Unitrin is a diversified Insurance company that provides insurance products for individuals and small businesses; primarily life, health, automobile, and homeowners policies. The company offers insurance across 48 states and the District of Colombia.
For 2010 the company reported net income of $184.6 million, an increase of 12.1% as compared to 2009. The rise in income was due largely to improvement in the company's Direct and Fireside Bank segments and higher net gains on sales of investments. Additionally, the company reported catastrophe losses from continuing operations of $78.1 million.
As with any insurance company, risk modeling is a primary factor in UTR’s performance. Since the level of risk determines insurance premiums, insurers consider every available quantifiable factor to develop profiles of high and low insurance risk. Due to the impracticability of determining insurance on a case-by-case basis, this general profile of high and low insurance risk is applied in the form of an algorithm to sort all clients between the two categories. Just like other algorithms that are used to simplify complex systems, insurance models suffer from a lack of scope. Situations that would have a large impact on risk, but are nearly impossible to predict (natural disasters, terrorist attacks, etc…) can create difficulties in determining an appropriate premium. However, in more conventional situations, the profit or loss of insurance companies is determined by their accuracy in sorting high-risk clients from low-risk ones.
Insurance companies in the United States are regulated primarily by the individual states as there is no nationwide federal regulatory agency that oversees insurance companies. Insurance companies are required to meet certain financial requirements and to demonstrate periodically (at least annually) to a state's Department of Insurance that they continue to meet or exceed the minimum financial requirements. The Department of Insurance can take various actions against an insurance company that fails to conduct its business in a financially sound manner, including causing the company to cease operations in the state.
In the insurance industry there are three main determinants of profitability: premiums collected, investment performance, and losses incurred. Increasing the amount of premiums collected equals higher revenue. This revenue can then be invested, hopefully at a profit. Each year the company has to pay claims against the premiums that it has collected. The fewer payouts a firm has in a given year, the more money remains for investment. Ironically, in some years the payouts are greater than premiums received, and the firm has to rely on its investments for profitability.
Some of UTR’s competitors include: