Mr. Vie: Unitrin is a diversified insurance and financial services company. Our subsidiaries sell a wide array of products to individual consumers as well as small to medium sized businesses. We are one of the nation's leading providers of property and casualty insurance, life and health insurance, and consumer finance services. We were formed in 1990 as a spinoff out of Teledyne, so we've been in business for 15 years. And I'll describe some of Unitrin's more interesting aspects as we go through the interview. Property and casualty insurance is our largest business, representing nearly two-thirds of our consolidated revenues. Unitrin is largely a personal lines auto insurance writer. Personal automobile insurance now represents more than 50% of our consolidated insurance premiums. We also sell homeowners and other personal lines, as well as insurance for businesses. Our property and casualty companies distribute their products primarily through independent agents, but we also sell automobile insurance direct to consumers through our Unitrin Direct business. Our life and health insurance companies serve two different markets. Our Career Agency business unit sells traditional insurance products through a company employee distribution channel. Our Reserve National unit sells limited benefit health and accident products through independent agents, primarily in rural America where HMOs and PPOs are less prevalent. The third piece of Unitrin is our consumer finance business, which we operate through Fireside Bank. Fireside provides financing for used cars through the purchase of retail installment contracts from automobile dealers. The borrowers under these contracts typically have credit history challenges. Fireside has a terrific competitive advantage compared to virtually everyone else in that market because it funds its loans through FDIC insured deposits, mainly certificates of deposit, which is more cost effective than securitizing the loan portfolio.
TWST: What is having the most impact on Unitrin?
Mr. Vie: The financial services arena is very competitive with a number
of well-capitalized competitors in each segment of the market. The
property and casualty insurance industry, in particular, tends to be
very cyclical and we are seeing signs of a softening property and
casualty market today. A soft market challenges its participants to
control expenses and maintain underwriting discipline to maintain
profitability. Our life and health insurance business is pretty much
steady as you go. The traditional whole life products that we sell are
not nearly as volatile as the investment products that most life
insurers sell today. Unitrin's consumer finance business is remarkably
stable when you consider the risk that one would think we are taking
with customers with challenging credit histories, but our street smart
underwriting and collection expertise have made Fireside one of our
highest return businesses year after year. It is more about how you
operate that business than anything else.
Tickers included in this excerpt: UTR
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