8-K
KEMPER Corp (KMPR)
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 29, 2021
Kemper Corporation
(Exact name of registrant as specified in its charter)
Commission File Number: 001-18298
| DE | 95-4255452 |
|---|---|
| (State or other jurisdiction<br>of incorporation) | (IRS Employer<br>Identification No.) |
200 E. Randolph Street, Suite 3300, Chicago, IL 60601
(Address of principal executive offices, including zip code)
312-661-4600
(Registrant’s telephone number, including area code)
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the Registrant under any of the following provisions (see General Instruction A.2.below):
| ☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) | | --- | --- || ☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) | | --- | --- || ☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) | | --- | --- |
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol(s) | Name of each exchange on which registered |
|---|---|---|
| Common Stock, par value $0.10 per share | KMPR | NYSE |
Indicate by check mark whether the registrant is an emerging growth company as defined in as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
| Emerging Growth Company | ☐ |
|---|
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition
period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of
the Exchange Act. ¨
Section 2. – Financial Information
| Item 2.02. | Results of Operations and Financial Condition. |
|---|
On April 29, 2021, Kemper Corporation ("Kemper" or the "Registrant") issued a press release announcing its financial results for the first quarter of 2021 and the availability of Kemper’s first quarter investor supplement and earnings call presentation on its website, kemper.com. The press release, the investor supplement and the earnings call presentation are furnished as Exhibits 99.1, 99.2 and 99.3, respectively, to this report.
Section 9. – Financial Statements and Exhibits.
| Item 9.01. | Financial Statements and Exhibits. |
|---|
(d) Exhibits
99.1 Registrant’s press release dated April 29, 2021.
99.2 First Quarter 2021 Investor Supplement of Kemper Corporation.
99.3 First Quarter 2021 Earnings Call Presentation.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
| Kemper Corporation | ||
|---|---|---|
| Date: | April 29, 2021 | /S/ JAMES J. MCKINNEY |
| James J. McKinney | ||
| Executive Vice President and Chief Financial Officer (principal financial officer) |
Document
Exhibit 99.1
 |
Kemper Corporation<br><br>200 East Randolph Street<br><br>Suite 3300<br><br>Chicago, IL 60601<br><br>kemper.com |
|---|---|
| Press Release |
Kemper Reports Strong First Quarter 2021 Operating Results
CHICAGO, April 29, 2021 — Kemper Corporation (NYSE: KMPR) reported net income of $123.2 million, or $1.85 per diluted share, for the first quarter of 2021, compared to $64.0 million, or $0.95 per diluted share, for the first quarter of 2020. In the first quarter of 2021, net income included a $41.2 million after-tax gain, or $0.62 per diluted share, attributable to the change in fair value of equity and convertible securities.
Adjusted Consolidated Net Operating Income1 was $87.2 million, or $1.31 per diluted share, for the first quarter of 2021, compared to $162.9 million, or $2.43 per diluted share, for the first quarter of 2020.
Highlights of the quarter include:
•Specialty P&C earned premiums increased 7% and policies-in-force (ex. Classic Car) grew ~2%, reflecting headwinds from continued state shut-downs early in the quarter impacting shopping behavior
•Underlying Specialty combined ratio was 94%, in line with 1Q’20 as miles driven and corresponding accident frequency are increasing
• Repurchased shares worth $47 million
• Kemper remains well positioned to support customers and grow long-term shareholder value
“I’m pleased to report that Kemper, despite some short-term headwinds, continued to deliver solid results and intrinsic value to our shareholders,” said Joseph P. Lacher, Jr., President and Chief Executive Officer. “This quarter, we continued to generate double-digit ROE and growth in tangible book value per share excluding fixed income unrealized gains and losses. Our Specialty Auto business continues to produce strong earnings, and although we saw impacts from slower state re-openings, our Specialty Auto business reported net operating income of $80 million, or 33% over the prior year quarter, with the top line increasing by 7%. The business remains well-positioned for attractive long-term growth and returns.”
“Further, since the beginning of the year, we have deployed roughly $500 million of capital through several actions. These demonstrate our thoughtful approach to capital deployment. Notable items include the repurchase of approximately $85 million in stock, the repayment of a $50 million term loan, an increase in our annual dividend to $1.24 per share, and the close of our acquisition of American Access. The strength of Kemper’s business model and our history of effective strategy execution positions us to navigate through the pandemic recovery. We feel confident that we will continue to meet the ongoing needs of our customers, as well as provide quality results and value creation for our stakeholders.”
1 Non-GAAP financial measure. All Non-GAAP financial measures are denoted with footnote 1 throughout this release. See “Use of Non-GAAP Financial Measures” for additional information.
| Three Months Ended | ||||
|---|---|---|---|---|
| (Dollars in Millions, Except Per Share Amounts) (Unaudited) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||
| Net Income | $ | 123.2 | $ | 64.0 |
| Adjusted Consolidated Net Operating Income (Loss) 1 | $ | 87.2 | $ | 162.9 |
| Impact of Catastrophe Losses and Related Loss Adjustment Expense (LAE) on Net Income | $ | (21.8) | $ | (4.6) |
| Diluted Net Income Per Share From: | ||||
| Net Income | $ | 1.85 | $ | 0.95 |
| Adjusted Consolidated Net Operating Income (Loss) 1 | $ | 1.31 | $ | 2.43 |
| Impact of Catastrophe Losses and Related LAE on Net Income Per Share | $ | (0.33) | $ | (0.07) |
Capital
Total Shareholders’ Equity at the end of the quarter was $4,339.1 million, a decrease of $224.3 million, or 5 percent, since year-end 2020 primarily driven by a decrease in the valuation of our fixed income bond portfolio, cash dividends and repurchases of common stock, partially offset by net income. Kemper and its direct non-insurance subsidiaries ended the quarter with cash and investments of $607.1 million, and the $400.0 million revolving credit agreement was undrawn.
During the first quarter of 2021, Kemper paid dividends of $21.0 million.
On February 23, 2021, Kemper announced that its Board of Directors declared a quarterly dividend of $0.31 per share.
Kemper ended the quarter with a book value per share of $66.74, a decrease of 4 percent from $69.74 at the end of 2020. Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 was $60.00, up 2 percent from $58.67 at the end of 2020.
Revenues
Total revenues for the first quarter of 2021 increased $123.0 million, or 10.0 percent, to $1,352.0 million, compared to the first quarter of 2020, driven by $55.1 million of higher Specialty P&C earned premiums and a $170.0 million increase attributable to the change in fair value of equity and convertible securities. Specialty P&C earned premiums increased due primarily to higher premium volume. Net investment income increased $17.5 million to $103.1 million in the first quarter of 2021 due primarily to the continued recovery of Alternative Investments and higher levels of investments in fixed income securities, partially offset by lower yields on fixed income securities. Net realized investment gains were $13.8 million in the first quarter of 2021, compared to $16.5 million in the first quarter of 2020. Other income decreased from $90.3 million to $1.5 million in the first quarter of 2021. The first quarter of 2020 included a final judgment received by the Company in connection with an arbitration award against Computer Sciences Corporation.
Segment Results
Unless otherwise noted, (i) the segment results discussed below are presented on an after-tax basis, (ii) prior-year development includes both catastrophe and non-catastrophe losses and LAE, (iii) catastrophe losses and LAE exclude the impact of prior-year development, (iv) loss ratio includes loss and LAE, and (v) all comparisons are made to the prior year quarter unless otherwise stated.
| Three Months Ended | ||||
|---|---|---|---|---|
| (Dollars in Millions) (Unaudited) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||
| Segment Net Operating Income (Loss): | ||||
| Specialty Property & Casualty Insurance | $ | 80.1 | $ | 60.1 |
| Preferred Property & Casualty Insurance | 9.6 | 18.4 | ||
| Life & Health Insurance | 7.3 | 22.3 | ||
| Total Segment Net Operating Income (Loss) | 97.0 | 100.8 | ||
| Corporate and Other Net Operating Income (Loss) | (9.8) | 62.1 | ||
| Adjusted Consolidated Net Operating Income (Loss) 1 | 87.2 | 162.9 | ||
| Net Income (Loss) From: | ||||
| Change in Fair Value of Equity and Convertible Securities | 41.2 | (93.1) | ||
| Net Realized Gains on Sales of Investments | 10.9 | 13.0 | ||
| Impairment Losses | (3.2) | (9.5) | ||
| Acquisition Related Transaction, Integration and Other Costs | (12.9) | (9.3) | ||
| Loss from Early Extinguishment of Debt | — | — | ||
| Net Income | $ | 123.2 | $ | 64.0 |
The Specialty Property & Casualty Insurance segment reported net operating income of $80.1 million for the first quarter of 2021, compared to $60.1 million in the first quarter of 2020. Results improved due primarily to higher premium volume and an improvement in underlying losses and LAE. The segment’s Underlying Combined Ratio1 was 93.5 percent, compared to 93.9 percent in the first quarter of 2020.
The Preferred Property & Casualty Insurance segment reported net operating income of $9.6 million for the first quarter of 2021, compared to net operating income of $18.4 million in the first quarter of 2020. Results deteriorated due primarily to catastrophe losses and LAE (excluding loss and LAE reserve development), partially offset by an improvement in underlying losses and LAE. The Preferred Property & Casualty Insurance segment’s Underlying Combined Ratio1 improved 1.6 percentage points to 90.7 percent in the first quarter of 2021 due primarily to lower incurred losses and LAE as well as ongoing profit improvement actions.
The Life & Health Insurance segment reported net operating income of $7.3 million for the first quarter of 2021, compared to $22.3 million in the first quarter of 2020. Results deteriorated due primarily to an increase in COVID-related mortality, in line with country-wide trends.
Unaudited condensed consolidated statements of income for the three months ended March 31, 2021 and 2020 are presented below.
| Three Months Ended | ||||
|---|---|---|---|---|
| (Dollars in Millions, Except Per Share Amounts) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||
| Revenues: | ||||
| Earned Premiums | $ | 1,200.8 | $ | 1,166.4 |
| Net Investment Income | 103.1 | 85.6 | ||
| Change in Value of Alternative Energy Partnership Investments2 | (15.4) | — | ||
| Other Income | 1.5 | 90.3 | ||
| Income (Loss) from Change in Fair Value of Equity and Convertible Securities | 52.2 | (117.8) | ||
| Net Realized Gains on Sales of Investments | 13.8 | 16.5 | ||
| Impairment Losses | (4.0) | (12.0) | ||
| Total Revenues | 1,352.0 | 1,229.0 | ||
| Expenses: | ||||
| Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses | 889.5 | 835.2 | ||
| Insurance Expenses | 283.7 | 271.6 | ||
| Loss from Early Extinguishment of Debt | — | — | ||
| Interest and Other Expenses | 57.2 | 44.5 | ||
| Total Expenses | 1,230.4 | 1,151.3 | ||
| Income from before Income Taxes | 121.6 | 77.7 | ||
| Income Tax Expense | 1.6 | (13.7) | ||
| Net Income | $ | 123.2 | $ | 64.0 |
| Income from Continuing Operations Per Unrestricted Share: | ||||
| Basic | $ | 1.88 | $ | 0.96 |
| Diluted | $ | 1.85 | $ | 0.95 |
| Net Income Per Unrestricted Share: | ||||
| Basic | $ | 1.88 | $ | 0.96 |
| Diluted | $ | 1.85 | $ | 0.95 |
| Weighted-average Outstanding (Shares in Thousands): | ||||
| Unrestricted Shares - Basic | 65,424.6 | 66,515.9 | ||
| Unrestricted Shares and Equivalent Shares - Diluted | 66,552.8 | 66,974.2 | ||
| Dividends Paid to Shareholders Per Share | $ | 0.31 | $ | 0.30 |
2The Alternative Energy Partnership Investments results are included as a pre-tax loss in the Change in Value of Alternative Energy Partnership Investments of $15.4 million and benefit in income tax expense of $28.6 million for a net income impact of $13.2 million.
Unaudited business segment revenues for the three months ended March 31, 2021 and 2020 are presented below.
| Three Months Ended | ||||
|---|---|---|---|---|
| (Dollars in Millions) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||
| REVENUES: | ||||
| Specialty Property & Casualty Insurance: | ||||
| Earned Premiums: | ||||
| Specialty Automobile | $ | 785.4 | $ | 753.2 |
| Commercial Automobile | 92.2 | 69.3 | ||
| Total Earned Premiums | 877.6 | 822.5 | ||
| Net Investment Income | 35.0 | 28.8 | ||
| Change in Value of Alternative Energy Partnership Investments | (7.3) | — | ||
| Other Income | 0.9 | 0.9 | ||
| Total Specialty Property & Casualty Insurance Revenues | 906.2 | 852.2 | ||
| Preferred Property & Casualty Insurance: | ||||
| Earned Premiums: | ||||
| Preferred Automobile | 103.0 | 114.9 | ||
| Homeowners | 50.8 | 56.8 | ||
| Other Personal | 8.4 | 9.2 | ||
| Total Earned Premiums | 162.2 | 180.9 | ||
| Net Investment Income | 15.9 | 9.7 | ||
| Change in Value of Alternative Energy Partnership Investments | (4.1) | — | ||
| Total Preferred Property & Casualty Insurance Revenues | 174.0 | 190.6 | ||
| Life & Health Insurance: | ||||
| Earned Premiums: | ||||
| Life | 98.1 | 97.2 | ||
| Accident & Health | 47.4 | 49.4 | ||
| Property | 15.5 | 16.4 | ||
| Total Earned Premiums | 161.0 | 163.0 | ||
| Net Investment Income | 51.1 | 51.0 | ||
| Change in Value of Alternative Energy Partnership Investments | (4.0) | — | ||
| Other Income | 0.1 | 0.1 | ||
| Total Life & Health Insurance Revenues | 208.2 | 214.1 | ||
| Total Segment Revenues | 1,288.4 | 1,256.9 | ||
| Income (Loss) from Change in Fair Value of Equity and Convertible Securities | 52.2 | (117.8) | ||
| Net Realized Gains on Sales of Investments | 13.8 | 16.5 | ||
| Impairment Losses | (4.0) | (12.0) | ||
| Other | 1.6 | 85.4 | ||
| Total Revenues | $ | 1,352.0 | $ | 1,229.0 |
KEMPER CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(Dollars in Millions)
(Unaudited)
| Mar 31,<br>2021 | Dec 31,<br>2020 | |||
|---|---|---|---|---|
| Assets: | ||||
| Investments: | ||||
| Fixed Maturities at Fair Value | $ | 7,479.4 | $ | 7,605.9 |
| Equity Securities at Fair Value | 897.4 | 858.5 | ||
| Equity Securities at Modified Cost | 36.0 | 40.1 | ||
| Equity Method Limited Liability Investments at Cost Plus Cumulative Undistributed Earnings | 219.2 | 204.0 | ||
| Alternative Energy Partnership Investments | 54.4 | 21.3 | ||
| Convertible Securities at Fair Value | 42.6 | 39.9 | ||
| Short-term Investments at Cost which Approximates Fair Value | 196.9 | 875.4 | ||
| Other Investments | 896.8 | 779.0 | ||
| Total Investments | 9,822.7 | 10,424.1 | ||
| Cash | 547.4 | 206.1 | ||
| Receivables from Policyholders | 1,260.9 | 1,194.5 | ||
| Other Receivables | 225.4 | 222.4 | ||
| Deferred Policy Acquisition Costs | 611.7 | 589.3 | ||
| Goodwill | 1,114.0 | 1,114.0 | ||
| Current Income Tax Assets | 65.6 | 15.6 | ||
| Other Assets | 556.0 | 575.9 | ||
| Total Assets | $ | 14,203.7 | $ | 14,341.9 |
| Liabilities and Shareholders’ Equity: | ||||
| Insurance Reserves: | ||||
| Life & Health | $ | 3,541.6 | $ | 3,527.5 |
| Property & Casualty | 1,999.5 | 1,982.5 | ||
| Total Insurance Reserves | 5,541.1 | 5,510.0 | ||
| Unearned Premiums | 1,713.0 | 1,615.1 | ||
| Policyholder Contract Liabilities | 466.5 | 467.0 | ||
| Deferred Income Tax Liabilities | 227.6 | 285.7 | ||
| Accrued Expenses and Other Liabilities | 793.8 | 727.9 | ||
| Debt at Amortized Cost | 1,122.6 | 1,172.8 | ||
| Total Liabilities | 9,864.6 | 9,778.5 | ||
| Shareholders’ Equity: | ||||
| Common Stock | 6.5 | 6.5 | ||
| Paid-in Capital | 1,802.1 | 1,805.2 | ||
| Retained Earnings | 2,140.0 | 2,071.2 | ||
| Accumulated Other Comprehensive Income | 390.5 | 680.5 | ||
| Total Shareholders’ Equity | 4,339.1 | 4,563.4 | ||
| Total Liabilities and Shareholders’ Equity | $ | 14,203.7 | $ | 14,341.9 |
Unaudited selected financial information for the Specialty Property & Casualty Insurance segment follows.
