SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 11-K
[X] ANNUAL REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2000
OR
[_] TRANSITION REPORT PURSUANT TO SECTION 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ____________ to __________
Commission file number 0-18298
UNITRIN, INC. 401(K) SAVINGS PLAN
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A. (Full Title of Plan)
Unitrin, Inc.
One East Wacker Drive
Chicago, IL 60601
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B. (Name and Address of Issuer of Securities Held Pursuant to Plan)
Required Information
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Pursuant to the section of the General Instructions to Form 11-K entitled
"Required Information," this Annual Report on Form 11-K for the fiscal year
ended December 31, 2000, consists of the audited financial statements of the
Unitrin, Inc. 401(k) Savings Plan for the year ended December 31, 2000, and the
related schedule thereto. The Unitrin, Inc. 401(k) Savings Plan is subject to
the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), and
in accordance with Item 4 of the section of the General Instructions to Form 11-
K entitled "Required Information," the financial statements and schedule
furnished herewith have been prepared in accordance with the financial reporting
requirements of ERISA, in lieu of the requirements of Items 1-3 of that section
of the General Instructions. Schedules I, II and III are not submitted because
they are either not applicable, the required information is included in the
financial statements or notes thereto, or are not required under ERISA.
Pages
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Independent Auditors' Report 1
Statements of Net Assets Available for Plan Benefits
as of December 31, 2000 and 1999 2
Statement of Changes in Net Assets Available for Plan
Benefits for the Year Ended December 31, 2000 3
Notes to the Financial Statements 4 - 7
Schedule of Assets Held for Investment Purposes
at December 31, 2000 8
Independent Auditors' Report
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The Plan Administrative Committee
Unitrin, Inc. 401(k) Savings Plan:
We have audited the accompanying statements of net assets available for plan
benefits of the Unitrin, Inc. 401(k) Savings Plan (the "Plan") as of December
31, 2000 and 1999 and the related statement of changes in net assets available
for plan benefits for the year ended December 31, 2000. These financial
statements are the responsibility of the Plan's administrative committee. Our
responsibility is to express an opinion on these financial statements based on
our audits.
We conducted our audits in accordance with auditing standards generally accepted
in the United States of America. Those standards require that we plan and
perform the audit to obtain reasonable assurance about whether the financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements. An audit also includes assessing the accounting principles used and
significant estimates made by management, as well as evaluating the overall
financial statement presentation. We believe that our audits provide a
reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the net assets available for plan benefits of the Plan as
of December 31, 2000 and 1999, and the changes in net assets available for plan
benefits for the year ended December 31, 2000, in conformity with accounting
principles generally accepted in the United States of America.
Our audits were performed for the purpose of forming an opinion on the basic
financial statements taken as a whole. The accompanying supplemental schedule
of assets held for investment purposes as of December 31, 2000 is presented for
the purpose of additional analysis and is not a required part of the basic
financial statements, but is supplementary information required by the
Department of Labor's Rules and Regulations for Reporting and Disclosure under
the Employee Retirement Income Security Act of 1974. This supplemental schedule
is the responsibility of the Plan's administrative committee. The supplemental
schedule has been subjected to the auditing procedures applied in the audits of
the basic financial statements and, in our opinion, is fairly stated in all
material respects in relation to the basic financial statements taken as a
whole.
/s/ KPMG LLP
Chicago, Illinois
June 12, 2001
Unitrin, Inc. 401(k) Savings Plan
Statements of Net Assets Available for Plan Benefits
As of December 31, 2000 and 1999
(Dollars in Thousands)
2000 1999
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Assets
Investments (See Note 3) $ 176,527 $ 170,819
Other Assets 1,479 1,629
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Net Assets Available for Plan Benefits $ 178,006 $ 172,448
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The Notes to the Financial Statements are an integral part of these financial
statements.
2
Unitrin, Inc. 401(k) Savings Plan
Statement of Changes in Net Assets Available for Plan Benefits
For the Year Ended December 31, 2000
(Dollars in Thousands)
Additions to Net Assets Attributed to:
Investment Income (Loss):
Net Depreciation
in Fair Value $ (17,749)
Interest and Dividends 11,047
Investment Expenses (304)
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Net Investment Income (Loss) (7,006)
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Contributions:
Employer 4,116
Participant 16,125
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Total Contributions 20,241
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Transfers from Other Funds 61,423
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Transfers from Other Benefit Plans (see Note 2) 12,862
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Total Additions to Net Assets 87,520
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Deductions From Net Assets Attributed to:
Benefits Paid to Participants 20,539
Transfers to Other Funds 61,423
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Total Deductions from Net Assets 81,962
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Change in Net Assets Available
for Plan Benefits 5,558
Net Assets Available for Plan
Benefits, Beginning of the Year 172,448
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Net Assets Available for
Plan Benefits, End of the Year $ 178,006
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The Notes to the Financial Statements are an integral part of these financial
statements.
3
UNITRIN, INC. 401(k) SAVINGS PLAN
NOTES TO THE FINANCIAL STATEMENTS
December 31, 2000 and 1999
Note 1 - Basis of Presentation
The financial statements included herein have been prepared on the basis of
accounting principles generally accepted in the United States of America.
Note 2 - Plan Description
The Plan is a defined contribution plan, which is available to employees of
Unitrin, Inc. ("Unitrin") and certain of its subsidiaries (collectively the
"Companies"). Employees of the Companies generally become eligible to
participate in the Plan on the first day of the month following the employee's
first full month of employment.
Subject to Internal Revenue Code limitations, participants are allowed to defer
and contribute between 1% and 15% of their compensation to the Plan. Effective
January 1, 1999 for certain plan participants, Unitrin began to provide a
monthly matching contribution of 50% of the first 6% of compensation contributed
by each participant. For all other plan participants, the Company provides an
annual matching contribution of 100% of the first $100 contributed by each
participant and 50% of the next $400 contributed by each participant. For
participants hired after January 1, 1997, Company contributions will be 100%
vested after 5 years of employment.
The Plan provides for 100% vesting of Company contributions in the event of a
Change of Control as defined in the Plan. Subject to certain limitations,
participants are permitted to invest in certain investment funds sponsored by
the Invesco group of companies, The Dreyfus Corporation ("Dreyfus"), Fidelity
Investments, the Unitrin Common Stock Trust and in the White Mountains Stock
Trust. An individual account is maintained by Invesco Retirement Plan Services,
the Plan's recordkeeper, for each participant and updated to reflect the
participant's contributions, actual investment income, and withdrawals. Each
participant may suspend, resume, or change the rate of contribution and withdraw
all or a portion of his vested account balance at any time, subject to certain
restrictions. While the Company has not expressed any intent to terminate the
Plan or to discontinue contributions, it is free to do so at any time, subject
to the provisions set forth in the Employee Retirement Income Security Act of
1974, as amended ("ERISA"). Should the Plan be terminated at some future date,
all participants become 100% vested in benefits earned as of the Plan
termination date.
A more detailed description of the Plan provisions is found in the formal Plan
documents and in summary materials distributed to Plan participants.
Effective April 1, 2000, Valley Group Employees' 401(k) Savings Plan (the
"Valley Plan") was merged into the Plan and, accordingly, its assets were
transferred to the Plan. The Valley Plan was available for the eligible
employees of Valley Insurance Company ("VIC"), Charter Indemnity Company
("Charter") and Mountain Valley Indemnity Company ("Mountain
4
Note 2 - Plan Description (Continued)
Valley"), formerly a wholly-owned subsidiary of VIC. VIC and Charter are both
wholly-owned subsidiaries of Valley Group, Inc., a wholly-owned subsidiary of
Trinity Universal Insurance Company ("Trinity"), which is a wholly-owned
subsidiary of Unitrin. On March 1, 2000, VIC completed the sale of Mountain
Valley. All employees of Mountain Valley participating in the Valley Plan on the
date of the sale maintained their investments in the Valley Plan, but they could
not make additional contributions.
On July 26, 2000, United Insurance Company of America, a wholly-owned subsidiary
of Unitrin completed the sale of its wholly-owned subsidiary, The Pyramid Life
Insurance Company ("Pyramid"). All employees of Pyramid participating in the
Plan on the date of the sale became fully vested.
Note 3 - Investments
All investments are directed by participants and held by the Plan's Trustee,
Institutional Trust Company. Investments are carried at fair value based on the
reported unit or share value of each investment. The number of shares
comprising the participant-directed investments at December 31, 2000 was:
Investment Investment Advisor Shares
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Invesco Dynamics Fund Invesco Funds Group 576,496
Invesco Total Return Invesco Capital Management 391,708
IRT 500 Index Institutional Trust Company 422,677
IRT Stable Value Institutional Trust Company 46,449,803
AIM Value AIM Advisors, Inc. 2,067,900
Berger Small Cap Value Berger Funds 88,261
PIMCO Total Return Fund Pacific Investment Management Co. 200,168
Janus Overseas Fund Janus Mutual Funds 311,982
Fidelity Advisor Growth Fund Fidelity Management & Research Co. 168,026
Dreyfus Appreciation Fund, Inc. Dreyfus 591,136
Unitrin, Inc. N/A 339,821
White Mountains N/A 2,208
Fayez Sarofim & Co. is a sub-investment adviser of the Dreyfus Appreciation
Fund, Inc. Fayez S. Sarofim, the majority shareholder of Fayez Sarofim & Co.,
is also a director of Unitrin. Additional information concerning the above
listed investments is contained in the prospectuses and financial statements of
the funds.
