --------- SLIDE 28 Fireside Thrift Co. Last Decade .. 16% Return on equity during 1992- 2001 .. 6% growth rate in assets .. 11% Compound growth rate in earnings .. Over $758 million in consumer loans .. Loans to over 140,000 consumers .. 15,000 savings accounts UNITRIN --------- SLIDE 29 GAAP Results of Operations (In Millions) 2001 2000 ------ ----- Revenues $ 159 $ 142 Interest Expense On Investment Certificates and Savings Accounts 43 39 Provision for Loan Losses 29 27 General and Adminstrative Expenses 55 50 ------ ----- Operating Profit $ 32 $ 26 ====== ===== Net Income $ 19 $ 15 ====== ===== Return on Required Equity 15% 13% UNITRIN --------- SLIDE 30 Net Income 1997-2001 (in Millions) Year Net Income ------------------ 1997 $7.9 1998 $11.7 1999 $13.8 2000 $15.0 2001 $18.5 UNITRIN --------- SLIDE 31 Lending in 2001 . $468 Million in New Loan Volume . 94% through Auto Dealers . 6% through Direct Lending to Buyers . Specialize in Customers with Past Credit Difficulties UNITRIN --------- SLIDE 32 Monthly Volume (3 Month Average) ($Millions) 3 month Average ------- Mar-99 $31 Sep-99 $36 Mar-00 $38 Sep-00 $40 Mar-01 $43 Sep-01 $37 Mar-02 $43 UNITRIN --------- SLIDE 33 Net Outstanding Loans (in Millions) 1992 $385 1993 $420 1994 $491 1995 $578 1996 $645 1997 $583 1998 $572 1999 $637 2000 $717 2001 $760 UNITRIN --------- SLIDE 34 Total Delinquency on March 31st % of Net Outstanding Total Delinquency on March 31st % of Year Net Outstanding -------------------------------- 1997 9.3% 1998 8.2% 1999 8.8% 2000 8.1% 2001 7.2% 2002 7.8% UNITRIN --------- SLIDE 35 Staff Distribution Percent ------- Lending 41% Collection 38% Support 15% Deposits 6% UNITRIN --------- SLIDE 36 Actions Taken . Increased collection staffing with a more intense focus on early delinquency . Distributed collection responsibility to lending personnel . Increased the loss provision factor by 15% beginning in the 4th quarter of 2001 UNITRIN --------- SLIDE 37 Funding . $747 Million in deposits as of 12/31/01 . Sources of deposits: -$537 Million from branch network -$149 Million from customers of security brokerage firms -$61 Million from institutional investors UNITRIN --------- SLIDE 38 Treasury Rates versus Prior Year Term Dec-00 Dec-01 -------------------------- 3 6.1% 1.7% 6 6.1% 1.8% 12 5.9% 2.1% 18 5.6% 2.5% 24 5.6% 2.8% 36 5.5% 3.4% 48 5.5% 3.8% 60 5.4% 4.0% UNITRIN --------- SLIDE 39 Fireside Rates versus Treasury Rates US Treas Fireside Term Dec-01 Dec-01 ---- -------- --------- 3 1.7% 2.3% 6 1.8% 2.5% 12 2.1% 3.3% 18 2.5% 3.6% 24 2.8% 4.1% 36 3.4% 4.6% 48 3.8% 4.8% 60 4.0% 5.0% UNITRIN --------- SLIDE 40 Average Cost of Thrift Average Cost Year of Thrift ------------------------ 1999 5.31% 2000 5.94% 2001 5.84% Mar-02 4.92% UNITRIN --------- SLIDE 41 Weighted Average Original Thrift Maturities (Excluding Savings Accounts) (Months) Weighted Average Original Thrift Year Maturities ------------------------------------------- 1998 18.2 1999 18.1 2000 21.5 2001 25.6 UNITRIN --------- SLIDE 42 EXPANSION POSSIBILITIES (In Billions) Dollar Amounts Indicate the Estimated Size of Fireside's Targeted Auto Lending State Amount ----- ------ Green Washington $ 2.8 Oregon $ 2.1 California $ 15.1 Arizona $ 2.7 Colorado $ 2.3 Yellow Kansas $ 1.5 Missouri $ 3.4 Red Nevada $ 1.0 Texas $ 11.8 White New Mexico $ 0.8 Idaho $ 0.8 Utah $ 1.0 UNITRIN --------- SLIDE 43 GAAP Results of Operations (In Millions) First Quarter ----------------- 2002 2001 ------ ------ Revenues $ 40 $ 39 Interest Expense On Investment Certificates and Savings Accounts 9 11 Provision for Loan Losses 10 8 General and Adminstrative Expenses 13 14 ------ ------ Operating Profit $ 8 $ 6 ====== ====== ------ ------ Net Income $ 4 $ 4 ====== ====== Return