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||||
| Results of Operations | ||||||
| Net Premiums Written | $ | 972.0 | $ | 911.2 | ||
| Earned Premiums | $ | 877.6 | $ | 822.5 | ||
| Net Investment Income | 35.0 | 28.8 | ||||
| Change in Value of Alternative Energy Partnership Investments | (7.3) | — | ||||
| Other Income | 0.9 | 0.9 | ||||
| Total Revenues | 906.2 | 852.2 | ||||
| Incurred Losses and LAE related to: | ||||||
| Current Year: | ||||||
| Non-catastrophe Losses and LAE | 650.0 | 619.8 | ||||
| Catastrophe Losses and LAE | 1.7 | 0.2 | ||||
| Prior Years: | ||||||
| Non-catastrophe Losses and LAE | (1.4) | 5.3 | ||||
| Catastrophe Losses and LAE | 0.4 | 0.2 | ||||
| Total Incurred Losses and LAE | 650.7 | 625.5 | ||||
| Insurance Expenses | 170.3 | 152.1 | ||||
| Other Expenses | — | (0.4) | ||||
| Operating Income (Loss) | 85.2 | 75.0 | ||||
| Income Tax Benefit (Expense) | (5.1) | (14.9) | ||||
| Segment Net Operating Income (Loss) | $ | 80.1 | $ | 60.1 | ||
| Ratios Based On Earned Premiums | ||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 74.1 | % | 75.4 | % | ||
| Current Year Catastrophe Losses and LAE Ratio | 0.2 | — | ||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.2) | 0.6 | ||||
| Prior Years Catastrophe Losses and LAE Ratio | — | — | ||||
| Total Incurred Loss and LAE Ratio | 74.1 | 76.0 | ||||
| Insurance Expense Ratio | 19.4 | 18.5 | ||||
| Combined Ratio | 93.5 | % | 94.5 | % | ||
| Underlying Combined Ratio1 | ||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 74.1 | % | 75.4 | % | ||
| Insurance Expense Ratio | 19.4 | 18.5 | ||||
| Underlying Combined Ratio1 | 93.5 | % | 93.9 | % | ||
| Non-GAAP Measure Reconciliation | ||||||
| Combined Ratio | 93.5 | % | 94.5 | % | ||
| Less: | ||||||
| Current Year Catastrophe Losses and LAE Ratio | 0.2 | — | ||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.2) | 0.6 | ||||
| Prior Years Catastrophe Losses and LAE Ratio | — | — | ||||
| Underlying Combined Ratio1 | 93.5 | % | 93.9 | % |
Unaudited selected financial information for the Preferred Property & Casualty Insurance segment follows.
| Three Months Ended | ||||||
|---|---|---|---|---|---|---|
| (Dollars in Millions) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||||
| Results of Operations | ||||||
| Net Premiums Written | $ | 154.4 | $ | 164.1 | ||
| Earned Premiums | $ | 162.2 | $ | 180.9 | ||
| Net Investment Income | 15.9 | 9.7 | ||||
| Change in Value of Alternative Energy Partnership Investments | (4.1) | — | ||||
| Total Revenues | 174.0 | 190.6 | ||||
| Incurred Losses and LAE related to: | ||||||
| Current Year: | ||||||
| Non-catastrophe Losses and LAE | 96.2 | 108.5 | ||||
| Catastrophe Losses and LAE | 24.0 | 4.8 | ||||
| Prior Years: | ||||||
| Non-catastrophe Losses and LAE | 0.1 | (3.3) | ||||
| Catastrophe Losses and LAE | (0.3) | (1.1) | ||||
| Total Incurred Losses and LAE | 120.0 | 108.9 | ||||
| Insurance Expenses | 51.0 | 58.7 | ||||
| Operating Income (Loss) | 3.0 | 23.0 | ||||
| Income Tax Benefit (Expense) | 6.6 | (4.6) | ||||
| Segment Net Operating Income (Loss) | $ | 9.6 | $ | 18.4 | ||
| Ratios Based On Earned Premiums | ||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 59.3 | % | 59.9 | % | ||
| Current Year Catastrophe Losses and LAE Ratio | 14.8 | 2.7 | ||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 0.1 | (1.8) | ||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.2) | (0.6) | ||||
| Total Incurred Loss and LAE Ratio | 74.0 | 60.2 | ||||
| Insurance Expense Ratio | 31.4 | 32.4 | ||||
| Combined Ratio | 105.4 | % | 92.6 | % | ||
| Underlying Combined Ratio1 | ||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 59.3 | % | 59.9 | % | ||
| Insurance Expense Ratio | 31.4 | 32.4 | ||||
| Underlying Combined Ratio1 | 90.7 | % | 92.3 | % | ||
| Non-GAAP Measure Reconciliation | ||||||
| Combined Ratio | 105.4 | % | 92.6 | % | ||
| Less: | ||||||
| Current Year Catastrophe Losses and LAE Ratio | 14.8 | 2.7 | ||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 0.1 | (1.8) | ||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.2) | (0.6) | ||||
| Underlying Combined Ratio1 | 90.7 | % | 92.3 | % |
Unaudited selected financial information for the Life & Health Insurance segment follows.
| Three Months Ended | ||||
|---|---|---|---|---|
| (Dollars in Millions) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||
| Results of Operations | ||||
| Earned Premiums | $ | 161.0 | $ | 163.0 |
| Net Investment Income | 51.1 | 51.0 | ||
| Change in Value of Alternative Energy Partnership Investments | (4.0) | — | ||
| Other Income | 0.1 | 0.1 | ||
| Total Revenues | 208.2 | 214.1 | ||
| Policyholders’ Benefits and Incurred Losses and LAE | 118.7 | 100.7 | ||
| Insurance Expenses | 90.3 | 86.9 | ||
| Operating Income (Loss) | (0.8) | 26.5 | ||
| Income Tax Benefit (Expense) | 8.1 | (4.2) | ||
| Segment Net Operating Income (Loss) | $ | 7.3 | $ | 22.3 |
Use of Non-GAAP Financial Measures
Adjusted Consolidated Net Operating Income (Loss) 1
Adjusted Consolidated Net Operating Income (Loss) 1 is an after-tax, non-GAAP financial measure computed by excluding from Net Income the after-tax impact of 1) income (loss) from change in fair value of equity and convertible securities, 2) net realized gains on sales of investments, 3) impairment losses, 4) acquisition related transaction, integration and other costs, 5) debt extinguishment, pension and other charges and 6) significant non-recurring or infrequent items that may not be indicative of ongoing operations. Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years and (b) there has been no similar charge or gain within the prior two years. The most directly comparable GAAP financial measure is Net Income.
Kemper believes that Adjusted Consolidated Net Operating Income (Loss) 1 provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Income (Loss) from change in fair value of equity and convertible securities, net realized gains on sales of investments and impairment losses related to investments included in the Company’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the insurance underwriting process. Loss from early extinguishment of debt is driven by the Company’s financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process. Acquisition related transaction, integration and other costs may vary significantly between periods and are generally driven by the timing of acquisitions and business decisions which are unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.
A reconciliation of Net Income to Adjusted Consolidated Net Operating Income (Loss) 1 for the three months ended March 31, 2021 and 2020 is presented below.
| Three Months Ended | ||||
|---|---|---|---|---|
| (Dollars in Millions) (Unaudited) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||
| Net Income | $ | 123.2 | $ | 64.0 |
| Less Net Income (Loss) From: | ||||
| Change in Fair Value of Equity and Convertible Securities | 41.2 | (93.1) | ||
| Net Realized Gains on Sales of Investments | 10.9 | 13.0 | ||
| Impairment Losses | (3.2) | (9.5) | ||
| Acquisition Related Transaction, Integration and Other Costs | (12.9) | (9.3) | ||
| Adjusted Consolidated Net Operating Income (Loss) 1 | $ | 87.2 | $ | 162.9 |
Diluted Adjusted Consolidated Net Operating Income Per Unrestricted Share1
Diluted Adjusted Consolidated Net Operating Income Per Unrestricted Share1 is a non-GAAP financial measure computed by dividing Adjusted Consolidated Net Operating Income (Loss) 1 attributed to unrestricted shares by the weighted-average unrestricted shares and equivalent shares outstanding. The most directly comparable GAAP financial measure is Diluted Net Income.
A reconciliation of Diluted Net Income to Diluted Adjusted Consolidated Net Operating Income Per Unrestricted Share1 for the three months ended March 31, 2021 and 2020 is presented below.
| Three Months Ended | ||||
|---|---|---|---|---|
| (Unaudited) | Mar 31,<br>2021 | Mar 31,<br>2020 | ||
| Diluted Net Income | $ | 1.85 | $ | 0.95 |
| Less Net Income (Loss) Per Unrestricted Share From: | ||||
| Change in Fair Value of Equity and Convertible Securities | 0.62 | (1.39) | ||
| Net Realized Gains on Sales of Investments | 0.16 | 0.19 | ||
| Impairment Losses | (0.05) | (0.14) | ||
| Acquisition Related Transaction, Integration and Other Costs | (0.19) | (0.14) | ||
| Diluted Adjusted Consolidated Net Operating Income Per Unrestricted Share1 | $ | 1.31 | $ | 2.43 |
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 is a ratio that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the after-tax impact of net unrealized gains on fixed income securities by total Common Shares Issued and Outstanding. Book Value Per Share is the most directly comparable GAAP financial measure. Kemper uses the trends in book value per share, excluding the after-tax impact of net unrealized gains on fixed income securities, in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods. Kemper believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are not influenced by management. Kemper believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.
A reconciliation of the numerator used in the computation of Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 and Book Value Per Share at March 31, 2021 and December 31, 2020 is presented below.
| (Dollars in Millions) (Unaudited) | Mar 31,<br>2021 | Dec 31,<br>2020 | ||
|---|---|---|---|---|
| Shareholders’ Equity | $ | 4,339.1 | $ | 4,563.4 |
| Net Unrealized Gains on Fixed Maturities | 438.0 | 724.0 | ||
| Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities1 | $ | 3,901.1 | $ | 3,839.4 |
Underlying Combined Ratio1
Underlying Combined Ratio1 is a non-GAAP financial measure that is computed by adding the current year non-catastrophe losses and LAE ratio with the insurance expense ratio. The most directly comparable GAAP financial measure is the combined ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses and loss and LAE reserve development from prior years, with the insurance expense ratio. Kemper believes the Underlying Combined Ratio is useful to investors and is used by management to reveal the trends in Kemper’s property and casualty insurance businesses that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses may cause loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on incurred losses and LAE and the combined ratio. Prior-year reserve development is caused by unexpected loss development on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing on the performance of the company’s insurance products in the current period. Kemper believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing its underwriting performance. The Underlying Combined Ratio1 should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.
Conference Call
Kemper will discuss its first quarter 2021 results in a conference call on Thursday, April 29th, at 5:00 p.m. Eastern (4:00 p.m. Central) Time. Kemper’s conference call will be accessible via the internet and by telephone. The phone number for Kemper’s conference call is 844.826.3041. To listen via webcast, register online at the investor section of kemper.com at least 15 minutes prior to the webcast to download and install any necessary software.
A replay of the call will be available online at the investor section of kemper.com.
More detailed financial information can be found in Kemper’s Investor Financial Supplement and Earnings Call Presentation for the first quarter of 2021, which is available at the investor section of kemper.com.
About Kemper
The Kemper family of companies is one of the nation’s leading specialized insurers. With $14.2 billion in assets, Kemper is improving the world of insurance by providing affordable and easy-to-use personalized solutions to individuals, families and businesses through its Auto, Personal Insurance, Life and Health brands. Kemper serves over 6.3 million policies, is represented by more than 30,000 agents and brokers, and has over 9,500 associates dedicated to meeting the ever-changing needs of its customers.
Learn more about Kemper at the Company’s website, kemper.com.
Caution Regarding Forward-Looking Statements
This press release may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts.
Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this press release. Forward-looking
statements involve a number of risks and uncertainties that are difficult to predict and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are those factors listed in periodic reports filed by Kemper with the Securities and Exchange Commission (“SEC”). The COVID-19 outbreak and subsequent global pandemic (“Pandemic”) is an extraordinary event that creates unique uncertainties and risks. Kemper cannot provide any assurances as to the impacts of the Pandemic and related economic conditions on the Company’s operating and financial results.
No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. Kemper assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this press release, including any such statements related to the Pandemic. The reader is advised, however, to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.
| Contacts | |
|---|---|
| Investors: Christine Patrick | 312.661.4803 or cpatrick@kemper.com |
| Media: Barbara Ciesemier | 312.661.4521 or bciesemier@kemper.com |
12
Document
Exhibit 99.2
Investor Supplement
First Quarter 2021
The financial statements and financial exhibits included herein are unaudited. These financial statements and exhibits should be read in conjunction with the Company’s periodic reports on Forms 10-K, 10-Q and 8-K filed with the U.S. Securities and Exchange Commission (the “SEC”). The results of operations for interim periods should not be considered indicative of results to be expected for the full year.
Non-GAAP Financial Measures
This document contains non-GAAP financial measures to analyze the Company’s operating performance for the periods presented. Because the Company’s calculation of these measures may differ from similar measures used by other companies, investors should be careful when comparing the Company’s non-GAAP financial measures to those of other companies. For detailed disclosures on non-GAAP financial measures please refer to the “Definitions of Non-GAAP Financial Measures” on Page 34.
Caution Regarding Forward-Looking Statements
This Investor Supplement may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts.
Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date this Investor Supplement was included as an exhibit to the Company's Current Report on Form 8-K. Forward-looking statements involve a number of risks and uncertainties that are difficult to predict and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are those factors listed in periodic reports filed by Kemper Corporation with the SEC. The COVID-19 outbreak and subsequent global pandemic (“Pandemic”) is an extraordinary event that creates unique uncertainties and risks. Kemper cannot provide any assurances as to the impacts of the Pandemic and related economic conditions on the Company’s operating and financial results.
No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. Kemper assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this Investor Supplement, including any such statements related to the Pandemic. The reader is advised, however, to consult any further disclosures Kemper makes on related subjects in its filings with the SEC.
Kemper Corporation
Investor Supplement
First Quarter 2021
Table of Contents
| Page | |
|---|---|
| Consolidated Financial Highlights | 3 |
| Consolidated Statements of Income | 4 |
| Consolidated Balance Sheets | 5 |
| Consolidated Statements of Cash Flows | 6-7 |
| Capital Metrics | 8-9 |
| Debt Outstanding, FHLB Advances and Ratings | 10 |
| Segment Summary Results: | |
| Revenues | 11 |
| Operating Income | 12 |
