A.M. Best Co. has affirmed the financial strength rating (FSR) of A- (Excellent) and issuer credit ratings (ICR) of “a-” of Unitrin Property and Casualty Insurance Group (Unitrin P&C) and its members. A.M. Best also has affirmed the FSRs of A- (Excellent) and ICR of “a-” of the life/health subsidiaries collectively referred to as Unitrin Life & Health Group (Unitrin L&H) and the separately rated Reserve National Insurance Company (Reserve National) (Oklahoma City, OK). These companies are all subsidiaries of the publicly-traded parent, Unitrin, Inc. (Unitrin) [NYSE: UTR].

Concurrently, A.M. Best has affirmed the ICR and senior debt ratings of “bbb-” on unsecured senior notes and senior unsecured debt, as well as “bb” on preferred stock of Unitrin, which is included in Unitrin’s “automatic shelf” that expires November 2, 2013. The outlook for all the above ratings is stable, except for the ratings of Reserve National, which is negative. All companies are headquartered in Chicago, IL, unless otherwise specified. (See link below for a detailed listing of the companies and ratings.)

The affirmation of the ratings for Unitrin P&C reflects its adequate risk-adjusted capitalization and balance sheet liquidity, historically profitable earnings, diverse business profile, long-standing independent agency relationships, the actions management has taken to improve earnings, as well as Unitrin’s position as one of the 20 largest personal lines writers in the United States. The ratings also acknowledge excess capital within the organization and the added financial flexibility of Unitrin to raise capital through equity or debt offerings during favorable markets.

Partially offsetting these positive rating factors is Unitrin P&C’s below average operating performance and elevated expense ratio, challenging underwriting and investment markets, combined with above average leverage ratios and negative operating cash flows each of the last three years.

Unitrin P&C’s capitalization adequately supports its underwriting, investment and business risks. Earnings generally have been favorable over the last five years, despite underwriting losses from severe weather-related events. Unitrin P&C maintains a diverse business profile with a strong market presence, good geographic spread of risk, multi-channel distribution and long-standing agency relationships. The ratings and outlook also take into consideration actions by management to improve earnings, the financial flexibility to raise capital through equity or debt during favorable markets and excess capital within Unitrin’s Fireside Bank, which is in run off and may be available if needed.

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