on Required Equity 15% 13% UNITRIN --------- SLIDE 44 Fireside's Goals .. Return on Equity in excess of 15% .. Continue portfolio growth in the 6 - 8% range per year (excluding bulk purchases) .. Growth will come from new offices UNITRIN --------- SLIDE 45 Prepared for Growth .. A tested lending system .. Funding sources are available for growth .. We are generating capital in excess of regulatory requirements .. The most experienced management in nonprime lending UNITRIN --------- SLIDE 46 - [TITLE SLIDE] UNITRIN --------- SLIDE 47 - [TITLE SLIDE] UNITRIN --------- Insurance Operations SLIDE 48 - [TITLE SLIDE] UNITRIN --------- Property and Casualty Insurance Operations SLIDE 49 Property & Casualty Insurance Operations . Multi Lines, Specialty Lines and Unitrin Direct . Independent Non-Employee Agents . Unitrin Direct Only in Select States . Employ Over 2,200 Associates . 65% of Premiums from Personal Lines . 35% of Premiums from Commercial Lines UNITRIN --------- SLIDE 50 Property & Casualty Insurance Operations Written Premiums (In Millions) 2001 2000 ---- ---- Multi Lines $ 580 $ 564 Specialty Lines 348 258 Unitrin Direct 24 - ------ ----- Total $ 952 $ 822 ====== ===== UNITRIN --------- SLIDE 51 Acquisition of Kemper's Personal Lines Insurance Business . $700 million net written premium . Specializes in sale of auto and homeowners' insurance through independent agents . Nationwide presence . Includes Kemper's internet direct business UNITRIN ---------- SLIDE 52 Acquisition of Kemper's Personal Lines Insurance Business . Price: -- $45 million -- 1% of Premiums written (2003 - 2005) -- Potential performance bonuses based upon loss ratios (2003-2005) . Definitive Agreement has been signed . Expected closing in summer UNITRIN --------- SLIDE 53 Property & Casualty Insurance Operations Premium Distribution With Without Kemper Kemper ---------- ---------- Texas 21% 33% California 11 12 New York 10 - Illinois 5 4 North Carolina 5 - Oregon 4 7 Washington 4 6 Wisconsin 3 4 All Other 37 34 UNITRIN --------- SLIDE 54 - [TITLE SLIDE] UNITRIN --------- Property & Casualty Insurance Operations 2001 Results SLIDE 55 Property and Casualty Insurance Operations (In Millions) 2001 2000 ------ ------ Earned Premiums: Multi Lines $ 570 $ 549 Specialty Lines 347 217 Unitrin Direct 10 - ------ ------ Total Premiums $ 927 $ 766 Operating Profit (Loss): Multi Lines $ (112) $ (29) Specialty Lines (17) 6 Unitrin Direct (23) (6) ------ ------ Total Operating Profit (Loss) $ (152) $ (29) UNITRIN --------- SLIDE 56 Multi Lines Insurance Segment Earned Premiums (In Millions) 2001 2000 ------ ------ Personal Lines Premiums: Automobile $ 198 $ 199 Homeowners 70 71 Other 10 11 ------ ------ Total Personal Lines Premiums 278 281 Commercial Lines Premiums: Property & Commercial Liability 130 130 Automobile 108 85 Other 54 53 ------ ------ Total Commercial Lines Premiums 292 268 ------ ------ Total Premiums $ 570 $ 549 ====== ====== UNITRIN --------- SLIDE 57 Multi Lines Insurance Segment Results of Operations (Dollars in Millions) 2001 2000 ------ ------ Operating Profit (Loss) $ (112) $ (29) GAAP Ratios Loss Ratio: Excluding Storms 82.8 % 70.3 % Storms 13.0 11.7 ------ ------ Total 95.8 82.0 ------ ------ Expense Ratio 31.2 31.4 ------ ------ Combined Ratio 127.0 % 113.4 % ====== ====== UNITRIN --------- SLIDE 58 Specialty Lines Insurance Segment Earned Premiums (In Millions) 2001 2000 ---------- ---------- Premiums: Personal Automobile $ 320 $ 195 Commercial Automobile 24 20 Other 3 2 -------- -------- Total Premiums $ 347 $ 217 -------- -------- UNITRIN ----------- SLIDE 59 Specialty Lines Insurance Segment Results of Operations (Dollars in Millions) 2001 2000 ---------- -------- Operating