| Net Operating Income | 12 |
| Catastrophe Frequency and Severity | 13 |
| Specialty Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information | 14-15 |
| Specialty Personal Automobile Insurance | 16 |
| Commercial Automobile Insurance | 17 |
| Preferred Property & Casualty Insurance Segment - Results of Operations and Selected Financial Information | 18-19 |
| Preferred Personal Automobile Insurance | 20 |
| Homeowners and Other Personal Insurance | 21 |
| Homeowners Insurance | 22 |
| Other Personal Insurance | 23 |
| Life & Health Insurance Segment - Results of Operations and Selected Financial Information | 24 |
| Life Insurance | 25 |
| Accident and Health Insurance | 25 |
| Property Insurance | 26 |
| Expenses | 27 |
| Details of Investment Performance | 28 |
| Details of Invested Assets | 29-30 |
| Investment Concentration | 31 |
| Municipal Bond Securities | 32 |
| Investments in Limited Liability Companies and Limited Partnerships | 33 |
| Definitions of Non-GAAP Financial Measures | 34-35 |
Kemper Corporation
Consolidated Financial Highlights
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
| Three Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||||||||
| For Period Ended | ||||||||||||||||
| Earned Premiums | $ | 1,200.8 | $ | 1,214.0 | $ | 1,206.5 | $ | 1,085.3 | $ | 1,166.4 | ||||||
| Net Investment Income | 103.1 | 102.7 | 92.1 | 67.8 | 85.6 | |||||||||||
| Change in Value of Alternative Energy Partnership Investments | (15.4) | — | — | — | — | |||||||||||
| Other Income | 1.5 | 1.9 | 0.9 | 1.5 | 90.3 | |||||||||||
| Income (Loss) from Change in Fair Value of Equity and Convertible Securities | 52.2 | 73.1 | 45.2 | 71.6 | (117.8) | |||||||||||
| Net Investment Gains (Loss) | 9.8 | 0.4 | 9.0 | 4.7 | 4.5 | |||||||||||
| Total Revenues | $ | 1,352.0 | $ | 1,392.1 | $ | 1,353.7 | $ | 1,230.9 | $ | 1,229.0 | ||||||
| Net Income | $ | 123.2 | $ | 97.5 | $ | 122.3 | $ | 126.1 | $ | 64.0 | ||||||
| Adjusted Consolidated Net Operating Income (Loss) 1 | $ | 87.2 | $ | 105.8 | $ | 90.9 | $ | 79.2 | $ | 162.9 | ||||||
| Per Unrestricted Common Share Amounts: | ||||||||||||||||
| Basic: | ||||||||||||||||
| Net Income | $ | 1.88 | $ | 1.49 | $ | 1.87 | $ | 1.93 | $ | 0.96 | ||||||
| Adjusted Consolidated Net Operating Income (Loss) 1 | $ | 1.33 | $ | 1.62 | $ | 1.39 | $ | 1.21 | $ | 2.45 | ||||||
| Diluted: | ||||||||||||||||
| Net Income | $ | 1.85 | $ | 1.46 | $ | 1.83 | $ | 1.91 | $ | 0.95 | ||||||
| Adjusted Consolidated Net Operating Income (Loss) 1 | $ | 1.31 | $ | 1.59 | $ | 1.36 | $ | 1.20 | $ | 2.43 | ||||||
| Dividends Paid to Shareholders Per Share | $ | 0.31 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | ||||||
| At Period End | ||||||||||||||||
| Total Assets | $ | 14,203.7 | $ | 14,341.9 | $ | 14,090.4 | $ | 13,489.4 | $ | 12,932.3 | ||||||
| Insurance Reserves | $ | 5,541.1 | $ | 5,510.0 | $ | 5,461.5 | $ | 5,375.0 | $ | 5,442.4 | ||||||
| Debt | $ | 1,122.6 | $ | 1,172.8 | $ | 1,173.0 | $ | 777.7 | $ | 778.1 | ||||||
| Shareholders’ Equity | $ | 4,339.1 | $ | 4,563.4 | $ | 4,347.5 | $ | 4,187.9 | $ | 3,760.8 | ||||||
| Shareholders’ Equity Excluding Goodwill1,2 | $ | 3,225.1 | $ | 3,449.4 | $ | 3,233.5 | $ | 3,073.9 | $ | 2,646.8 | ||||||
| Common Shares Issued and Outstanding (In Millions) | 65.016 | 65.436 | 65.406 | 65.282 | 65.365 | |||||||||||
| Book Value Per Share2 | $ | 66.74 | $ | 69.74 | $ | 66.47 | $ | 64.15 | $ | 57.54 | ||||||
| Book Value Per Share Excluding Goodwill1,2 | $ | 49.60 | $ | 52.71 | $ | 49.44 | $ | 47.09 | $ | 40.49 | ||||||
| Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1,2 | $ | 60.00 | $ | 58.67 | $ | 56.63 | $ | 55.13 | $ | 53.53 | ||||||
| Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1,2 | $ | 42.87 | $ | 41.65 | $ | 39.60 | $ | 38.07 | $ | 36.49 | ||||||
| Debt to Total Capitalization2 | 20.6 | % | 20.4 | % | 21.2 | % | 15.7 | % | 17.1 | % | ||||||
| Rolling 12 Months Return on 5-point Average Shareholders Equity2,3 | 11.1 | % | 9.8 | % | 10.8 | % | 11.4 | % | 11.8 | % | ||||||
| 1 Non-GAAP Financial Measure. See page 34 for definition. | ||||||||||||||||
| 2 See Capital Metrics on pages 8-9 for detail calculations. | ||||||||||||||||
| 3 Rolling 12 Months Return on 5-point Average Shareholders Equity is calculated by taking the last 12 months of Net Income (Loss) divided by the 5-point average Shareholders’ Equity. The 5-point Average Shareholders’ Equity is calculated by using a 5-point quarter average of Shareholders’ Equity for the 12 month period. |
Kemper Corporation
Consolidated Statements of Income
(Dollars in Millions, Except Per Share Amounts)
(Unaudited)
| Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||
| Revenues: | |||||||||||
| Earned Premiums | $ | 1,200.8 | $ | 1,214.0 | $ | 1,206.5 | $ | 1,085.3 | $ | 1,166.4 | |
| Net Investment Income | 103.1 | 102.7 | 92.1 | 67.8 | 85.6 | ||||||
| Change in Value of Alternative Energy Partnership Investments | (15.4) | — | — | — | — | ||||||
| Other Income | 1.5 | 1.9 | 0.9 | 1.5 | 90.3 | ||||||
| Income (Loss) from Change in Fair Value of Equity and Convertible Securities | 52.2 | 73.1 | 45.2 | 71.6 | (117.8) | ||||||
| Net Realized Gains on Sales of Investments | 13.8 | (0.1) | 10.0 | 11.7 | 16.5 | ||||||
| Impairment Losses | (4.0) | 0.5 | (1.0) | (7.0) | (12.0) | ||||||
| Total Revenues | 1,352.0 | 1,392.1 | 1,353.7 | 1,230.9 | 1,229.0 | ||||||
| Expenses: | |||||||||||
| Policyholders’ Benefits and Incurred Losses and Loss Adjustment Expenses | 889.5 | 863.4 | 877.5 | 747.5 | 835.2 | ||||||
| Insurance Expenses | 283.7 | 279.3 | 276.9 | 272.7 | 271.6 | ||||||
| Interest and Other Expenses | 57.2 | 128.8 | 47.2 | 51.0 | 44.5 | ||||||
| Total Expenses | 1,230.4 | 1,271.5 | 1,201.6 | 1,071.2 | 1,151.3 | ||||||
| Income before Income Taxes | 121.6 | 120.6 | 152.1 | 159.7 | 77.7 | ||||||
| Income Tax Benefit (Expense) | 1.6 | (23.1) | (29.8) | (33.6) | (13.7) | ||||||
| Net Income | $ | 123.2 | $ | 97.5 | $ | 122.3 | $ | 126.1 | $ | 64.0 | |
| Income Per Unrestricted Share: | |||||||||||
| Basic | $ | 1.88 | $ | 1.49 | $ | 1.87 | $ | 1.93 | $ | 0.96 | |
| Diluted | $ | 1.85 | $ | 1.46 | $ | 1.83 | $ | 1.91 | $ | 0.95 | |
| Net Income Per Unrestricted Share: | |||||||||||
| Basic | $ | 1.88 | $ | 1.49 | $ | 1.87 | $ | 1.93 | $ | 0.96 | |
| Diluted | $ | 1.85 | $ | 1.46 | $ | 1.83 | $ | 1.91 | $ | 0.95 | |
| Dividends Paid to Shareholders Per Share | $ | 0.31 | $ | 0.30 | $ | 0.30 | $ | 0.30 | $ | 0.30 | |
| Weighted Average Unrestricted Common Shares Outstanding (in Millions) | 65.425 | 65.414 | 65.363 | 65.258 | 66.516 |
Kemper Corporation
Consolidated Balance Sheets
(Dollars in Millions)
(Unaudited)
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Assets: | ||||||||||||||||
| Investments: | ||||||||||||||||
| Fixed Maturities at Fair Value | $ | 7,479.4 | $ | 7,605.9 | $ | 7,504.8 | $ | 7,480.4 | $ | 6,998.5 | ||||||
| Equity Securities at Fair Value | 897.4 | 858.5 | 788.2 | 783.3 | 709.8 | |||||||||||
| Equity Securities at Modified Cost | 36.0 | 40.1 | 48.4 | 48.1 | 44.8 | |||||||||||
| Equity Method Limited Liability Investments | 219.2 | 204.0 | 206.2 | 209.9 | 226.3 | |||||||||||
| Alternative Energy Partnerships | 54.4 | 21.3 | — | — | — | |||||||||||
| Convertible Securities at Fair Value | 42.6 | 39.9 | 36.3 | 35.0 | 32.8 | |||||||||||
| Short-term Investments at Cost which Approximates Fair Value | 196.9 | 875.4 | 628.8 | 154.2 | 166.7 | |||||||||||
| Other Investments | 896.8 | 779.0 | 762.8 | 757.5 | 760.2 | |||||||||||
| Total Investments | 9,822.7 | 10,424.1 | 9,975.5 | 9,468.4 | 8,939.1 | |||||||||||
| Cash | 547.4 | 206.1 | 352.2 | 389.3 | 301.3 | |||||||||||
| Receivables from Policyholders | 1,260.9 | 1,194.5 | 1,249.3 | 1,165.3 | 1,219.1 | |||||||||||
| Other Receivables | 225.4 | 222.4 | 214.0 | 207.1 | 207.8 | |||||||||||
| Deferred Policy Acquisition Costs | 611.7 | 589.3 | 578.2 | 560.8 | 551.5 | |||||||||||
| Goodwill | 1,114.0 | 1,114.0 | 1,114.0 | 1,114.0 | 1,114.0 | |||||||||||
| Current Income Tax Assets | 65.6 | 15.6 | 33.1 | 3.5 | 17.8 | |||||||||||
| Other Assets | 556.0 | 575.9 | 574.1 | 581.0 | 581.7 | |||||||||||
| Total Assets | $ | 14,203.7 | $ | 14,341.9 | $ | 14,090.4 | $ | 13,489.4 | $ | 12,932.3 | ||||||
| Liabilities and Shareholders’ Equity: | ||||||||||||||||
| Insurance Reserves: | ||||||||||||||||
| Life and Health | $ | 3,541.6 | $ | 3,527.5 | $ | 3,511.5 | $ | 3,497.7 | $ | 3,500.8 | ||||||
| Property and Casualty | 1,999.5 | 1,982.5 | 1,950.0 | 1,877.3 | 1,941.6 | |||||||||||
| Total Insurance Reserves | 5,541.1 | 5,510.0 | 5,461.5 | 5,375.0 | 5,442.4 | |||||||||||
| Unearned Premiums | 1,713.0 | 1,615.1 | 1,681.6 | 1,642.6 | 1,621.4 | |||||||||||
| Policyholder Contract Liabilities | 466.5 | 467.0 | 503.7 | 520.3 | 430.5 | |||||||||||
| Deferred Income Tax Liabilities | 227.6 | 285.7 | 245.5 | 226.8 | 116.0 | |||||||||||
| Accrued Expenses and Other Liabilities | 793.8 | 727.9 | 677.6 | 759.1 | 783.1 | |||||||||||
| Long-term Debt, Current and Non-current, at Amortized Cost | 1,122.6 | 1,172.8 | 1,173.0 | 777.7 | 778.1 | |||||||||||
| Total Liabilities | 9,864.6 | 9,778.5 | 9,742.9 | 9,301.5 | 9,171.5 | |||||||||||
| Shareholders’ Equity: | ||||||||||||||||
| Common Stock | 6.5 | 6.5 | 6.5 | 6.5 | 6.5 | |||||||||||
| Paid-in Capital | 1,802.1 | 1,805.2 | 1,798.5 | 1,792.5 | 1,788.2 | |||||||||||
| Retained Earnings | 2,140.0 | 2,071.2 | 1,993.5 | 1,891.6 | 1,791.2 | |||||||||||
| Accumulated Other Comprehensive Income | 390.5 | 680.5 | 549.0 | 497.3 | 174.9 | |||||||||||
| Total Shareholders’ Equity | 4,339.1 | 4,563.4 | 4,347.5 | 4,187.9 | 3,760.8 | |||||||||||
| Total Liabilities and Shareholders’ Equity | $ | 14,203.7 | $ | 14,341.9 | $ | 14,090.4 | $ | 13,489.4 | $ | 12,932.3 | ||||||
| Kemper Corporation<br><br>Consolidated Statements of Cash Flows<br><br>(Dollars in Millions)<br><br>(Unaudited) | ||||||||||||||||
| --- | --- | --- | --- | --- | ||||||||||||
| Three Months Ended | ||||||||||||||||
| Mar 31,<br>2021 | Mar 31,<br>2020 | |||||||||||||||
| Cash Flows from Operating Activities: | ||||||||||||||||
| Net Income | $ | 123.2 | $ | 64.0 | ||||||||||||
| Adjustments to Reconcile Net Income to Net Cash Provided by Operating Activities: | ||||||||||||||||
| Net Realized Investment Gains | (13.8) | (16.5) | ||||||||||||||
| Impairment Losses | 4.0 | 12.0 | ||||||||||||||
| Depreciation and Amortization of Property, Equipment and Software | 11.1 | 8.0 | ||||||||||||||
| Amortization of Intangibles Assets Acquired | 3.2 | 4.7 | ||||||||||||||
| Change in Accumulated Undistributed Earnings of Equity Method Limited Liability Investments | (18.1) | (0.7) | ||||||||||||||
| (Income) Loss from Alternative Energy Partnership Investments | 15.4 | — | ||||||||||||||
| Decrease (Increase) in Value of Equity and Convertible Securities at Fair Value | (52.2) | 117.8 | ||||||||||||||
| Changes in: | ||||||||||||||||
| Receivables from Policyholders | (66.7) | (94.3) | ||||||||||||||
| Reinsurance Recoverables | 5.0 | 9.8 | ||||||||||||||
| Deferred Policy Acquisition Costs | (21.3) | (13.8) | ||||||||||||||
| Insurance Reserves | 29.8 | (29.4) | ||||||||||||||
| Unearned Premiums | 97.9 | 75.9 | ||||||||||||||
| Income Taxes | (37.3) | 14.7 | ||||||||||||||
| Other | 60.4 | (89.9) | ||||||||||||||
| Net Cash Provided by Operating Activities | 140.6 | 62.3 | ||||||||||||||
| Kemper Corporation<br><br>Consolidated Statements of Cash Flows<br><br>(Dollars in Millions)<br><br>(Unaudited) | ||||||||||||||||
| --- | --- | --- | --- | --- | ||||||||||||
| Three Months Ended | ||||||||||||||||
| Net Cash Provided by Operating Activities (Carryforward from page 6) | $ | 140.6 | $ | 62.3 | ||||||||||||
| Cash Flows from Investing Activities: | ||||||||||||||||
| Proceeds from Sales, Calls, and Maturities of Fixed Maturities | 291.2 | 225.5 | ||||||||||||||
| Proceeds from the Sales of Investments: | ||||||||||||||||
| Equity Securities | 27.3 | 372.1 | ||||||||||||||
| Real Estate Investments | — | 1.9 | ||||||||||||||
| Mortgage Loans | 12.8 | 8.5 | ||||||||||||||
| Other Investments | 7.0 | 4.0 | ||||||||||||||
| Purchases of Investments: | ||||||||||||||||
| Fixed Maturities | (503.2) | (393.9) | ||||||||||||||
| Equity Securities | (12.5) | (290.0) | ||||||||||||||
| Real Estate Investments | (0.2) | (0.1) | ||||||||||||||
| Corporate-owned Life Insurance | (100.0) | (100.0) | ||||||||||||||
| Mortgage Loans | (33.7) | (4.6) | ||||||||||||||
| Other Investments | (50.1) | (9.2) | ||||||||||||||
| Net Purchases of Short-term Investments | 677.4 | 301.8 | ||||||||||||||
| Acquisition of Software and Long-lived Assets | (9.2) | (20.1) | ||||||||||||||
| Other | 4.9 | (1.9) | ||||||||||||||
| Net Cash Provided (Used In) by Investing Activities | 311.7 | 94.0 | ||||||||||||||
| Cash Flows from Financing Activities: | ||||||||||||||||
| Repayment of Long-Term Debt | (50.0) | — | ||||||||||||||
| Proceeds from Policyholder Contract Liabilities | 60.7 | 156.6 | ||||||||||||||
| Repayment of Policyholder Contract Liabilities | (61.5) | (36.2) | ||||||||||||||
| Proceeds from Shares Issued under Employee Stock Purchase Plan | 1.2 | 1.0 | ||||||||||||||
| Common Stock Repurchases | (42.1) | (95.9) | ||||||||||||||
| Dividends and Dividend Equivalents Paid | (21.0) | (20.0) | ||||||||||||||
| Other | 1.7 | 2.7 | ||||||||||||||
| Net Cash Provided by Financing Activities | (111.0) | 8.2 | ||||||||||||||
| Increase in Cash | 341.3 | 164.5 | ||||||||||||||
| Cash, Beginning of Year | 206.1 | 136.8 | ||||||||||||||
| Cash, End of Period | $ | 547.4 | $ | 301.3 | ||||||||||||
| Kemper Corporation<br><br>Capital Metrics<br><br>(Dollars and Shares in Millions, Except Per Share Amounts)<br><br>(Unaudited) | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||||
| Three Months Ended | ||||||||||||||||
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||||||||
| Book Value Per Share | ||||||||||||||||
| Numerator | ||||||||||||||||
| Shareholders’ Equity | $ | 4,339.1 | $ | 4,563.4 | $ | 4,347.5 | $ | 4,187.9 | $ | 3,760.8 | ||||||
| Less: Goodwill | (1,114.0) | (1,114.0) | (1,114.0) | (1,114.0) | (1,114.0) | |||||||||||
| Shareholders’ Equity Excluding Goodwill1 | $ | 3,225.1 | $ | 3,449.4 | $ | 3,233.5 | $ | 3,073.9 | $ | 2,646.8 | ||||||
| Shareholders’ Equity | $ | 4,339.1 | $ | 4,563.4 | $ | 4,347.5 | $ | 4,187.9 | $ | 3,760.8 | ||||||
| Less: Net Unrealized Gains on Fixed Maturities | (438.0) | (724.0) | (643.7) | (588.6) | (261.6) | |||||||||||
| Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities1 | $ | 3,901.1 | $ | 3,839.4 | $ | 3,703.8 | $ | 3,599.3 | $ | 3,499.2 | ||||||
| Less: Goodwill | (1,114.0) | (1,114.0) | (1,114.0) | (1,114.0) | (1,114.0) | |||||||||||
| Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1 | $ | 2,787.1 | $ | 2,725.4 | $ | 2,589.8 | $ | 2,485.3 | $ | 2,385.2 | ||||||
| Denominator | ||||||||||||||||
| Common Shares Issued and Outstanding | 65.016 | 65.436 | 65.406 | 65.282 | 65.365 | |||||||||||
| Book Value Per Share | $ | 66.74 | $ | 69.74 | $ | 66.47 | $ | 64.15 | $ | 57.54 | ||||||
| Book Value Per Share Excluding Goodwill1 | $ | 49.60 | $ | 52.71 | $ | 49.44 | $ | 47.09 | $ | 40.49 | ||||||
| Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities1 | $ | 60.00 | $ | 58.67 | $ | 56.63 | $ | 55.13 | $ | 53.53 | ||||||
| Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1 | $ | 42.87 | $ | 41.65 | $ | 39.60 | $ | 38.07 | $ | 36.49 | ||||||
| Return on Shareholders’ Equity | ||||||||||||||||
| Numerator | ||||||||||||||||
| Rolling 12 Months Net Income | $ | 469.1 | $ | 409.9 | $ | 437.1 | $ | 443.8 | $ | 439.8 | ||||||
| Denominator (5-point Average) | ||||||||||||||||
| 5-point Average Shareholders’ Equity | $ | 4,239.7 | $ | 4,166.4 | $ | 4,032.5 | $ | 3,899.8 | $ | 3,726.2 | ||||||
| Rolling 12 Months Return on Average Shareholders' Equity (5-point Average) | 11.1 | % | 9.8 | % | 10.8 | % | 11.4 | % | 11.8 | % | ||||||
| Return on Shareholders’ Equity Excluding Goodwill1 | ||||||||||||||||
| Denominator (5-point Average) | ||||||||||||||||
| 5-point Average Shareholders’ Equity Excluding Goodwill1 | $ | 3,125.7 | $ | 3,052.4 | $ | 2,918.5 | $ | 2,785.8 | $ | 2,612.7 | ||||||
| Rolling 12 Months Return on Average Shareholders' Equity Excluding Goodwill (5-point Average)1 | 15.0 | % | 13.4 | % | 15.0 | % | 15.9 | % | 16.8 | % | ||||||
| Return on Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities1 | ||||||||||||||||
| Denominator (5-point Average) | ||||||||||||||||
| 5-point Average Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities1 | $ | 3,708.5 | $ | 3,636.0 | $ | 3,554.7 | $ | 3,477.1 | $ | 3,372.9 | ||||||
| Rolling 12 Months Return on Average Shareholders' Equity Excluding Net Unrealized Gains on Fixed Maturities (5-point Average)1 | 12.6 | % | 11.3 | % | 12.3 | % | 12.8 | % | 13.0 | % | ||||||
| Return on Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1 | ||||||||||||||||
| Denominator (5-point Average) | ||||||||||||||||
| 5-point Average Shareholders’ Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill1 | $ | 2,594.5 | $ | 2,522.0 | $ | 2,440.7 | $ | 2,363.1 | $ | 2,259.4 | ||||||
| Rolling 12 Months Return on Average Shareholders' Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill (5-point Average)1 | 18.1 | % | 16.3 | % | 17.9 | % | 18.8 | % | 19.5 | % | ||||||
| 1 Non-GAAP financial measure. See definitions beginning on page 34. | ||||||||||||||||
| Kemper Corporation<br><br>Capital Metrics<br><br>(Dollars and Shares in Millions, Except Per Share Amounts)<br><br>(Unaudited) | ||||||||||||||||
| --- | --- | --- | --- | --- | --- | --- | --- | |||||||||
| Three Months Ended | ||||||||||||||||
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||||||||
| Debt and Total Capitalization | ||||||||||||||||
| Debt | $ | 1,122.6 | $ | 1,172.8 | $ | 1,173.0 | $ | 777.7 | $ | 778.1 | ||||||
| Shareholders’ Equity | 4,339.1 | 4,563.4 | 4,347.5 | 4,187.9 | 3,760.8 | |||||||||||
| Total Capitalization | $ | 5,461.7 | $ | 5,736.2 | $ | 5,520.5 | $ | 4,965.6 | $ | 4,538.9 | ||||||
| Ratio of Debt to Shareholders’ Equity | 25.9 | % | 25.7 | % | 27.0 | % | 18.6 | % | 20.7 | % | ||||||
| Ratio of Debt to Total Capitalization | 20.6 | % | 20.4 | % | 21.2 | % | 15.7 | % | 17.1 | % | ||||||
| Parent Company Liquidity | ||||||||||||||||
| Kemper Holding Company Cash and Investments1 | $ | 607.1 | $ | 733.2 | $ | 738.7 | $ | 270.5 | $ | 199.1 | ||||||
| Borrowings Available Under Credit Agreement | 400.0 | 400.0 | 400.0 | 400.0 | 400.0 | |||||||||||
| Parent Company Liquidity | $ | 1,007.1 | $ | 1,133.2 | $ | 1,138.7 | $ | 670.5 | $ | 599.1 | ||||||
| Capital Returned to Shareholders | ||||||||||||||||
| Cash Dividends Paid | $ | 21.0 | $ | 19.7 | $ | 19.7 | $ | 19.7 | $ | 20.0 | ||||||
| 1 Includes Kemper's direct non-insurance subsidiaries |
Kemper Corporation
Debt Outstanding, FHLB Advances and Ratings
(Dollars in Millions)
(Unaudited)
| Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Kemper Corporation: | ||||||||||
| Term Loan due July 5, 2023 | — | 49.9 | 49.9 | 49.9 | 49.9 | |||||
| Senior Notes at Amortized Cost: | ||||||||||
| 5.000% Senior Notes due September 19, 2022 | 277.9 | 278.3 | 278.7 | 279.1 | 279.6 | |||||
| 4.350% Senior Notes due February 15, 2025 | 448.9 | 448.8 | 448.8 | 448.7 | 448.6 | |||||
| 2.400% Senior Notes due September 30, 2030 | 395.8 | 395.8 | 395.6 | — | — | |||||
| Long-term Debt Outstanding | $ | 1,122.6 | $ | 1,172.8 | $ | 1,173.0 | $ | 777.7 | $ | 778.1 |
| Federal Home Loan Bank Advances to Insurance Subsidiaries: | ||||||||||
| Reported as Policyholder Contract Liabilities: | ||||||||||
| Federal Home Loan Bank of Chicago | $ | 407.5 | $ | 407.8 | $ | 444.1 | $ | 454.3 | $ | 364.2 |
| Reported as Debt Outstanding: | ||||||||||
| Federal Home Loan Bank of Dallas | $ | — | $ | — | $ | — | $ | — | $ | — |
| Federal Home Loan Bank of Chicago | $ | — | $ | — | $ | — | $ | — | $ | — |
| Federal Home Loan Bank of San Francisco | $ | — | $ | — | $ | — | $ | — | $ | — |
| A.M. Best | Moody’s | S&P | Fitch | |||||||
| As of Date of Financial Supplement | ||||||||||
| Kemper Debt Ratings: | ||||||||||
| Senior Unsecured Debt | BBB | Baa3 | BBB | BBB | ||||||
| Insurance Company Financial Strength Ratings: | ||||||||||
| Trinity Universal Insurance Company | A | A3 | A | A | ||||||
| United Insurance Company of America | A | A3 | A- | A- | ||||||
| Reserve National Insurance Company | A | NR | NR | NR | ||||||
| Infinity Insurance Company | A | A3 | A | NR |
NR - Not Rated
Kemper Corporation
Segment Revenues
(Dollars in Millions)
(Unaudited)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Revenues: | ||||||||||
| Specialty Property & Casualty Insurance: | ||||||||||
| Earned Premiums: | ||||||||||
| Specialty Automobile | $ | 785.4 | $ | 796.1 | $ | 792.2 | $ | 689.8 | $ | 753.2 |
| Commercial Automobile | 92.2 | 86.3 | 79.2 | 69.2 | 69.3 | |||||
| Total Specialty Property & Casualty Insurance Earned Premiums | 877.6 | 882.4 | 871.4 | 759.0 | 822.5 | |||||
| Net Investment Income | 35.0 | 37.9 | 30.5 | 16.9 | 28.8 | |||||
| Change in Value of Alternative Energy Partnership Investments | (7.3) | — | — | — | — | |||||
| Other Income | 0.9 | 0.4 | 0.4 | 0.1 | 0.9 | |||||
| Total Specialty Property & Casualty Insurance Revenues | 906.2 | 920.7 | 902.3 | 776.0 | 852.2 | |||||
| Preferred Property & Casualty Insurance: | ||||||||||
| Earned Premiums: | ||||||||||
| Preferred Automobile | 103.0 | 107.1 | 110.6 | 99.1 | 114.9 | |||||
| Homeowners | 50.8 | 53.3 | 55.0 | 55.6 | 56.8 | |||||
| Other Personal | 8.4 | 8.8 | 8.9 | 8.9 | 9.2 | |||||
| Total Preferred Property & Casualty Insurance Earned Premiums | 162.2 | 169.2 | 174.5 | 163.6 | 180.9 | |||||
| Net Investment Income | 15.9 | 13.4 | 10.3 | 4.3 | 9.7 | |||||
| Change in Value of Alternative Energy Partnership Investments | (4.1) | — | — | — | — | |||||
| Other Income | — | — | — | 0.1 | — | |||||
| Total Preferred Property & Casualty Insurance Revenues | 174.0 | 182.6 | 184.8 | 168.0 | 190.6 | |||||
| Life & Health Insurance: | ||||||||||
| Earned Premiums: | ||||||||||
| Life | 98.1 | 96.5 | 96.3 | 95.7 | 97.2 | |||||
| Accident and Health | 47.4 | 50.2 | 48.9 | 50.8 | 49.4 | |||||
| Property | 15.5 | 15.7 | 15.4 | 16.2 | 16.4 | |||||
| Total Life & Health Insurance Earned Premiums | 161.0 | 162.4 | 160.6 | 162.7 | 163.0 | |||||
| Net Investment Income | 51.1 | 52.8 | 50.7 | 44.3 | 51.0 | |||||
| Change in Value of Alternative Energy Partnership Investments | (4.0) | — | — | — | — | |||||
| Other Income | 0.1 | — | — | 0.5 | 0.1 | |||||
| Total Life & Health Insurance Revenues | 208.2 | 215.2 | 211.3 | 207.5 | 214.1 | |||||
| Total Segment Revenues | 1,288.4 | 1,318.5 | 1,298.4 | 1,151.5 | 1,256.9 | |||||
| Income (Loss) from Change in Fair Value of Equity and Convertible Securities | 52.2 | 73.1 | 45.2 | 71.6 | (117.8) | |||||
| Net Realized Gains on Sales of Investments | 13.8 | (0.1) | 10.0 | 11.7 | 16.5 | |||||
| Impairment Losses | (4.0) | 0.5 | (1.0) | (7.0) | (12.0) | |||||
| Other | 1.6 | 0.1 | 1.1 | 3.1 | 85.4 | |||||
| Total Revenues | $ | 1,352.0 | $ | 1,392.1 | $ | 1,353.7 | $ | 1,230.9 | $ | 1,229.0 |
Kemper Corporation
Segment Operating Results
(Dollars in Millions)
(Unaudited)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Segment Operating Income (Loss): | ||||||||||
| Specialty Property & Casualty Insurance | $ | 85.2 | $ | 111.5 | $ | 149.9 | $ | 84.5 | $ | 75.0 |
| Preferred Property & Casualty Insurance | 3.0 | 19.8 | (41.8) | 0.8 | 23.0 | |||||
| Life & Health Insurance | (0.8) | 9.6 | 15.2 | 19.9 | 26.5 | |||||
| Total Segment Operating Income (Loss) | 87.4 | 140.9 | 123.3 | 105.2 | 124.5 | |||||
| Partial Satisfaction of Judgment | — | — | — | — | 89.4 | |||||
| Other | (11.5) | (9.7) | (11.0) | (4.7) | (11.1) | |||||
| Corporate and Other Operating Income (Loss) | (11.5) | (9.7) | (11.0) | (4.7) | 78.3 | |||||
| Total Operating Income (Loss) | 75.9 | 131.2 | 112.3 | 100.5 | 202.8 | |||||
| Income From: | ||||||||||
| Change in Fair Value of Equity and Convertible Securities | 52.2 | 73.1 | 45.2 | 71.6 | (117.8) | |||||
| Net Realized Gains on Sales of Investments | 13.8 | (0.1) | 10.0 | 11.7 | 16.5 | |||||
| Impairment Losses | (4.0) | 0.5 | (1.0) | (7.0) | (12.0) | |||||
| Acquisition Related Transaction, Integration and Other Costs | (16.3) | (20.0) | (14.4) | (17.1) | (11.8) | |||||
| Debt Extinguishment, Pension and Other Charges | — | (64.1) | — | — | — | |||||
| Income before Income Taxes | $ | 121.6 | $ | 120.6 | $ | 152.1 | $ | 159.7 | $ | 77.7 |
| Segment Net Operating Income (Loss): | ||||||||||
| Specialty Property & Casualty Insurance | $ | 80.1 | $ | 91.1 | $ | 119.2 | $ | 67.5 | $ | 60.1 |
| Preferred Property & Casualty Insurance | 9.6 | 16.9 | (32.7) | 0.9 | 18.4 | |||||
| Life & Health Insurance | 7.3 | 9.4 | 12.2 | 16.1 | 22.3 | |||||
| Total Segment Net Operating Income (Loss) | 97.0 | 117.4 | 98.7 | 84.5 | 100.8 | |||||
| Corporate and Other Net Operating Income (Loss) From: | ||||||||||
| Partial Satisfaction of Legal Judgment | — | — | — | — | 70.6 | |||||
| Other | (9.8) | (11.6) | (7.8) | (5.3) | (8.5) | |||||
| Corporate and Other Net Operating Income (Loss) | (9.8) | (11.6) | (7.8) | (5.3) | 62.1 | |||||
| Adjusted Consolidated Net Operating Income (Loss) | 87.2 | 105.8 | 90.9 | 79.2 | 162.9 | |||||
| Net Income (Loss) From: | ||||||||||
| Change in Fair Value of Equity and Convertible Securities | 41.2 | 57.8 | 35.7 | 56.6 | (93.1) | |||||
| Net Realized Gains on Sales of Investments | 10.9 | (0.1) | 7.9 | 9.3 | 13.0 | |||||
| Impairment Losses | (3.2) | 0.4 | (0.8) | (5.5) | (9.5) | |||||
| Acquisition Related Transaction, Integration and Other Costs | (12.9) | (15.8) | (11.4) | (13.5) | (9.3) | |||||
| Debt Extinguishment, Pension and Other Charges | — | (50.6) | — | — | — | |||||
| Net Income | $ | 123.2 | $ | 97.5 | $ | 122.3 | $ | 126.1 | $ | 64.0 |
Kemper Corporation
Catastrophe Frequency and Severity
(Dollars in Millions)
(Unaudited)
| Three Months Ended March 31, 2021 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Specialty Property & Casualty Insurance Segment | Preferred Property & Casualty Insurance Segment | Life & Health Insurance Segment | Consolidated | |||||||||
| Number of Events | Losses and LAE | Number of Events | Losses and LAE | Number of Events | Losses and LAE | Number of Events | Losses and LAE | |||||
| Range of Losses and LAE Per Event: | ||||||||||||
| Below $5 | 9 | $ | 1.7 | 11 | $ | 8.9 | 8 | $ | 1.9 | 12 | $ | 11.4 |
| $5 - $10 | — | — | — | — | — | — | — | — | ||||
| $10 - $15 | — | — | — | — | — | — | — | — | ||||
| $15 - $20 | — | — | 1 | 15.1 | — | — | 1 | 16.2 | ||||
| $20 - $25 | — | — | — | — | — | — | — | — | ||||
| Greater Than $25 | — | — | — | — | — | — | — | — | ||||
| Total | 9 | $ | 1.7 | 12 | $ | 24.0 | 8 | $ | 1.9 | 13 | $ | 27.6 |
| Three Months Ended March 31, 2020 | ||||||||||||
| Specialty Property & Casualty Insurance Segment | Preferred Property & Casualty Insurance Segment | Life & Health Insurance Segment | Consolidated | |||||||||
| Number of Events | Losses and LAE | Number of Events | Losses and LAE | Number of Events | Losses and LAE | Number of Events | Losses and LAE | |||||
| Range of Losses and LAE Per Event: | ||||||||||||
| Below $5 | 4 | $ | 0.2 | 7 | $ | 4.8 | 6 | $ | 0.8 | 9 | $ | 5.8 |
| $5 - $10 | — | — | — | — | — | — | — | — | ||||
| $10 - $15 | — | — | — | — | — | — | — | — | ||||
| $15 - $20 | — | — | — | — | — | — | — | — | ||||
| $20 - $25 | — | — | — | — | — | — | — | — | ||||
| Greater Than $25 | — | — | — | — | — | — | — | — | ||||
| Total | 4 | $ | 0.2 | 7 | $ | 4.8 | 6 | $ | 0.8 | 9 | $ | 5.8 |
Kemper Corporation
Specialty Property & Casualty Insurance Segment
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| March 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 972.0 | $ | 829.2 | $ | 914.2 | $ | 780.9 | $ | 911.2 | |||||
| Total Specialty P&C | |||||||||||||||
| Specialty Personal Automobile | 785.4 | 796.1 | 792.2 | 689.8 | 753.2 | ||||||||||
| Commercial Automobile | 92.2 | 86.3 | 79.2 | 69.2 | 69.3 | ||||||||||
| Earned Premium | $ | 877.6 | $ | 882.4 | $ | 871.4 | $ | 759.0 | $ | 822.5 | |||||
| Net Investment Income | 35.0 | 37.9 | 30.5 | 16.9 | 28.8 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (7.3) | — | — | — | — | ||||||||||
| Other Income | 0.9 | 0.4 | 0.4 | 0.1 | 0.9 | ||||||||||
| Total Revenues | 906.2 | 920.7 | 902.3 | 776.0 | 852.2 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 650.0 | 626.2 | 589.0 | 515.8 | 619.8 | ||||||||||
| Catastrophe Losses and LAE | 1.7 | 5.5 | 2.1 | 4.5 | 0.2 | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | (1.4) | (1.7) | 1.9 | 9.6 | 5.3 | ||||||||||
| Catastrophe Losses and LAE | 0.4 | 0.1 | (0.1) | — | 0.2 | ||||||||||
| Total Incurred Losses and LAE | 650.7 | 630.1 | 592.9 | 529.9 | 625.5 | ||||||||||
| Insurance Expenses | 170.3 | 179.1 | 159.5 | 161.2 | 152.1 | ||||||||||
| Other Expenses | — | — | — | 0.4 | (0.4) | ||||||||||
| Operating Income (Loss) | 85.2 | 111.5 | 149.9 | 84.5 | 75.0 | ||||||||||
| Income Tax Benefit (Expense) | (5.1) | (20.4) | (30.7) | (17.0) | (14.9) | ||||||||||
| Segment Net Operating Income (Loss) | $ | 80.1 | $ | 91.1 | $ | 119.2 | $ | 67.5 | $ | 60.1 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 74.1 | % | 71.0 | % | 67.6 | % | 67.9 | % | 75.4 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 0.2 | 0.6 | 0.2 | 0.6 | — | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.2) | (0.2) | 0.2 | 1.3 | 0.6 | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | — | — | — | — | — | ||||||||||
| Total Incurred Loss and LAE Ratio | 74.1 | 71.4 | 68.0 | 69.8 | 76.0 | ||||||||||
| Insurance Expense Ratio | 19.4 | 20.3 | 18.3 | 21.2 | 18.5 | ||||||||||
| Combined Ratio | 93.5 | % | 91.7 | % | 86.3 | % | 91.0 | % | 94.5 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 74.1 | % | 71.0 | % | 67.6 | % | 67.9 | % | 75.4 | % | |||||
| Insurance Expense Ratio | 19.4 | 20.3 | 18.3 | 21.2 | 18.5 | ||||||||||
| Underlying Combined Ratio | 93.5 | % | 91.3 | % | 85.9 | % | 89.1 | % | 93.9 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio as Reported | 93.5 | % | 91.7 | % | 86.3 | % | 91.0 | % | 94.5 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 0.2 | 0.6 | 0.2 | 0.6 | — | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.2) | (0.2) | 0.2 | 1.3 | 0.6 | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | — | — | — | — | — | ||||||||||
| Underlying Combined Ratio | 93.5 | % | 91.3 | % | 85.9 | % | 89.1 | % | 93.9 | % | |||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Specialty Property & Casualty Insurance Segment
Results of Operations and Selected Financial Information (continued)
(Dollars in Millions)
(Unaudited)
| Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Insurance Reserves: | ||||||||||
| Non-Standard Automobile | $ | 1,304.7 | $ | 1,308.3 | $ | 1,271.9 | $ | 1,252.6 | $ | 1,326.3 |
| Commercial Automobile | 257.2 | 236.5 | 223.0 | 221.0 | 215.1 | |||||
| Insurance Reserves | $ | 1,561.9 | $ | 1,544.8 | $ | 1,494.9 | $ | 1,473.6 | $ | 1,541.4 |
| Insurance Reserves: | ||||||||||
| Loss and Allocated LAE Reserves: | ||||||||||
| Case and Allocated LAE | $ | 799.7 | $ | 744.6 | $ | 718.8 | $ | 667.9 | $ | 716.0 |
| Incurred but Not Reported | 614.1 | 653.6 | 631.8 | 660.8 | 679.1 | |||||
| Total Loss Reserves | 1,413.8 | 1,398.2 | 1,350.6 | 1,328.7 | 1,395.1 | |||||
| Unallocated LAE Reserves | 148.1 | 146.6 | 144.3 | 144.9 | 146.3 | |||||
| Insurance Reserves | $ | 1,561.9 | $ | 1,544.8 | $ | 1,494.9 | $ | 1,473.6 | $ | 1,541.4 |
Kemper Corporation
Specialty Property & Casualty Insurance Segment
Specialty Personal Automobile Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 861.5 | $ | 736.3 | $ | 819.4 | $ | 700.5 | $ | 830.3 | |||||