5
Note 3 - Investments (Continued)
The following presents investments that represent 5 percent or more of the
Plan's net assets:
(Dollars in Thousands)
Investment 2000 1999
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Invesco Total Return $ 10,353 $ 11,808
IRT 500 Index 13,390 12,061
IRT Stable Value 46,450 47,617
AIM Value 25,870 30,780
Fidelity Advisor Growth Fund 8,280 8,646
Dreyfus Appreciation Fund, Inc. 25,383 27,430
Unitrin, Inc. 13,806 12,985
Invesco Dynamics Fund 13,703 5,398
Note 4 - Federal Income Tax Status
The Plan is exempt from income taxes under Section 401(a) of the Internal
Revenue Code. In January 1996, the Plan obtained a favorable determination
letter from the Internal Revenue Service. Subsequent to the receipt of the
determination letter, the Plan was amended and is in process of seeking a
determination letter for the amended plan. The Plan anticipates receiving a
favorable determination.
Under Federal income tax statutes, regulations and interpretations, income taxes
on amounts that a participant accumulates in the Plan are deferred and therefore
not included in the participant's taxable income until those amounts are
actually distributed. Except for certain contributions made prior to April 1,
1993, contributions are considered pre-tax deposits and are not subject to
Federal income taxes at the time of contribution. Prior to April 1, 1993 certain
contributions were made on an after-tax basis and are not subject to income tax
when they are distributed to the participant because they have already been
taxed. A participant's account balance, except for after-tax contributions made
prior to April 1, 1993, is taxable income and generally is taxed at ordinary
income tax rates when distributed. However, favorable tax treatment through
special averaging provisions may apply to participants of a certain age. An
additional 10 percent Federal income tax penalty may be imposed on all taxable
income distributed to a participant unless the distribution meets certain
requirements contained within Section 72 of the Internal Revenue Code.
Taxable distributions from the Plan generally are subject to a 20% Federal
income tax withholding unless directly rolled over into another qualified plan
or Individual Retirement Account. Distributions of Unitrin common stock and
White Mountains common stock generally are not subject to the 20% withholding,
and special tax rules may apply to the calculation of "net unrealized
appreciation" on such stock.
6
Note 4 - Federal Income Tax Status (Continued)
If the Plan's requirements concerning loans to participants are satisfied, the
amount of the loan will not be treated as a taxable distribution. If, however,
the loan requirements are not satisfied and a default occurs, the loan will be
treated as a distribution from the Plan for Federal income tax purposes, and the
tax consequences discussed above for distributions may apply. Interest paid on
the loan is generally not tax deductible.
7
Unitrin, Inc. 401(k) Savings Plan
Schedule of Assets Held for Investment Purposes
As of December 31, 2000
(Dollars in Thousands)
EIN #: 95-4255452
PLAN #: 003
Identity of Issuer,
Party-in- Borrower, Lessor Current
interest or Similar Party Description of Investment Cost Value
------------------- ------------------------------ ---------------------------- ----------- -------------
* Invesco Dymanics Fund Mutual Fund Shares $ 15,603 $ 13,703
* Invesco Total Return Mutual Fund Shares 11,955 10,353
* IRT 500 Index Collective Trust 13,856 13,390
* IRT Stable Value Collective Trust 46,450 46,450
* AIM Value Mutual Fund Shares 31,072 25,870
Berger Small Cap Value Mutual Fund Shares 2,017 2,244
PIMCO Total Return Fund Mutual Fund Shares 2,006 2,080
Janus Overseas Fund Mutual Fund Shares 10,797 8,280
Fidelity Advisor Growth Fund Mutual Fund Shares 7,880 5,739
* Dreyfus Appreciation Fund, Mutual Fund Shares 26,002 25,383
Inc.
* Unitrin, Inc. Common Stock 9,908 13,806
White Mountains Ins. Group. Common Stock 297 703
Ltd.
* Invesco Cash Reserve Mutual Fund Shares 1 1
Participants Participant Loans (6.5% - 8,525 8,525
10.5%)
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$ 186,369 $ 176,527
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* This party involved is known to be a party-in-interest to the Plan.
See Accompanying Independent Auditors' Report.
8
Pursuant to the requirements of the Securities Exchange Act of 1934, the Plan
Administrative Committee of the Unitrin, Inc. 401(k) Savings Plan has duly
caused this annual report to be signed on its behalf by Unitrin, Inc., which is
hereunto duly authorized.
UNITRIN 401K SAVINGS PLAN
By: Unitrin, Inc.
/s/ RICHARD ROESKE
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Richard Roeske
Vice President and
Chief Accounting Officer
(Principal Accounting Officer)
9