Profit (Loss) $ (17) $ 6 GAAP Ratios Loss Ratio: Excluding Storms 81.3% 76.0% Storms 1.9 0.7 -------- ------ Total 83.2 76.7 -------- ------ Expense Ratio 25.7 27.2 -------- ------ Combined Ratio 108.9% 103.9% ======== ====== UNITRIN ----------- SLIDE 60 - [TITLE SLIDE] UNITRIN ------------- Property & Casualty Insurance Operations First Quarter Results SLIDE 61 Property and Casualty Insurance Operations (In Millions) First Quarter ---------------------- 2002 2001 -------- ------- Earned Premiums: Multi Lines $ 146 $ 139 Specialty Lines 102 73 Unitrin Direct 6 - -------- ------- Total Premiums $ 254 $ 212 Operating Profit (Loss): Multi Lines $ (7) $ 3 Specialty Lines 1 (4) Unitrin Direct (8) (4) --------- ------- Total Operating Profit (Loss) $ (14) $ (5) UNITRIN ------- SLIDE 62 Multi Lines Insurance Segment Earned Premiums (In Millions) First Quarter ---------------------- 2002 2001 -------- ------- Personal Lines Premiums: Automobile $ 47 $ 49 Homeowners 17 18 Other 3 3 -------- ------- Total Personal Lines Premiums 67 70 Commercial Lines Premiums: Property & Commercial Liability 35 31 Commercial Automobile 28 25 Other 16 13 -------- ------- Total Commercial Lines Premiums 79 69 -------- ------- Total Premiums $ 146 $ 139 ======== ======= UNITRIN ------- SLIDE 63 Multi Lines Insurance Segment Results of Operations (Dollars in Millions) First Quarter ----------------------- 2002 2001 ------- ------- Operating Profit (Loss) $ (7) $ 3 GAAP Ratios Loss Ratio: Excluding Storms 74.3% 70.0% Storms 6.3 6.3 ------- ------- Total 80.6 76.3 ------- ------- Expense Ratio 30.2 29.5 ------- ------- Combined Ratio 110.8% 105.8% ======= ======= UNITRIN ------- SLIDE 64 Specialty Lines Insurance Segment Earned Premiums (In Millions) First Quarter --------------- 2002 2001 ------ ------ Premiums: Personal Automobile $ 93 $ 67 Commercial Automobile 8 5 Other 1 1 ------ ------ Total Premiums 102 73 ------ ------ UNITRIN --------- SLIDE 65 Specialty Lines Insurance Segment Results of Operations (Dollars in Millions) First Quarter --------------- 2002 2001 ------ ------ Operating Profit (Loss) $ 1 $ (4) GAAP Ratios Loss Ratio: Excluding Storms 79.3% 81.9% Storms - - ------ ------ Total 79.3 81.9 ------ ------ Expense Ratio 23.6 27.5 ------ ------ Combined Ratio 102.9% 109.4% ====== ====== UNITRIN --------- SLIDE 66 Property & Casualty Insurance Operations Critical Success Factors .. Continue Rate Increases .. Implement Underwriting Changes .. Reduce Expense Ratios .. Automation Initiatives UNITRIN --------- SLIDE 67 - [TITLE SLIDE] UNITRIN --------- Life and Health Insurance Segment SLIDE 68 Life and Health Insurance Segment . Ranks Among the 100 Largest Life Insurance Groups in U.S. . Assets in Excess of $3.6 Billion . Nearly 5.0 Million Life Insurance Policies in Force with an Insurance Amount of $20 Billion . Qualified in 48 States and the District of Columbia UNITRIN --------- SLIDE 69 Career Agency Companies Premiums 2001 2000 ------- ------- Annual Premiums (In Millions): Reliable Life $ 170 $ 170 Union National 92 90 United Insurance 260 266 ------- ------- Total Annual Premiums 522 526 Annual Premiums per Agency (In Thousands): Reliable Life $ 187 $ 171 Union National 208 202 United Insurance 172 169 ------- ------- Total Annual Premiums per Agency 182 174 UNITRIN --------- SLIDE 70 Career Agency Companies Insurance Products Life Insurance .. Primary Purpose - Final Expenses Accident .. Accidental Death and Dismemberment .. Hospital and Emergency Room Hospital Indemnity .. Lost Time During Hospital Confinement Hospital and Surgical Expense .. Daily Room and Surgical Benefits .. Supplements Other Coverages First Occurrence Cancer Basic Fire and Extended Coverages UNITRIN ----------- SLIDE 71 Career Agency Companies Competitive Advantages . Leader in Lower Income Segment . Larger Agency Sizes that Attract and Retain Employees . Use of Handheld Computers in the Field . Existing Infrastructure UNITRIN ----------- SLIDE 72 Career Agency Companies Strategic Direction . Top Line Premium Growth through Larger, More Stable Agencies . Improve Persistency Rates . Repricing of Product Portfolio . Marketing of More Supplemental Products . Expense Reduction . Establishment of Career Agency Insurance Services to Consolidate Backroom Operations . Use of Common Administrative System UNITRIN ----------- SLIDE 73 Reserve National Insurance Company NationalCare Insurance Company . Founded in 1956 . Acquired by Unitrin in September, 1998 . 19 Regional Offices Licensed in 31 States . Range of Products Includes Hospital Expense Plans and Supplemental Plans (Home Health Care, Cancer, Medicare, HeartCare and Life) . Serves Individuals, Families, Farmers, Ranchers and Small Businesses in Rural Areas UNITRIN ----------- SLIDE 74 Reserve National and NationalCare Competitive Advantages . Mail Lead Program in Niche Market . Niche Market Serving Rural Areas . Range of Products with Competitive Prices . Commitment to the Consumer and Sales Force . Not Affected by Managed Care . Equitable Agent Compensation and Sales Force UNITRIN ----------- SLIDE 75 - [TITLE SLIDE] UNITRIN --------------------------- Life & Health Insurance Segment Operating Results SLIDE 76 Life & Health Insurance Segment Financial Highlights (In Millions) 2001 2000 ------------ ------------ Premiums: Life $ 401 $ 407 Accident and Health 151 190 Property 88 85 ---------- --------- Total Premiums $ 640 $ 682 Operating Profit $ 106 $ 68 UNITRIN ----------- SLIDE 77 Life & Health Insurance Segment Financial Highlights (In Millions) First Quarter --------------------------- 2002 2001 ------------ ---------- Premiums: Life $ 102 $ 101 Accident and Health 38 37 Property 22 21 ---------- --------- Total Premiums $ 162 $ 159 Operating Profit $ 23 $ 22 UNITRIN ----------- SLIDE 78 - [TITLE SLIDE] UNITRIN --------------- SLIDE 79 UNITRIN AND ITS AGENTS WORK TO DELIVER PEACE OF MIND. UNITRIN ------- [PHOTO APPEARS HERE] This management presentation contains forward-looking statements, which usually include words such as "believe(s)," "goal(s)," "target(s)," "estimate(s)," "anticipate(s)," "forecast(s)" and similar expressions. Readers are cautioned not to place undue reliance on such statements, which speak only as of the date of the Unitrin, Inc. 2002 Annual Shareholders' Meeting. Forward-looking statements are subject to risks and uncertainties which could cause actual results to differ materially from those contemplated in such statements. Such risks and uncertainties include, but are not limited to, changes in economic factors (such as interest rates and stock market fluctuations), changes in competitive conditions (including availability of labor with required technical or other skills), the number and severity of insurance claims (including those associated with catastrophe losses), regulatory approval of certain insurance rates, license applications and similar matters, governmental actions (including new laws or regulations or court decisions interpreting existing laws and regulations), and adverse judgments in litigation to which the Company or its subsidiaries are parties. No assurances can be given that the results contemplated in any forward-looking statements will be achieved. The Company assumes no obligation to release publicly any revisions to any forward-looking statements as a result of events or developments subsequent to the date of this management presentation. May 1, 2002 UNITRIN -----------