| Earned Premiums | $ | 785.4 | $ | 796.1 | $ | 792.2 | $ | 689.8 | $ | 753.2 | |||||
| Net Investment Income | 29.1 | 32.4 | 26.2 | 15.2 | 24.8 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (5.8) | — | — | — | — | ||||||||||
| Other Income | 0.9 | 0.4 | 0.4 | 0.1 | 0.8 | ||||||||||
| Total Revenues | 809.6 | 828.9 | 818.8 | 705.1 | 778.8 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 586.4 | 569.1 | 543.4 | 472.4 | 576.0 | ||||||||||
| Catastrophe Losses and LAE | 1.6 | 5.2 | 2.0 | 4.2 | 0.2 | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | (4.4) | (3.1) | 2.1 | 11.2 | 17.8 | ||||||||||
| Catastrophe Losses and LAE | 0.4 | — | (0.1) | 0.1 | 0.2 | ||||||||||
| Total Incurred Losses and LAE | 584.0 | 571.2 | 547.4 | 487.9 | 594.2 | ||||||||||
| Insurance Expenses | 155.3 | 162.8 | 145.6 | 146.7 | 139.2 | ||||||||||
| Other Expenses | — | — | — | 0.4 | (0.4) | ||||||||||
| Operating Income (Loss) | 70.3 | 94.9 | 125.8 | 70.1 | 45.8 | ||||||||||
| Income Benefit (Expense) | (4.6) | (17.5) | (25.7) | (14.2) | (8.8) | ||||||||||
| Total Product Line Net Operating Income (Loss) | $ | 65.7 | $ | 77.4 | $ | 100.1 | $ | 55.9 | $ | 37.0 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 74.7 | % | 71.4 | % | 68.5 | % | 68.5 | % | 76.5 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 0.2 | 0.7 | 0.3 | 0.6 | — | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.6) | (0.4) | 0.3 | 1.6 | 2.4 | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | 0.1 | — | — | — | — | ||||||||||
| Total Incurred Loss and LAE Ratio | 74.4 | 71.7 | 69.1 | 70.7 | 78.9 | ||||||||||
| Insurance Expense Ratio | 19.8 | 20.4 | 18.4 | 21.3 | 18.5 | ||||||||||
| Combined Ratio | 94.2 | % | 92.1 | % | 87.5 | % | 92.0 | % | 97.4 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 74.7 | % | 71.4 | % | 68.5 | % | 68.5 | % | 76.5 | % | |||||
| Insurance Expense Ratio | 19.8 | 20.4 | 18.4 | 21.3 | 18.5 | ||||||||||
| Underlying Combined Ratio | 94.5 | % | 91.8 | % | 86.9 | % | 89.8 | % | 95.0 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio | 94.2 | % | 92.1 | % | 87.5 | % | 92.0 | % | 97.4 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 0.2 | 0.7 | 0.3 | 0.6 | — | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (0.6) | (0.4) | 0.3 | 1.6 | 2.4 | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | 0.1 | — | — | — | — | ||||||||||
| Underlying Combined Ratio | 94.5 | % | 91.8 | % | 86.9 | % | 89.8 | % | 95.0 | % | |||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Specialty Property & Casualty Insurance Segment
Commercial Automobile Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 110.5 | $ | 92.9 | $ | 94.8 | $ | 80.4 | $ | 80.9 | |||||
| Earned Premiums | $ | 92.2 | $ | 86.3 | $ | 79.2 | $ | 69.2 | $ | 69.3 | |||||
| Net Investment Income | 5.9 | 5.5 | 4.3 | 1.7 | 4.0 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (1.5) | — | — | — | — | ||||||||||
| Other Income | — | — | — | — | 0.1 | ||||||||||
| Total Revenues | 96.6 | 91.8 | 83.5 | 70.9 | 73.4 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 63.6 | 57.1 | 45.6 | 43.4 | 43.8 | ||||||||||
| Catastrophe Losses and LAE | 0.1 | 0.3 | 0.1 | 0.3 | — | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | 3.0 | 1.4 | (0.2) | (1.6) | (12.5) | ||||||||||
| Catastrophe Losses and LAE | — | 0.1 | — | (0.1) | — | ||||||||||
| Total Incurred Losses and LAE | 66.7 | 58.9 | 45.5 | 42.0 | 31.3 | ||||||||||
| Insurance Expenses | 15.0 | 16.3 | 13.9 | 14.5 | 12.9 | ||||||||||
| Other Expenses | — | — | — | — | — | ||||||||||
| Operating Income (Loss) | 14.9 | 16.6 | 24.1 | 14.4 | 29.2 | ||||||||||
| Income Tax Benefit (Expense) | (0.5) | (2.9) | (5.0) | (2.8) | (6.1) | ||||||||||
| Total Product Line Net Operating Income (Loss) | $ | 14.4 | $ | 13.7 | $ | 19.1 | $ | 11.6 | $ | 23.1 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 68.9 | % | 66.3 | % | 57.6 | % | 62.7 | % | 63.2 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 0.1 | 0.3 | 0.1 | 0.4 | — | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 3.3 | 1.6 | (0.3) | (2.3) | (18.0) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 | — | (0.1) | — | ||||||||||
| Total Incurred Loss and LAE Ratio | 72.3 | 68.3 | 57.4 | 60.7 | 45.2 | ||||||||||
| Insurance Expense Ratio | 16.3 | 18.9 | 17.6 | 21.0 | 18.6 | ||||||||||
| Combined Ratio | 88.6 | % | 87.2 | % | 75.0 | % | 81.7 | % | 63.8 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 68.9 | % | 66.3 | % | 57.6 | % | 62.7 | % | 63.2 | % | |||||
| Insurance Expense Ratio | 16.3 | 18.9 | 17.6 | 21.0 | 18.6 | ||||||||||
| Underlying Combined Ratio | 85.2 | % | 85.2 | % | 75.2 | % | 83.7 | % | 81.8 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio | 88.6 | % | 87.2 | % | 75.0 | % | 81.7 | % | 63.8 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 0.1 | 0.3 | 0.1 | 0.4 | — | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 3.3 | 1.6 | (0.3) | (2.3) | (18.0) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | — | 0.1 | — | (0.1) | — | ||||||||||
| Underlying Combined Ratio | 85.2 | % | 85.2 | % | 75.2 | % | 83.7 | % | 81.8 | % | |||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Preferred Property & Casualty Insurance Segment
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 154.4 | $ | 155.2 | $ | 172.2 | $ | 161.5 | $ | 164.1 | |||||
| Earned Premiums | $ | 162.2 | $ | 169.2 | $ | 174.5 | $ | 163.6 | $ | 180.9 | |||||
| Net Investment Income | 15.9 | 13.4 | 10.3 | 4.3 | 9.7 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (4.1) | — | — | — | — | ||||||||||
| Other Income | — | — | — | 0.1 | — | ||||||||||
| Total Revenues | 174.0 | 182.6 | 184.8 | 168.0 | 190.6 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 96.2 | 107.1 | 102.8 | 82.5 | 108.5 | ||||||||||
| Catastrophe Losses and LAE | 24.0 | (5.3) | 61.9 | 20.6 | 4.8 | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | 0.1 | 9.5 | 6.3 | 8.2 | (3.3) | ||||||||||
| Catastrophe Losses and LAE | (0.3) | 0.1 | 0.1 | 0.4 | (1.1) | ||||||||||
| Total Incurred Losses and LAE | 120.0 | 111.4 | 171.1 | 111.7 | 108.9 | ||||||||||
| Insurance Expenses | 51.0 | 51.4 | 55.5 | 55.5 | 58.7 | ||||||||||
| Other Expenses | — | — | — | — | — | ||||||||||
| Operating Income (Loss) | 3.0 | 19.8 | (41.8) | 0.8 | 23.0 | ||||||||||
| Income Tax Benefit (Expense) | 6.6 | (2.9) | 9.1 | 0.1 | (4.6) | ||||||||||
| Segment Net Operating Income (Loss) | $ | 9.6 | $ | 16.9 | $ | (32.7) | $ | 0.9 | $ | 18.4 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 59.3 | % | 63.2 | % | 58.9 | % | 50.5 | % | 59.9 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 14.8 | (3.1) | 35.5 | 12.6 | 2.7 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 0.1 | 5.6 | 3.6 | 5.0 | (1.8) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.2) | 0.1 | 0.1 | 0.2 | (0.6) | ||||||||||
| Total Incurred Loss and LAE Ratio | 74.0 | 65.8 | 98.1 | 68.3 | 60.2 | ||||||||||
| Insurance Expense Ratio | 31.4 | 30.4 | 31.8 | 33.9 | 32.4 | ||||||||||
| Combined Ratio | 105.4 | % | 96.2 | % | 129.9 | % | 102.2 | % | 92.6 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 59.3 | % | 63.2 | % | 58.9 | % | 50.5 | % | 59.9 | % | |||||
| Insurance Expense Ratio | 31.4 | 30.4 | 31.8 | 33.9 | 32.4 | ||||||||||
| Underlying Combined Ratio | 90.7 | % | 93.6 | % | 90.7 | % | 84.4 | % | 92.3 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio as Reported | 105.4 | % | 96.2 | % | 129.9 | % | 102.2 | % | 92.6 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 14.8 | (3.1) | 35.5 | 12.6 | 2.7 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 0.1 | 5.6 | 3.6 | 5.0 | (1.8) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.2) | 0.1 | 0.1 | 0.2 | (0.6) | ||||||||||
| Underlying Combined Ratio | 90.7 | % | 93.6 | % | 90.7 | % | 84.4 | % | 92.3 | % | |||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Preferred Property & Casualty Insurance Segment
Results of Operations and Selected Financial Information (continued)
(Dollars in Millions)
(Unaudited)
| Mar 31, 2021 | Dec 31, 2020 | Sep 30, 2020 | Jun 30, 2020 | Mar 31, 2020 | ||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Insurance Reserves: | ||||||||||
| Preferred Automobile | $ | 275.9 | $ | 281.3 | $ | 265.2 | $ | 252.8 | $ | 254.8 |
| Homeowners | 107.6 | 104.0 | 137.9 | 99.5 | 90.8 | |||||
| Other Personal | 30.7 | 26.3 | 25.5 | 25.7 | 28.8 | |||||
| Insurance Reserves | $ | 414.2 | $ | 411.6 | $ | 428.6 | $ | 378.0 | $ | 374.4 |
| Insurance Reserves: | ||||||||||
| Loss and Allocated LAE Reserves: | ||||||||||
| Case and Allocated LAE | $ | 282.0 | $ | 262.2 | $ | 266.8 | $ | 230.7 | $ | 231.1 |
| Incurred but Not Reported | 105.6 | 122.0 | 134.2 | 119.6 | 115.1 | |||||
| Total Loss Reserves | 387.6 | 384.2 | 401.0 | 350.3 | 346.2 | |||||
| Unallocated LAE Reserves | 26.6 | 27.4 | 27.6 | 27.7 | 28.2 | |||||
| Insurance Reserves | $ | 414.2 | $ | 411.6 | $ | 428.6 | $ | 378.0 | $ | 374.4 |
Kemper Corporation
Preferred Property & Casualty Insurance Segment
Preferred Personal Automobile Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 100.4 | $ | 98.8 | $ | 107.2 | $ | 95.6 | $ | 105.9 | |||||
| Earned Premiums | $ | 103.0 | $ | 107.1 | $ | 110.6 | $ | 99.1 | $ | 114.9 | |||||
| Net Investment Income | 7.3 | 7.9 | 6.1 | 2.5 | 5.8 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (1.9) | — | — | — | — | ||||||||||
| Other Income | — | — | — | 0.1 | — | ||||||||||
| Total Revenues | 108.4 | 115.0 | 116.7 | 101.7 | 120.7 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 67.8 | 78.0 | 72.2 | 53.8 | 75.9 | ||||||||||
| Catastrophe Losses and LAE | 0.6 | 0.4 | 1.8 | 2.0 | 0.2 | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | 1.2 | 9.9 | 5.9 | 9.7 | 2.2 | ||||||||||
| Catastrophe Losses and LAE | 0.1 | (0.4) | (0.2) | (0.3) | (0.1) | ||||||||||
| Total Incurred Losses and LAE | 69.7 | 87.9 | 79.7 | 65.2 | 78.2 | ||||||||||
| Insurance Expenses | 32.8 | 32.3 | 34.7 | 34.0 | 36.1 | ||||||||||
| Operating Income (Loss) | 5.9 | (5.2) | 2.3 | 2.5 | 6.4 | ||||||||||
| Income Tax Benefit (Expense) | 2.1 | 1.9 | (0.3) | (0.4) | (1.2) | ||||||||||
| Total Product Line Net Operating Income (Loss) | $ | 8.0 | $ | (3.3) | $ | 2.0 | $ | 2.1 | $ | 5.2 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 65.8 | % | 72.9 | % | 65.4 | % | 54.3 | % | 66.1 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 0.6 | 0.4 | 1.6 | 2.0 | 0.2 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 1.2 | 9.2 | 5.3 | 9.8 | 1.9 | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | 0.1 | (0.4) | (0.2) | (0.3) | (0.1) | ||||||||||
| Total Incurred Loss and LAE Ratio | 67.7 | 82.1 | 72.1 | 65.8 | 68.1 | ||||||||||
| Insurance Expense Ratio | 31.8 | 30.2 | 31.4 | 34.3 | 31.4 | ||||||||||
| Combined Ratio | 99.5 | % | 112.3 | % | 103.5 | % | 100.1 | % | 99.5 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 65.8 | % | 72.9 | % | 65.4 | % | 54.3 | % | 66.1 | % | |||||
| Insurance Expense Ratio | 31.8 | 30.2 | 31.4 | 34.3 | 31.4 | ||||||||||
| Underlying Combined Ratio | 97.6 | % | 103.1 | % | 96.8 | % | 88.6 | % | 97.5 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio | 99.5 | % | 112.3 | % | 103.5 | % | 100.1 | % | 99.5 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 0.6 | 0.4 | 1.6 | 2.0 | 0.2 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 1.2 | 9.2 | 5.3 | 9.8 | 1.9 | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | 0.1 | (0.4) | (0.2) | (0.3) | (0.1) | ||||||||||
| Underlying Combined Ratio | 97.6 | % | 103.1 | % | 96.8 | % | 88.6 | % | 97.5 | % | |||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Preferred Property & Casualty Insurance Segment
Homeowners and Other Personal Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 54.0 | $ | 56.4 | $ | 65.0 | $ | 65.9 | $ | 58.2 | |||||
| Earned Premiums | $ | 59.2 | $ | 62.1 | $ | 63.9 | $ | 64.5 | $ | 66.0 | |||||
| Net Investment Income | 8.6 | 5.5 | 4.2 | 1.8 | 3.9 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (2.2) | — | — | — | — | ||||||||||
| Total Revenues | 65.6 | 67.6 | 68.1 | 66.3 | 69.9 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 28.4 | 29.1 | 30.6 | 28.7 | 32.6 | ||||||||||
| Catastrophe Losses and LAE | 23.4 | (5.7) | 60.1 | 18.6 | 4.6 | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | (1.1) | (0.4) | 0.4 | (1.5) | (5.5) | ||||||||||
| Catastrophe Losses and LAE | (0.4) | 0.5 | 0.3 | 0.7 | (1.0) | ||||||||||
| Total Incurred Losses and LAE | 50.3 | 23.5 | 91.4 | 46.5 | 30.7 | ||||||||||
| Insurance Expenses | 18.2 | 19.1 | 20.8 | 21.5 | 22.6 | ||||||||||
| Operating Income (Loss) | (2.9) | 25.0 | (44.1) | (1.7) | 16.6 | ||||||||||
| Income Tax Benefit (Expense) | 4.5 | (4.8) | 9.4 | 0.5 | (3.4) | ||||||||||
| Total Product Line Net Operating Income (Loss) | $ | 1.6 | $ | 20.2 | $ | (34.7) | $ | (1.2) | $ | 13.2 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 48.1 | % | 46.8 | % | 47.8 | % | 44.5 | % | 49.3 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 39.5 | (9.2) | 94.1 | 28.8 | 7.0 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (1.9) | (0.6) | 0.6 | (2.3) | (8.3) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.7) | 0.8 | 0.5 | 1.1 | (1.5) | ||||||||||
| Total Incurred Loss and LAE Ratio | 85.0 | 37.8 | 143.0 | 72.1 | 46.5 | ||||||||||
| Insurance Expense Ratio | 30.7 | 30.8 | 32.6 | 33.3 | 34.2 | ||||||||||
| Combined Ratio | 115.7 | % | 68.6 | % | 175.6 | % | 105.4 | % | 80.7 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 48.1 | % | 46.8 | % | 47.8 | % | 44.5 | % | 49.3 | % | |||||
| Insurance Expense Ratio | 30.7 | 30.8 | 32.6 | 33.3 | 34.2 | ||||||||||
| Underlying Combined Ratio | 78.8 | % | 77.6 | % | 80.4 | % | 77.8 | % | 83.5 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio | 115.7 | % | 68.6 | % | 175.6 | % | 105.4 | % | 80.7 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 39.5 | (9.2) | 94.1 | 28.8 | 7.0 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (1.9) | (0.6) | 0.6 | (2.3) | (8.3) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.7) | 0.8 | 0.5 | 1.1 | (1.5) | ||||||||||
| Underlying Combined Ratio | 78.8 | % | 77.6 | % | 80.4 | % | 77.8 | % | 83.5 | % | |||||
| 1Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Preferred Property & Casualty Insurance Segment
Homeowners Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 46.1 | $ | 48.3 | $ | 55.7 | $ | 57.2 | $ | 49.9 | |||||
| Earned Premiums | $ | 50.8 | $ | 53.3 | $ | 55.0 | $ | 55.6 | $ | 56.8 | |||||
| Net Investment Income | 7.8 | 5.0 | 3.8 | 1.6 | 3.6 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (2.0) | — | — | — | — | ||||||||||
| Total Revenues | 56.6 | 58.3 | 58.8 | 57.2 | 60.4 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 24.2 | 26.5 | 28.1 | 25.4 | 28.7 | ||||||||||
| Catastrophe Losses and LAE | 22.0 | (10.1) | 58.6 | 18.2 | 4.5 | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | (2.5) | 0.3 | 2.0 | (0.8) | (4.3) | ||||||||||
| Catastrophe Losses and LAE | (0.1) | 0.6 | 0.2 | 0.6 | (0.7) | ||||||||||
| Total Incurred Losses and LAE | 43.6 | 17.3 | 88.9 | 43.4 | 28.2 | ||||||||||
| Insurance Expenses | 15.7 | 16.6 | 18.2 | 18.6 | 19.5 | ||||||||||
| Operating Income (Loss) | (2.7) | 24.4 | (48.3) | (4.8) | 12.7 | ||||||||||
| Income Tax Benefit (Expense) | 4.1 | (4.7) | 10.3 | 1.1 | (2.6) | ||||||||||
| Total Product Line Net Operating Income (Loss) | $ | 1.4 | $ | 19.7 | $ | (38.0) | $ | (3.7) | $ | 10.1 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 47.6 | % | 49.7 | % | 51.1 | % | 45.7 | % | 50.5 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 43.3 | (18.9) | 106.5 | 32.7 | 7.9 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (4.9) | 0.6 | 3.6 | (1.4) | (7.6) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.2) | 1.1 | 0.4 | 1.1 | (1.2) | ||||||||||
| Total Incurred Loss and LAE Ratio | 85.8 | 32.5 | 161.6 | 78.1 | 49.6 | ||||||||||
| Insurance Expense Ratio | 30.9 | 31.1 | 33.1 | 33.5 | 34.3 | ||||||||||
| Combined Ratio | 116.7 | % | 63.6 | % | 194.7 | % | 111.6 | % | 83.9 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 47.6 | % | 49.7 | % | 51.1 | % | 45.7 | % | 50.5 | % | |||||
| Insurance Expense Ratio | 30.9 | 31.1 | 33.1 | 33.5 | 34.3 | ||||||||||
| Underlying Combined Ratio | 78.5 | % | 80.8 | % | 84.2 | % | 79.2 | % | 84.8 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio | 116.7 | % | 63.6 | % | 194.7 | % | 111.6 | % | 83.9 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 43.3 | (18.9) | 106.5 | 32.7 | 7.9 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | (4.9) | 0.6 | 3.6 | (1.4) | (7.6) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (0.2) | 1.1 | 0.4 | 1.1 | (1.2) | ||||||||||
| Underlying Combined Ratio | 78.5 | % | 80.8 | % | 84.2 | % | 79.2 | % | 84.8 | % | |||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Preferred Property & Casualty Insurance Segment
Other Personal Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | |||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||||||
| Results of Operations | |||||||||||||||
| Net Premiums Written | $ | 7.9 | $ | 8.1 | $ | 9.3 | $ | 8.7 | $ | 8.3 | |||||
| Earned Premiums | $ | 8.4 | $ | 8.8 | $ | 8.9 | $ | 8.9 | $ | 9.2 | |||||
| Net Investment Income | 0.8 | 0.5 | 0.4 | 0.2 | 0.3 | ||||||||||
| Change in Value of Alternative Energy Partnership Investments | (0.2) | — | — | — | — | ||||||||||
| Total Revenues | 9.0 | 9.3 | 9.3 | 9.1 | 9.5 | ||||||||||
| Incurred Losses and LAE related to: | |||||||||||||||
| Current Year: | |||||||||||||||
| Non-catastrophe Losses and LAE | 4.2 | 2.6 | 2.5 | 3.3 | 3.9 | ||||||||||
| Catastrophe Losses and LAE | 1.4 | 4.4 | 1.5 | 0.4 | 0.1 | ||||||||||
| Prior Years: | |||||||||||||||
| Non-catastrophe Losses and LAE | 1.4 | (0.7) | (1.6) | (0.7) | (1.2) | ||||||||||
| Catastrophe Losses and LAE | (0.3) | (0.1) | 0.1 | 0.1 | (0.3) | ||||||||||
| Total Incurred Losses and LAE | 6.7 | 6.2 | 2.5 | 3.1 | 2.5 | ||||||||||
| Insurance Expenses | 2.5 | 2.5 | 2.6 | 2.9 | 3.1 | ||||||||||
| Operating Income (Loss) | (0.2) | 0.6 | 4.2 | 3.1 | 3.9 | ||||||||||
| Income Tax Benefit (Expense) | 0.4 | (0.1) | (0.9) | (0.6) | (0.8) | ||||||||||
| Total Product Line Net Operating Income (Loss) | $ | 0.2 | $ | 0.5 | $ | 3.3 | $ | 2.5 | $ | 3.1 | |||||
| Ratios Based On Earned Premiums | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 50.0 | % | 29.6 | % | 28.1 | % | 37.1 | % | 42.4 | % | |||||
| Current Year Catastrophe Losses and LAE Ratio | 16.7 | 50.0 | 16.9 | 4.5 | 1.1 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 16.7 | (8.0) | (18.0) | (7.9) | (13.0) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (3.6) | (1.1) | 1.1 | 1.1 | (3.3) | ||||||||||
| Total Incurred Loss and LAE Ratio | 79.8 | 70.5 | 28.1 | 34.8 | 27.2 | ||||||||||
| Insurance Expense Ratio | 29.8 | 28.4 | 29.2 | 32.6 | 33.7 | ||||||||||
| Combined Ratio | 109.6 | % | 98.9 | % | 57.3 | % | 67.4 | % | 60.9 | % | |||||
| Underlying Combined Ratio 1 | |||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 50.0 | % | 29.6 | % | 28.1 | % | 37.1 | % | 42.4 | % | |||||
| Insurance Expense Ratio | 29.8 | 28.4 | 29.2 | 32.6 | 33.7 | ||||||||||
| Underlying Combined Ratio | 79.8 | % | 58.0 | % | 57.3 | % | 69.7 | % | 76.1 | % | |||||
| Non-GAAP Measure Reconciliation | |||||||||||||||
| Combined Ratio | 109.6 | % | 98.9 | % | 57.3 | % | 67.4 | % | 60.9 | % | |||||
| Less: | |||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 16.7 | 50.0 | 16.9 | 4.5 | 1.1 | ||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 16.7 | (8.0) | (18.0) | (7.9) | (13.0) | ||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | (3.6) | (1.1) | 1.1 | 1.1 | (3.3) | ||||||||||
| Underlying Combined Ratio | 79.8 | % | 58.0 | % | 57.3 | % | 69.7 | % | 76.1 | % | |||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Life & Health Insurance Segment
Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Results of Operations | ||||||||||
| Earned Premiums | $ | 161.0 | $ | 162.4 | $ | 160.6 | $ | 162.7 | $ | 163.0 |
| Net Investment Income | 51.1 | 52.8 | 50.7 | 44.3 | 51.0 | |||||
| Change in Value of Alternative Energy Partnership Investments | (4.0) | — | — | — | — | |||||
| Other Income | 0.1 | — | — | 0.5 | 0.1 | |||||
| Total Revenues | 208.2 | 215.2 | 211.3 | 207.5 | 214.1 | |||||
| Policyholders’ Benefits and Incurred Losses and LAE | 118.7 | 121.8 | 113.6 | 105.9 | 100.7 | |||||
| Insurance Expenses | 90.3 | 83.8 | 82.5 | 81.7 | 86.9 | |||||
| Operating Income (Loss) | (0.8) | 9.6 | 15.2 | 19.9 | 26.5 | |||||
| Income Tax Benefit (Expense) | 8.1 | (0.2) | (3.0) | (3.8) | (4.2) | |||||
| Segment Net Operating Income (Loss) | $ | 7.3 | $ | 9.4 | $ | 12.2 | $ | 16.1 | $ | 22.3 |
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Insurance Reserves: | ||||||||||
| Future Policyholder Benefits | $ | 3,448.0 | $ | 3,440.5 | $ | 3,426.4 | $ | 3,407.0 | $ | 3,397.1 |
| Incurred Losses and LAE Reserves: | ||||||||||
| Life | 68.1 | 61.1 | 59.0 | 61.6 | 75.5 | |||||
| Accident and Health | 25.5 | 25.9 | 26.1 | 29.1 | 28.2 | |||||
| Property | 5.4 | 4.6 | 5.1 | 3.8 | 3.1 | |||||
| Total Incurred Losses and LAE Reserves | 99.0 | 91.6 | 90.2 | 94.5 | 106.8 | |||||
| Insurance Reserves | $ | 3,547.0 | $ | 3,532.1 | $ | 3,516.6 | $ | 3,501.5 | $ | 3,503.9 |
Kemper Corporation
Life & Health Insurance Segment
Life Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Results of Operations | ||||||||||
| Earned Premiums | $ | 98.1 | $ | 96.5 | $ | 96.3 | $ | 95.7 | $ | 97.2 |
| Net Investment Income | 49.6 | 52.3 | 47.5 | 44.8 | 48.7 | |||||
| Change in Value of Alternative Energy Partnership Investments | (3.8) | — | — | — | — | |||||
| Other Income | — | (0.1) | — | 0.1 | — | |||||
| Total Revenues | 143.9 | 148.7 | 143.8 | 140.6 | 145.9 | |||||
| Policyholders’ Benefits and Incurred Losses and LAE | 87.9 | $ | 89.4 | 84.0 | 76.7 | 68.1 | ||||
| Insurance Expenses | 58.0 | 52.9 | 54.7 | 50.9 | 60.3 | |||||
| Operating Income (Loss) | (2.0) | 6.4 | 5.1 | 13.0 | 17.5 | |||||
| Income Tax Benefit (Expense) | 8.0 | 0.3 | (0.8) | (2.4) | (2.3) | |||||
| Total Product Line Operating Income (Loss) | $ | 6.0 | $ | 6.7 | $ | 4.3 | $ | 10.6 | $ | 15.2 |
Kemper Corporation
Life & Health Insurance Segment
Accident & Health Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Results of Operations | ||||||||||
| Earned Premiums | $ | 47.4 | $ | 50.2 | $ | 48.9 | $ | 50.8 | $ | 49.4 |
| Net Investment Income | 1.0 | 0.3 | 3.1 | (0.4) | 2.0 | |||||
| Change in Value of Alternative Energy Partnership Investments | (0.1) | — | — | — | — | |||||
| Other Income | 0.1 | 0.1 | — | 0.4 | 0.1 | |||||
| Total Revenues | 48.4 | 50.6 | 52.0 | 50.8 | 51.5 | |||||
| Policyholders’ Benefits and Incurred Losses and LAE | 24.5 | 24.5 | 20.7 | 22.0 | 28.1 | |||||
| Insurance Expenses | 24.4 | 25.1 | 22.1 | 24.6 | 20.1 | |||||
| Operating Income (Loss) | (0.5) | 1.0 | 9.2 | 4.2 | 3.3 | |||||
| Income Tax Benefit (Expense) | 0.2 | — | (2.0) | (0.9) | (0.7) | |||||
| Total Product Line Net Operating Income (Loss) | $ | (0.3) | $ | 1.0 | $ | 7.2 | $ | 3.3 | $ | 2.6 |
Kemper Corporation
Life & Health Insurance Segment
Property Insurance - Results of Operations and Selected Financial Information
(Dollars in Millions)
(Unaudited)
| Three Months Ended | ||||||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||||||||
| Results of Operations | ||||||||||||||||
| Earned Premiums | $ | 15.5 | $ | 15.7 | $ | 15.4 | $ | 16.2 | $ | 16.4 | ||||||
| Net Investment Income | 0.5 | 0.2 | 0.1 | (0.1) | 0.3 | |||||||||||
| Change in Value of Alternative Energy Partnership Investments | (0.1) | — | — | — | — | |||||||||||
| Total Revenues | 15.9 | 15.9 | 15.5 | 16.1 | 16.7 | |||||||||||
| Incurred Losses and LAE related to: | ||||||||||||||||
| Current Year: | ||||||||||||||||
| Non-catastrophe Losses and LAE | 3.2 | 2.5 | 5.2 | 3.5 | 4.0 | |||||||||||
| Catastrophe Losses and LAE | 1.9 | 5.3 | 3.1 | 3.2 | 0.8 | |||||||||||
| Prior Years: | ||||||||||||||||
| Non-catastrophe Losses and LAE | 0.7 | 0.1 | 0.4 | 0.3 | (0.4) | |||||||||||
| Catastrophe Losses and LAE | 0.5 | — | 0.2 | 0.2 | 0.1 | |||||||||||
| Total Incurred Losses and LAE | 6.3 | 7.9 | 8.9 | 7.2 | 4.5 | |||||||||||
| Insurance Expenses | 7.9 | 5.8 | 5.7 | 6.2 | 6.5 | |||||||||||
| Operating Income (Loss) | 1.7 | 2.2 | 0.9 | 2.7 | 5.7 | |||||||||||
| Income Tax Benefit (Expense) | (0.1) | (0.5) | (0.2) | (0.5) | (1.2) | |||||||||||
| Total Product Line Net Operating Income (Loss) | $ | 1.6 | $ | 1.7 | $ | 0.7 | $ | 2.2 | $ | 4.5 | ||||||
| Ratios Based On Earned Premiums | ||||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 20.6 | % | 15.9 | % | 33.8 | % | 21.5 | % | 24.3 | % | ||||||
| Current Year Catastrophe Losses and LAE Ratio | 12.3 | 33.8 | 20.1 | 19.8 | 4.9 | |||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 4.5 | 0.6 | 2.6 | 1.9 | (2.4) | |||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | 3.2 | — | 1.3 | 1.2 | 0.6 | |||||||||||
| Total Incurred Loss and LAE Ratio | 40.6 | 50.3 | 57.8 | 44.4 | 27.4 | |||||||||||
| Insurance Expense Ratio | 51.0 | 36.9 | 37.0 | 38.3 | 39.6 | |||||||||||
| Combined Ratio | 91.6 | % | 87.2 | % | 94.8 | % | 82.7 | % | 67.0 | % | ||||||
| Underlying Combined Ratio 1 | ||||||||||||||||
| Current Year Non-catastrophe Losses and LAE Ratio | 20.6 | % | 15.9 | % | 33.8 | % | 21.5 | % | 24.3 | % | ||||||
| Insurance Expense Ratio | 51.0 | 36.9 | 37.0 | 38.3 | 39.6 | |||||||||||
| Underlying Combined Ratio | 71.6 | % | 52.8 | % | 70.8 | % | 59.8 | % | 63.9 | % | ||||||
| Non-GAAP Measure Reconciliation | ||||||||||||||||
| Combined Ratio | 91.6 | % | 87.2 | % | 94.8 | % | 82.7 | % | 67.0 | % | ||||||
| Less: | ||||||||||||||||
| Current Year Catastrophe Losses and LAE Ratio | 12.3 | 33.8 | 20.1 | 19.8 | 4.9 | |||||||||||
| Prior Years Non-catastrophe Losses and LAE Ratio | 4.5 | 0.6 | 2.6 | 1.9 | (2.4) | |||||||||||
| Prior Years Catastrophe Losses and LAE Ratio | 3.2 | — | 1.3 | 1.2 | 0.6 | |||||||||||
| Underlying Combined Ratio | 71.6 | % | 52.8 | % | 70.8 | % | 59.8 | % | 63.9 | % | ||||||
| 1 Underlying Combined Ratio is a non-GAAP measure, which is computed as the difference between three operating ratios: the combined ratio, the effect of catastrophes (excluding development of prior-year catastrophes) on the combined ratio and the effect of prior-year reserve development at the reporting date (including development on prior-year catastrophes) on the combined ratio. |
Kemper Corporation
Expenses
(Dollars in Millions)
| Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | |||||||
| Insurance Expenses: | |||||||||||
| Commissions | $ | 195.2 | $ | 183.3 | $ | 195.5 | $ | 178.2 | $ | 188.8 | |
| General Expenses | 84.6 | 83.1 | 74.6 | 79.2 | 70.5 | ||||||
| Premium Taxes | 25.4 | 23.0 | 23.3 | 23.1 | 24.8 | ||||||
| Total Costs Incurred | 305.2 | 289.4 | 293.4 | 280.5 | 284.1 | ||||||
| Net Policy Acquisition Costs Deferred | (22.4) | (11.1) | (17.4) | (9.3) | (13.8) | ||||||
| Amortization of Valuation of Business Acquired ("VOBA") | 0.9 | 1.0 | 0.9 | 1.5 | 1.3 | ||||||
| Insurance Expenses | 283.7 | 279.3 | 276.9 | 272.7 | 271.6 | ||||||
| Loss from Early Extinguishment of Debt | — | — | — | — | — | ||||||
| Interest and Other Expenses: | |||||||||||
| Interest Expense | 11.1 | 11.3 | 8.3 | 8.9 | 7.5 | ||||||
| Other Expenses: | |||||||||||
| Acquisition Related Transaction, Integration and Other Costs | 16.3 | 20.0 | 14.4 | 17.1 | 11.8 | ||||||
| Pension Settlement Expense | — | 64.1 | — | — | — | ||||||
| Other | 29.8 | 33.4 | 24.5 | 25.0 | 25.2 | ||||||
| Other Expenses | 46.1 | 117.5 | 38.9 | 42.1 | 37.0 | ||||||
| Interest and Other Expenses | 57.2 | 128.8 | 47.2 | 51.0 | 44.5 | ||||||
| Total Expenses | $ | 340.9 | $ | 408.1 | $ | 324.1 | $ | 323.7 | $ | 316.1 |
Kemper Corporation
Details of Investment Performance
(Dollars in Millions)
| Three Months Ended | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|
| Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Net Investment Income | ||||||||||
| Interest on Fixed Income Securities | $ | 69.0 | $ | 71.8 | $ | 72.7 | $ | 74.3 | $ | 71.0 |
| Dividends on Equity Securities Excluding Alternative Investments | 2.1 | 4.7 | 2.8 | 3.6 | 4.3 | |||||
| Alternative Investments: | ||||||||||
| Equity Method Limited Liability Investments | 22.5 | 7.6 | 8.2 | (12.7) | 1.8 | |||||
| Limited Liability Investments Included in Equity Securities | 4.5 | 14.8 | 2.4 | 1.1 | 3.8 | |||||
| Total Alternative Investments | 27.0 | 22.4 | 10.6 | (11.6) | 5.6 | |||||
| Short-term Investments | 1.2 | 1.3 | 2.3 | 0.3 | 1.6 | |||||
| Loans to Policyholders | 5.5 | 5.5 | 5.5 | 5.5 | 5.6 | |||||
| Real Estate | 2.4 | 2.5 | 2.3 | 2.3 | 2.5 | |||||
| Other | 4.7 | 3.9 | 2.7 | 2.4 | 4.2 | |||||
| Total Investment Income | 111.9 | 112.1 | 98.9 | 76.8 | 94.8 | |||||
| Investment Expenses: | ||||||||||
| Real Estate | 2.1 | 2.3 | 1.2 | 2.7 | 2.6 | |||||
| Other Investment Expenses | 6.7 | 7.1 | 5.6 | 6.3 | 6.6 | |||||
| Total Investment Expenses | 8.8 | 9.4 | 6.8 | 9.0 | 9.2 | |||||
| Net Investment Income | $ | 103.1 | $ | 102.7 | $ | 92.1 | $ | 67.8 | $ | 85.6 |
| Net Realized Gains (Losses) on Sales of Investments | ||||||||||
| Fixed Maturities: | ||||||||||
| Gains on Sales | $ | 13.2 | $ | 1.9 | $ | 11.9 | $ | 10.9 | $ | 15.9 |
| Losses on Sales | (1.1) | (4.4) | (1.9) | (0.5) | (1.1) | |||||
| Equity Securities: | ||||||||||
| Gains on Sales | 1.7 | 4.4 | 0.1 | 0.1 | 1.3 | |||||
| Losses on Sales | — | (1.7) | — | — | (0.2) | |||||
| Equity Method Limited Liability Investments: | ||||||||||
| Losses on Sales | — | (0.3) | (0.1) | — | — | |||||
| Real Estate: | ||||||||||
| Gains on Sales | — | — | — | 1.2 | 0.6 | |||||
| Net Realized Gains on Sales of Investments | $ | 13.8 | $ | (0.1) | $ | 10.0 | $ | 11.7 | $ | 16.5 |
| Net Impairment Losses Recognized in Earnings | ||||||||||
| Fixed Maturities | $ | (3.2) | $ | 1.3 | $ | (1.0) | $ | (7.0) | $ | (10.0) |
| Equity Securities | (0.8) | (0.8) | — | — | (2.0) | |||||
| Net Impairment Losses Recognized in Earnings | $ | (4.0) | $ | 0.5 | $ | (1.0) | $ | (7.0) | $ | (12.0) |
Kemper Corporation
Details of Invested Assets
(Dollars in Millions)
(Unaudited)
| Mar 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Carrying<br>Value | Percent<br><br>of Total1 | Carrying<br>Value | Percent<br><br>of Total1 | Carrying<br>Value | Percent<br><br>of Total1 | |||||||
| Fixed Maturities Reported at Fair Value: | ||||||||||||
| U.S. Government and Government Agencies and Authorities | $ | 532.4 | 5.4 | % | $ | 585.3 | 5.6 | % | $ | 815.9 | 8.8 | % |
| States and Political Subdivisions | 1,667.9 | 17.0 | 1,589.5 | 15.2 | 1,515.8 | 16.4 | ||||||
| Foreign Governments | 4.8 | — | 5.2 | — | 16.8 | 0.2 | ||||||
| Corporate Securities: | ||||||||||||
| Bonds and Notes | 4,270.8 | 43.5 | 4,425.4 | 42.5 | 3,859.7 | 41.7 | ||||||
| Redeemable Preferred Stocks | 7.0 | 0.1 | 7.5 | 0.1 | 6.7 | 0.1 | ||||||
| Collateralized Loan Obligations | 782.9 | 8.0 | 767.7 | 7.4 | 618.2 | 6.7 | ||||||
| Other Mortgage- and Asset-backed | 213.6 | 2.2 | 225.3 | 2.2 | 89.0 | 1.0 | ||||||
| Total Fixed Maturities Reported at Fair Value | 7,479.4 | 76.2 | 7,605.9 | 73.0 | 6,922.1 | 74.7 | ||||||
| Equity Securities Reported at Fair Value: | ||||||||||||
| Preferred Stocks | 54.6 | 0.6 | 59.1 | 0.6 | 59.2 | 0.6 | ||||||
| Common Stocks | 11.4 | 0.1 | 10.8 | 0.1 | 13.2 | 0.1 | ||||||
| Other Equity Interests: | ||||||||||||
| Exchange Traded Funds | 522.4 | 5.3 | 496.6 | 4.8 | 586.8 | 6.3 | ||||||
| Limited Liability Companies and Limited Partnerships | 308.9 | 3.1 | 292.0 | 2.8 | 248.1 | 2.7 | ||||||
| Total Equity Securities Reported at Fair Value | 897.3 | 9.1 | 858.5 | 8.2 | 907.3 | 9.8 | ||||||
| Equity Securities Reported at Modified Cost: | ||||||||||||
| Preferred Stocks | 8.1 | 0.1 | 8.1 | 0.1 | 9.1 | 0.1 | ||||||
| Common Stocks | 16.3 | 0.2 | 16.3 | 0.2 | 12.3 | 0.1 | ||||||
| Limited Liability Companies and Limited Partnerships | 11.6 | 0.1 | 15.7 | 0.2 | 20.5 | 0.2 | ||||||
| Total Equity Securities Reported at Modified Cost | 36.0 | 0.4 | 40.1 | 0.5 | 41.9 | 0.4 | ||||||
| Convertible Securities at Fair Value | 42.6 | 0.4 | 39.9 | 0.4 | 37.3 | 0.4 | ||||||
| Equity Method Limited Liability Investments | 219.2 | 2.2 | 204.0 | 2.0 | 220.4 | 2.4 | ||||||
| Alternative Energy Partnership Investments | 54.4 | 0.6 | 21.3 | 0.2 | — | — | ||||||
| Short-term Investments at Cost which Approximates Fair Value | 196.9 | 2.0 | 875.4 | 8.4 | 470.9 | 5.1 | ||||||
| Other Investments: | ||||||||||||
| Company Owned Life Insurance | 429.5 | 4.4 | 327.4 | 3.1 | 217.0 | 2.3 | ||||||
| Loans to Policyholders at Unpaid Principal | 295.1 | 3.0 | 297.9 | 2.9 | 305.6 | 3.3 | ||||||
| Real Estate at Depreciated Cost | 98.0 | 1.0 | 98.7 | 0.9 | 111.4 | 1.2 | ||||||
| Mortgage Loans | 73.2 | 0.7 | 54.6 | 0.5 | 27.5 | 0.3 | ||||||
| Other | 1.0 | — | 0.4 | — | — | — | ||||||
| Total Other Investments | 896.8 | 9.1 | 779.0 | 7.4 | 661.5 | 7.1 | ||||||
| Total Investments | $ | 9,822.6 | 100.0 | % | $ | 10,424.1 | 100.0 | % | $ | 9,261.4 | 100.0 | % |
| 1 Sum of percentages for individual lines may not equal subtotals and grand total due to rounding. |
Kemper Corporation
Details of Invested Assets (continued)
(Dollars in Millions)
(Unaudited)
| Mar 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Carrying<br>Value | Percent<br><br>of Total1 | Carrying<br>Value | Percent<br><br>of Total1 | Carrying<br>Value | Percent<br><br>of Total1 | |||||||
| S&P Equivalent Rating for Fixed Maturities | ||||||||||||
| AAA, AA, A | $ | 4,742.9 | 63.3 | % | $ | 4,759.9 | 62.6 | % | $ | 4,387.1 | 63.4 | % |
| BBB | 2,286.7 | 30.6 | 2,355.6 | 31.0 | 2,044.1 | 29.5 | ||||||
| BB, B | 318.3 | 4.3 | 353.1 | 4.6 | 319.2 | 4.6 | ||||||
| CCC or Lower | 131.5 | 1.8 | 137.3 | 1.8 | 171.7 | 2.5 | ||||||
| Total Investments in Fixed Maturities | $ | 7,479.4 | 100.0 | % | $ | 7,605.9 | 100.0 | % | $ | 6,922.1 | 100.0 | % |
| Duration (in Years) | ||||||||||||
| Total Investments in Fixed Maturities | 7.9 | 7.8 | 7.1 | |||||||||
| 1 Sum of percentages for individual lines may not equal subtotals and grand total due to rounding. |
Kemper Corporation
Investment Concentration
(Dollars in Millions)
(Unaudited)
| Mar 31, 2021 | Dec 31, 2020 | Dec 31, 2019 | ||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Fair Value of Non-governmental Fixed Maturities by Industry | Amount | Percent<br>of Total<br>Investments | Amount | Percent<br>of Total<br>Investments | Amount | Percent<br>of Total<br>Investments | ||||||
| Finance, Insurance and Real Estate | $ | 1,911.7 | 19.5 | % | $ | 1,916.3 | 18.4 | % | $ | 1,522.8 | 16.4 | % |
| Manufacturing | 1,575.3 | 16.0 | 1,633.5 | 15.7 | 1,356.4 | 14.6 | ||||||
| Transportation, Communication and Utilities | 775.5 | 7.9 | 825.5 | 7.9 | 650.2 | 7.0 | ||||||
| Services | 552.5 | 5.6 | 581.3 | 5.6 | 604.4 | 6.5 | ||||||
| Mining | 270.4 | 2.8 | 285.7 | 2.7 | 154.5 | 1.7 | ||||||
| Retail Trade | 176.6 | 1.8 | 172.6 | 1.7 | 183.3 | 2.0 | ||||||
| Wholesale Trade | 0.5 | — | 0.5 | — | 72.9 | 0.8 | ||||||
| Agriculture, Forestry and Fishing | — | — | — | — | 12.4 | 0.1 | ||||||
| Other | 11.8 | 0.1 | 10.5 | 0.1 | 16.6 | 0.2 | ||||||
| Total Fair Value of Non-governmental Fixed Maturities | $ | 5,274.3 | 53.7 | % | $ | 5,425.9 | 52.1 | % | $ | 4,573.5 | 49.3 | % |
| Mar 31, 2021 | ||||||||||||
| --- | --- | --- | --- | --- | ||||||||
| Ten Largest Investment Exposures 1 | Fair<br>Value | Percent<br>of Total<br>Investments | ||||||||||
| Fixed Maturities: | ||||||||||||
| States including their Political Subdivisions: | ||||||||||||
| Texas | $ | 136.1 | 1.4 | % | ||||||||
| California | 85.1 | 0.9 | ||||||||||
| New York | 83.5 | 0.9 | ||||||||||
| Colorado | 83.1 | 0.8 | ||||||||||
| Michigan | 75.5 | 0.8 | ||||||||||
| Georgia | 71.9 | 0.7 | ||||||||||
| Louisiana | 69.2 | 0.7 | ||||||||||
| Pennsylvania | 65.5 | 0.7 | ||||||||||
| Equity Securities at Fair Value—Other Equity Interests: | ||||||||||||
| Vanguard Total World Stock ETF | 205.4 | 2.1 | ||||||||||
| iShares® Core MSCI Total International Stock ETF | 79.8 | 0.8 | ||||||||||
| Total | $ | 955.1 | 9.8 | % |
1Excluding Investments in U.S. Government and Government Agencies and Authorities at March 31, 2021.
Kemper Corporation
Municipal Bond Securities
(Dollars in Millions)
(Unaudited)
| Mar 31, 2021 | ||||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|---|
| State<br>General<br>Obligation | Political<br>Subdivision<br>General<br>Obligation | Revenue | Total Fair<br>Value | Percent<br><br>of Total<br><br>Muni Bond1 | Percent<br><br>of Total<br><br>Investments1 | |||||||
| Texas | $ | 10.0 | $ | 12.7 | $ | 113.3 | $ | 136.0 | 8.2 | % | 1.4 | % |
| Georgia | 8.1 | 6.2 | 57.5 | 71.8 | 4.3 | 0.7 | ||||||
| Colorado | — | 1.0 | 82.1 | 83.1 | 5.0 | 0.8 | ||||||
| New York | 6.4 | 8.9 | 68.2 | 83.5 | 5.0 | 0.9 | ||||||
| Louisiana | 37.1 | 5.3 | 26.8 | 69.2 | 4.1 | 0.7 | ||||||
| Michigan | 39.6 | — | 35.9 | 75.5 | 4.5 | 0.8 | ||||||
| California | 7.3 | 3.4 | 74.4 | 85.1 | 5.1 | 0.9 | ||||||
| Pennsylvania | 6.2 | 2.6 | 56.7 | 65.5 | 3.9 | 0.7 | ||||||
| Massachusetts | 4.1 | 1.5 | 45.1 | 50.7 | 3.0 | 0.5 | ||||||
| Virginia | 6.9 | 16.7 | 23.7 | 47.3 | 2.8 | 0.5 | ||||||
| Florida | 5.0 | — | 52.9 | 57.9 | 3.5 | 0.6 | ||||||
| Minnesota | — | — | 43.3 | 43.3 | 2.6 | 0.4 | ||||||
| Washington | 15.3 | — | 33.7 | 49.0 | 2.9 | 0.5 | ||||||
| Oregon | 34.1 | — | 11.6 | 45.7 | 2.7 | 0.5 | ||||||
| Ohio | 6.3 | — | 41.6 | 47.9 | 2.9 | 0.5 | ||||||
| Utah | 0.6 | — | 38.5 | 39.1 | 2.3 | 0.4 | ||||||
| District of Columbia | 4.6 | — | 29.4 | 34.0 | 2.0 | 0.3 | ||||||
| South Carolina | — | 1.8 | 17.3 | 19.1 | 1.1 | 0.2 | ||||||
| New Mexico | — | — | 34.6 | 34.6 | 2.1 | 0.4 | ||||||
| Illinois | — | — | 43.4 | 43.4 | 2.6 | 0.4 | ||||||
| Indiana | — | — | 30.7 | 30.7 | 1.8 | 0.3 | ||||||
| Maryland | 2.1 | 8.6 | 38.7 | 49.4 | 3.0 | 0.5 | ||||||
| Hawaii | 20.0 | 0.3 | 3.4 | 23.7 | 1.4 | 0.2 | ||||||
| Alabama | — | — | 10.4 | 10.4 | 0.6 | 0.1 | ||||||
| Missouri | — | — | 33.2 | 33.2 | 2.0 | 0.3 | ||||||
| Tennessee | 3.5 | 8.2 | 19.2 | 30.9 | 1.9 | 0.3 | ||||||
| Arkansas | 18.7 | — | — | 18.7 | 1.1 | 0.2 | ||||||
| Kentucky | — | — | 17.5 | 17.5 | 1.0 | 0.2 | ||||||
| Mississippi | 13.2 | — | 4.4 | 17.6 | 1.1 | 0.2 | ||||||
| Arizona | — | 0.8 | 20.0 | 20.8 | 1.2 | 0.2 | ||||||
| Alaska | 2.0 | 2.8 | 10.0 | 14.8 | 0.9 | 0.2 | ||||||
| New Hampshire | 4.3 | 0.4 | 12.0 | 16.7 | 1.0 | 0.2 | ||||||
| Nebraska | — | 7.8 | 12.9 | 20.7 | 1.2 | 0.2 | ||||||
| Oklahoma | — | — | 14.7 | 14.7 | 0.9 | 0.1 | ||||||
| Wisconsin | — | 7.3 | 6.1 | 13.4 | 0.8 | 0.1 | ||||||
| North Dakota | — | — | 12.8 | 12.8 | 0.8 | 0.1 | ||||||
| New Jersey | — | — | 11.4 | 11.4 | 0.7 | 0.1 | ||||||
| Delaware | — | — | 10.5 | 10.5 | 0.6 | 0.1 | ||||||
| Connecticut | 13.2 | — | 5.6 | 18.8 | 1.1 | 0.2 | ||||||
| All Other States | 0.1 | 8.2 | 91.2 | 99.5 | 6.0 | 1.0 | ||||||
| Total | $ | 268.7 | $ | 104.5 | $ | 1,294.7 | $ | 1,667.9 | 100.0 | % | 17.0 | % |
| 1 Sum of percentages for individual lines may not equal total due to rounding. |
Kemper Corporation
Investments in Limited Liability
Companies and Limited Partnerships
(Dollars in Millions)
(Unaudited)
| Unfunded<br>Commitment | Reported Value | |||||
|---|---|---|---|---|---|---|
| Asset Class | Mar 31,<br>2021 | Mar 31,<br>2021 | Dec 31,<br>2020 | |||
| Reported as Equity Method Limited Liability Investments: | ||||||
| Mezzanine Debt | $ | 58.8 | $ | 105.9 | $ | 102.5 |
| Senior Debt | 22.9 | 32.9 | 28.6 | |||
| Distressed Debt | — | 19.4 | 14.5 | |||
| Secondary Transactions | 12.8 | 12.4 | 11.2 | |||
| Leveraged Buyout | 0.1 | 3.8 | 3.5 | |||
| Growth Equity | — | 0.7 | 0.7 | |||
| Real Estate | — | 31.5 | 29.9 | |||
| Other | — | 12.6 | 13.1 | |||
| Total Equity Method Limited Liability Investments | 94.6 | 219.2 | 204.0 | |||
| Alternative Energy Partnership Investments | 31.5 | 54.4 | 21.3 | |||
| Reported as Other Equity Interests at Fair Value: | ||||||
| Mezzanine Debt | 69.6 | 125.8 | 118.3 | |||
| Senior Debt | 18.4 | 30.0 | 33.9 | |||
| Distressed Debt | 22.0 | 34.5 | 31.8 | |||
| Secondary Transactions | 6.2 | 4.0 | 4.2 | |||
| Hedge Funds | — | 78.7 | 71.6 | |||
| Leveraged Buyout | 7.0 | 33.8 | 30.7 | |||
| Other | 0.9 | 2.2 | 1.5 | |||
| Total Reported as Other Equity Interests at Fair Value | 124.1 | 309.0 | 292.0 | |||
| Reported as Other Equity Interests at Modified Cost: | ||||||
| Other | 0.2 | 11.6 | 15.7 | |||
| Total Reported as Other Equity Interests at Modified Cost | 0.2 | 11.6 | 15.7 | |||
| Total Investments in Limited Liability Companies and Limited Partnerships | $ | 250.4 | $ | 594.2 | $ | 533.0 |
Kemper Corporation
Definitions of Non-GAAP Financial Measures
The Company believes that investors’ understanding of Kemper’s performance is enhanced by the disclosure of the following non-GAAP financial measures. The methods for calculating these measures may differ from those used by other companies and therefore comparability may be limited.
Book Value Per Share Excluding Goodwill is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity excluding goodwill by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. Book Value Per Share Excluding Goodwill is a common measure used by analysts and investors to compare similar companies.
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the after-tax impact of net unrealized gains on fixed income securities by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. The Company uses the trends in book value per share excluding the after-tax impact of net unrealized gains on fixed income securities in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods. The Company believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are not influenced by management. The Company believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.
Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Goodwill is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the after-tax impact of net unrealized gains on fixed income securities and goodwill by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. The Company uses the trends in book value per share excluding the after-tax impact of net unrealized gains on fixed income securities and goodwill in conjunction with book value per share to identify and analyze the change in net worth excluding goodwill attributable to management efforts between periods. The Company believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are not influenced by management. The Company believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers.
Adjusted Consolidated Net Operating Income (Loss) is an after-tax, non-GAAP financial measure and is computed by excluding from Net Income (Loss) the after-tax impact of:
1) Income (Loss) from Change in Fair Value of Equity and Convertible Securities;
2) Net Realized Gains on Sales of Investments;
3) Impairment Losses;
4) Acquisition Related Transaction, Integration and Other Costs;
5) Debt Extinguishment, Pension and Other Charges; and
6) Significant non-recurring or infrequent items that may not be indicative of ongoing operations.
Significant non-recurring items are excluded when (a) the nature of the charge or gain is such that it is reasonably unlikely to recur within two years and (b) there has been no similar charge or gain within the prior two years. The most directly comparable GAAP financial measure is Net Income (Loss).
The Company believes that Adjusted Consolidated Net Operating Income (Loss) provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Net Realized Gains on Sales of Investments, Impairment Losses related to investments, and Income (Loss) from Change in Fair Value of Equity and Convertible Securities included in the Company’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the insurance underwriting process. Acquisition Related Transaction, Integration and Other Costs may vary significantly between periods and are generally driven by the timing of acquisitions and business decisions which are unrelated to the insurance underwriting process. Loss from Early Extinguishment of Debt is driven by the Company’s financing and refinancing decisions and capital needs, as well as, external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends.
Kemper Corporation
Definitions of Non-GAAP Financial Measures (continued)
A reconciliation of Net Income to Adjusted Consolidated Net Operating Income is presented below:
| Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| Dollars in Millions (Unaudited) | Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Net Income | $ | 123.2 | $ | 97.5 | $ | 122.3 | $ | 126.1 | $ | 64.0 | |
| Less Net Income (Loss) From: | |||||||||||
| Income (Loss) from Change in Fair Value of Equity and Convertible Securities | 41.2 | 57.8 | 35.7 | 56.6 | (93.1) | ||||||
| Net Realized Gains on Sales of Investments | 10.9 | (0.1) | 7.9 | 9.3 | 13.0 | ||||||
| Impairment Losses | (3.2) | 0.4 | (0.8) | (5.5) | (9.5) | ||||||
| Acquisition Related Transaction, Integration and Other Costs | (12.9) | (15.8) | (11.4) | (13.5) | (9.3) | ||||||
| Debt Extinguishment, Pension and Other Charges | — | (50.6) | — | — | — | ||||||
| Adjusted Consolidated Net Operating Income (Loss) | $ | 87.2 | $ | 105.8 | $ | 90.9 | $ | 79.2 | $ | 162.9 |
Adjusted Consolidated Net Operating Income Per Unrestricted Share is a non-GAAP financial measure. It is computed by dividing Adjusted Consolidated Net Operating Income by the weighted average unrestricted shares outstanding. The most directly comparable GAAP financial measure is Net Income Per Unrestricted Share‐basic. A reconciliation of Net Income Per Unrestricted Share-basic to Adjusted Consolidated Net Operating Income Per Unrestricted Share-basic is presented below:
| Three Months Ended | |||||||||||
|---|---|---|---|---|---|---|---|---|---|---|---|
| (Unaudited) | Mar 31,<br>2021 | Dec 31,<br>2020 | Sep 30,<br>2020 | Jun 30,<br>2020 | Mar 31,<br>2020 | ||||||
| Net Income Per Unrestricted Share | $ | 1.88 | $ | 1.49 | $ | 1.87 | $ | 1.93 | $ | 0.96 | |
| Less Net Income (Loss) Per Unrestricted Share From: | |||||||||||
| Income (Loss) from Change in Fair Value of Equity and Convertible Securities | 0.63 | 0.87 | 0.54 | 0.87 | (1.40) | ||||||
| Net Realized Gains on Sales of Investments | 0.17 | — | 0.12 | 0.14 | 0.19 | ||||||
| Impairment Losses | (0.05) | 0.01 | (0.01) | (0.08) | (0.14) | ||||||
| Acquisition Related Transaction and Integration Costs | (0.20) | (0.24) | (0.17) | (0.21) | (0.14) | ||||||
| Debt Extinguishment, Pension and Other Charges | — | (0.77) | — | — | — | ||||||
| Adjusted Consolidated Net Operating Income Per Unrestricted Share | $ | 1.33 | $ | 1.62 | $ | 1.39 | $ | 1.21 | $ | 2.45 |
Underlying Combined Ratio is a non-GAAP financial measure. It is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio. The most directly comparable GAAP financial measure is the Combined Ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses and loss and LAE reserve development from prior years, with the Insurance Expense Ratio. The Company believes the underlying combined ratio is useful to investors and is used by management to reveal the trends in the Company’s property and casualty insurance businesses that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses cause loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior-year reserve developments are caused by unexpected loss development on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing on the performance of our insurance products in the current period. The Company believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing the Company’s underwriting performance. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business.
35
q12021earningspres
Earnings Call Presentation – 1Q 2021 First Quarter 2021 Earnings April 29, 2021
Earnings Call Presentation – 1Q 2021 Cautionary Statements Regarding Forward-Looking Information This presentation may contain or incorporate by reference information that includes or is based on forward-looking statements within the meaning of the safe-harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements give expectations or forecasts of future events and can be identified by the fact that they relate to future actions, performance or results rather than strictly to historical or current facts. Any or all forward-looking statements may turn out to be wrong, and, accordingly, readers are cautioned not to place undue reliance on such statements, which speak only as of the date of this presentation. Forward-looking statements involve a number of risks and uncertainties that are difficult to predict and are not guarantees of future performance. Among the general factors that could cause actual results and financial condition to differ materially from estimated results and financial condition are those factors listed in periodic reports filed by Kemper Corporation with the Securities and Exchange Commission (“SEC”). The COVID-19 outbreak and subsequent global pandemic (“Pandemic”) is an extraordinary event that creates unique uncertainties and risks. Kemper cannot provide any assurances as to the impacts of the Pandemic and related economic conditions on the Company’s operating and financial results. No assurances can be given that the results and financial condition contemplated in any forward-looking statements will be achieved or will be achieved in any particular timetable. Kemper assumes no obligation to publicly correct or update any forward-looking statements as a result of events or developments subsequent to the date of this presentation, including any such statements related to the Pandemic. The reader is advised, however, to consult any further disclosures Kemper makes on related subjects in its filings with the SEC. Non-GAAP Financial Measures This presentation contains non-GAAP financial measures that the company believes are meaningful to investors. Non-GAAP financial measures have been reconciled to the most comparable GAAP financial measure. Preliminary Matters 2
Earnings Call Presentation – 1Q 2021 Deliver low double-digit ROE2 over time Create Long-Term Shareholder Value Leverage competitive advantages to grow returns and BVPS1 over time ¹ Book value per share 2 Return on equity Sustainable competitive advantages and build core capabilities Growing returns and book value per share over time Diversified sources of earnings; Strong capital/liquidity positions; Disciplined approach to capital management Consumer-related businesses with opportunities that: • Target specialty markets • Have limited, weak or unfocused competition • Require unique expertise (underwriting, claim, distribution, analytics and other) Strategic focus: 3
Earnings Call Presentation – 1Q 2021 First Quarter 2021 Highlights Despite top-line headwinds, produced solid returns and cash generation Solid financial results despite environmental changes • Specialty Auto continues to produce strong earnings, though top line headwinds persist; 1.8% growth in PIF (ex. Classic Car sale) reflects state shutdowns early in the year • Preferred P&C was impacted by catastrophe losses from winter weather events – no change to anticipated annual catastrophe loss expectations • Life & Health results continue to reflect increased COVID-related mortality and policy retention • Solar energy investment drove $13 million of net operating income 1st Quarter Overview Delivered double-digit ROE and growth in book value per share ex. unrealized gain and goodwill • Net income of $123 million and adjusted consolidated net operating income1 of $87 million; earnings per share of $1.85 on a diluted basis; adjusted consolidated net operating EPS1 of $1.31 on a diluted basis • 11% ROAE2, 18% ROAE2 excluding net unrealized gains on fixed maturities and goodwill1 • Book value per share ex. net unrealized gains on fixed maturities and goodwill1 grew 17% year-over-year • Generated $526 million of operating cash flow over the trailing 12 months • Closed on American Access Casualty acquisition April 1 Shareholder Value Creation ¹ Non-GAAP financial measure; please see reconciliation in appendix on pages 22-30 2 Return on average shareholders’ equity (5-point average) Strong capital and liquidity position provides financial flexibility • Repurchased $47 million worth of shares • Holding company remains a source of strength for subsidiaries with greater than $1.3 billion of liquidity • Debt-to-capital ratio of 20.6% is within target range of 17-22% Capital Management and Financial Strength 4
Earnings Call Presentation – 1Q 2021 Focused and consistent strategy execution yields solid value creation for all stakeholders First Quarter Financial Highlights 18% ROATCE and 17% YoY growth in TBV per common share excluding unrealized gains1 As Reported Quarter Ended (Dollars in millions, except per share amounts) Mar 31, 2021 Mar 31, 2020 Net Income $123 $64 Net Income – Per Diluted Share $1.85 $0.95 Adjusted Consolidated Net Operating Income1 $87 $163 Adj. Consolidated Net Op. Income – Per Diluted Share1 $1.31 $2.43 Catastrophe Losses $28 $6 Tangible Book Value Per Common Share excluding unrealized gains1 $42.87 $36.49 Return on Avg. Tangible Common Equity1 18.1% 19.5% Dividend Paid to Shareholders Per Share $0.31 $0.30 Specialty PIF growth (ex. Classic Car) 1.8% 10% 5 ¹ Non-GAAP financial measure; please see reconciliation in appendix on pages 22-30
Earnings Call Presentation – 1Q 2021 Despite market challenges, business model continues to produce high-quality earnings Review of Net Operating Income ¹ Non-GAAP financial measure; see reconciliation in appendix pages 22-30 *All Other includes partial satisfaction of judgment ($89 million), refinement of CEI estimate and impact of purchase accounting Continue to produce sound Operating Income 6 Three Months Ended, As Reported Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Variance Dollars per Unrestricted Share - Diluted 2021 2020 2020 2020 2020 QoQ Net Income 1.85$ 1.46$ 1.83$ 1.91$ 0.95$ 0.90 (Income) Loss from Change in FV of Equity & Convertible Securities (0.62) (0.86) (0.53) (0.86) 1.39 (2.01) Investment Related (Gains)/Losses (0.16) - (0.12) (0.14) (0.19) 0.03 Net Impairment Losses 0.05 (0.01) 0.01 0.08 0.14 (0.09) Acquisition Related Transaction, Integration & Other Costs 0.19 0.24 0.17 0.21 0.14 0.05 Debt Extinguishment, Pension and Other Charges - 0.76 - - - - Adj. Consolidated Net Operating Income 1 1.31 1.59 1.36 1.20 2.43 (1.12) Sources of Volatility: Income (Loss) After-Tax From: Catastrophes (0.33) (0.07) (0.80) (0.34) (0.07) (0.26) - Solar Investment 0.20 0.05 - - - 0.20 Prior-year Reserve Development - (0.10) (0.10) (0.22) (0.01) 0.01 - Alternative Investment Income 0.32 0.27 0.12 (0.14) 0.07 0.25 - All Other* (0.03) (0.05) (0.05) - 1.03 (1.06) Total from Sources of Volatility 0.16$ 0.10$ (0.83)$ (0.70)$ 1.02$ (0.86)$
Earnings Call Presentation – 1Q 2021 Consistent Capital Generation and Attractive Returns Steady growth through various economic cycles Total Adjusted Return of BVPS Ex. Unrealized Gains on Fixed Maturities and Goodwill Return on Shareholders’ Equity 2016 2017 2018 2019 1Q20 2Q20 3Q20 4Q20 1Q21 Book Value Per Share ex. Goodwill and Unrealized¹ Cumulative Dividends Per Share Paid $31.21 $31.10$29.66 $40.27 $40.70 $44.41$42.58 $46.76 $48.29 1.1% 8.0% 11.4% 24.7% 19.5% 18.8% 17.9% 16.3% 18.1% 0.9% 6.6% 8.3% 16.3% 13.0% 12.8% 12.3% 11.3% 12.6% 2016 2017 2018 2019 1Q20 2Q20 3Q20 4Q20 1Q21 ROATCE ROE ex. Unrealized Gains on Fixed Maturities Growth 63% • Strong execution and solid operating results have led to consistent book value growth and shareholder returns • Book value growth reflects efficient capital deployment decisions and focus on intrinsic value creation • Attractive returns on equity through economic cycles • ROATCE measure appropriately captures investors compensation on tangible equity ¹ Non-GAAP financial measure; please see reconciliation in appendix on pages 22-30 2 Return on average tangible common equity (rolling 5 point avg.); please see reconciliation in appendix on pages 22-30 3 Return on average shareholder’s equity excluding unrealized gains on fixed maturities (rolling 5 point avg.); please see reconciliation in appendix on pages 22-30 2 3 7
Earnings Call Presentation – 1Q 2021 27.6% 21.9% 23.0% 16.4% 20.4% 20.6% 2016 2017 2018 2019 2020 1Q21 Debt-to-Capital <30% Strong Balance Sheet with Well-Funded Insurance Entities Significant capital and liquidity positions Debt Cash Flow from Operating Activities $2.7B $4.8B$4.0B$2.7B Total Capitalization Parent Company Liquidity Risk-Based Capital Ratios $299 $197 $101 $207 $733 $607 $385 $385 $540 $660 $700 $704 2016 2017 2018 2019 2020 1Q21 Borrowings Available Under Credit Agreement & from Subs HoldCo Cash & Investments (M M ) 415 430 410 355 340 335335 290 285 365 330 325 2016 2017 2018 2019 2020 1Q21 Life & Health P&C (ex. Alliance United) (% ) $684 $867 $641$582 (M M ) $241 $241 $539 $534 $448 $526 2016 2017 2018 2019 2020 1Q21 TTM $1,433 $5.7B Substantial financial flexibility for growth, investments and capital management $5.5B 8 $1,311
Earnings Call Presentation – 1Q 2021 Capital Actions Taken in 2021 Nearly $500 million of capital management actions taken year-to-date 9 • $47 million worth of common stock repurchased in the quarter • 590 thousand shares repurchased • Roughly 1% of outstanding shares • Repaid $50 million of our term loan due in 2023 • Third consecutive annual increase in dividend to $1.24 from $1.20 (at February 2021 Board meeting) • Closed on acquisition of American Access Casualty April 1 (~$372 million purchase price) Demonstrates strong capital stewardship and value creation for shareholders
Earnings Call Presentation – 1Q 2021 4.1% 3.2% 4.2% 4.5% 4.5% 0.2% 0.9% 1Q20 2Q20* 3Q20 4Q20 1Q21 55% 17% 6% 5% 6% 2% 9% Other States/ Munis 64% 30% 4% 2% Diversified & Highly-Rated Portfolio Fixed Maturity Ratings $7.5 Billion A or Higher ≤ CCC B / BB BBB Diversified Portfolio with Consistent Returns Note: Charts may not balance due to rounding ¹ I Equity securities excludes $295 million of Other Equity Interests of LP/LLC’s that have been reclassified into Alternative Investments • Net investment income and portfolio yield benefitted from strong alternative investment performance • Investment portfolio is designed for growth of both income and total return • Stable investment income supports long- term business objectives $80 $80 $81 $81 $76 $6 $(12) $11 $22 $27 1Q20 2Q20 3Q20 4Q20 1Q21 Core Portfolio Alternative Inv. Portfolio Net Investment Income¹ (M M ) $86 $103$103$92$68 Overview Corporates Short-term Alternatives¹ Equity¹ U.S. Gov’t Portfolio Composition Pre-Tax Equiv. Annualized Book Yield $9.8 Billion 10 *90 BPS adverse impact from alternatives Annualized Solar Yield
Earnings Call Presentation – 1Q 2021 Solar Energy Investment: In Line with Environmental Impact Goals $100 million commitment to solar energy tax credit equity generating attractive returns 11 • In conjunction with Sunrun, invested in a diversified basket of residential solar energy projects • Opportunity to provide renewable energy solutions for homeowners that benefits the environment • Expect to earn an attractive return that will primarily be recognized as tax credits and deductions as well as operating cash flows • Majority of financial benefits will be recognized over the next two years • Largest impact is expected to have taken place in 1Q’21 Reporting on Income Statement Line Items ▪ $15.4 million reduction to Total Revenues in 1Q’21 ($0.23) per share ▪ ($28.6) million benefit to Tax Expense in 1Q’21 $0.43 per share ▪ $13.2 million net benefit in 1Q’21 $0.20 per share ▪ Will reduce our Effective Tax Rate over next two years Continue to optimize our capital management through investments with attractive returns and cash flows
Earnings Call Presentation – 1Q 2021 93.1 88.5 85.4 90.8 93.2 93.1 91.0 88.9 89.4 93.2 1Q20 2Q20 3Q20 Q420 Q121 Underlying Combined Ratio¹ QTD YTD Specialty Auto Insurance Segment1 Environment continues to normalize with state-specific geographic re-openings Source: Population growth sources include U.S. Census Bureau and The Association Institute ¹ As adjusted for acquisition; see reconciliation on Pages 22-30 2 Non-GAAP financial measure; see reconciliation in appendix on pages 22-30 (% ) Key Highlights Strength of franchise continues to create value for our stakeholders Written Premium Population CAGR State Groupings TTM ($ million) YoY Growth ’16-’19 Est. ’20-’30 California $2,051 1.4% 0.3% 0.8% Florida / Texas $878 16.7% 1.3% 1.6% Expansion States $225 19.7% 1.0% 1.1% Other $51 - 0.3% 0.4% Total $3,205 6.3% US 0.6% Hispanic 1.6% 12 Key Metrics ($ in millions) 1Q’21 Change to 1Q’20 Earned Premiums $878 6.7% Underlying Loss & LAE Ratio2 74.0% (130)bps Underlying Expense Ratio2 19.1% 120 bps Policies In-Force (000) 1,915 0.1% Policies In-Force ex. Classic Car (000) 1,912 1.8% • Slow state re-openings • 1.8% growth in PIF, excluding Classic Car • Slow shopping behavior (particularly in CA) impacted early in the quarter with improved customer demand and growth in March • Pre-COVID levels of frequency are returning • Written premium increased 7%, led by continued opportunities in core and emerging geographies, and strong commercial vehicle growth
Earnings Call Presentation – 1Q 2021 Preferred Property & Casualty Insurance Segment Ongoing efforts to bring segment to target profitability continue Key Highlights 97.5 88.6 96.8 103.1 97.6 83.5 77.8 80.4 77.6 78.8 1Q20 2Q20 3Q20 4Q20 1Q21 Underlying Combined Ratio¹ Auto Home & Other Profitability improvement actions continue ¹ Non-GAAP financial measure; please see reconciliation in appendix on pages 22-30 • Underlying combined ratio in the segment decreased to 90.7% for the quarter • Auto PIF and underlying combined ratio results reflect efforts to reposition the business for profitability • Home & Other absorbed seasonally-elevated catastrophe activity driven by winter weather • While Q1 was elevated from a historical perspective, no change to full year expected catastrophe impact range (% ) 13 Key Metrics ($ in millions) 1Q’21 Change to 1Q’20 Auto Earned Premiums $103 (10.4)% Policies In-Force (000) 215 (11.3)% Home & Other Earned Premiums $59 (10.3)% Policies In-Force (000) 210 (9.1)%
Earnings Call Presentation – 1Q 2021 Life & Health Insurance Segment Positive momentum as “P&C catastrophe-like” impact declines Note: Chart may not balance due to rounding ¹ Excludes other income and solar credit impairment (M M ) • Business remains profitable, despite challenging pandemic impact - Increased mortality experience remains largely in line with country-wide trends - Stronger policy retention continues to elevate ongoing benefit cost while creating long-term value • Product demand increasing with an improving environment Key Highlights $163 $163 $161 $162 $161 $51 $44 $51 $53 $51 1Q20 2Q20 3Q20 4Q20 1Q21 Revenues1 Earned Premiums Net Investment Income $212$211$207$214 $215 Long-term cash flow and value creation remain strong Key Metrics ($ in millions) 1Q’21 Change to 1Q’20 L&H Net Operating Income $7.3 (67.3)% Life Face Value of In-Force $20,046 1.6% Policies In-Force (000) 3,342 (2.4)% 14
Earnings Call Presentation – 1Q 2021 Appendix 15
Earnings Call Presentation – 1Q 2021 ….to create value for all our stakeholders A Leading Specialized Insurer Taking advantage of a diversified portfolio of niche businesses…. Founded in 1990 and headquartered in Chicago, with subsidiaries writing policies since 1911 ~6.3M Policies ~30,000 Agents/Brokers ~9,500 Employees Preferred personal lines insurance providing preferred automobile, homeowners and other personal insurance products ~$14B Assets Specialty P&C insurance providing personal and commercial automobile insurance products Life and health insurance providing life, supplemental benefits, and other property insurance products 16
Earnings Call Presentation – 1Q 2021 Capital Deployment Priorities Dedicated to being good stewards of capital Management and capital deployment priorities focused on maximizing shareholder value 1. Investment in the business • Fund profitable organic growth at appropriate risk-adjusted returns • Strategic investments and acquisitions that enhance the business and meet or exceed our ROE targets over time 2. Return capital to shareholders • Repurchase shares opportunistically • Maintain competitive dividends 17
Earnings Call Presentation – 1Q 2021 Below Investment Grade Fixed Maturities Portfolio of $450 Million 18 Portfolio is diversified across different asset types Below investment grade portfolio represents 6% of our fixed maturities portfolio $184 $98 $94 $56 $13 $4 $1 40.9% 21.7% 20.9% 12.5% 2.9% 0.9% 0.2% 0.0% 5.0% 10.0% 15.0% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% $0 $20 $40 $60 $80 $100 $120 $140 $160 $180 $200 Private Senior CLO Private Junior Public Corp Munis Foreign Government Non-Agency MBS B e lo w I n v e st m e n t G ra d e $ A m o u n t (M M ) % o f F ix e d M a tu ri ty P o rt fo li o
Earnings Call Presentation – 1Q 2021 CLO Composition ($783 Million) 19 $97 $529 $36 $23 $97 12.4% 67.5% 4.7% 2.9% 12.4% 0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 70.0% 80.0% $0 $100 $200 $300 $400 $500 $600 AAA AA A BBB High Yield Well-diversified CLO book with 85% of holdings classified ‘A’ or higher $ A m o u n t (M M ) % o f C LO P o rt fo li o CLOs represent 8% of investment portfolio
Earnings Call Presentation – 1Q 2021 Alternative Investment Portfolio of $594 Million 20 Portfolio is highly diversified with strategies focused on private credit, private equity and hedge funds Alternative investment portfolio is ~6% of total investments and diversified across underlying investment strategies with primary focus on current income generation $348.4 $112.6 $78.7 $54.4 Private Credit Private Equity Hedge Funds Tax Equity Funds Private Credit ~3% of total investments (59% of Alts portfolio) Diversification across date of investment, industry and geography Private Equity ~ 1% of total investments (19% of Alts portfolio) Diversification across date of investment, industry and geography Hedge Funds < 1% of total investments (13% of Alts portfolio) Diversified in strategies with focus on minimum correlation to public markets and additional liquidity relative to Private Credit and Private Equity strategies Tax Equity Funds < 1% of total investments (9% of Alts portfolio)
Earnings Call Presentation – 1Q 2021 2021 Reinsurance Program Both programs were renewed with no significant change • Policy placed at 1/1/21 similar to prior three years • Total coverage: 95% of $225 million in excess of $50 million Catastrophe Reinsurance Program (Multi-Year) • Same coverage as 2020 program • Intended to reduce volatility from high- frequency, low severity events • Coverage – $50 million in excess of $60 million – $500k deductible per storm – Perils: All perils, excluding named storms (e.g., hurricanes) and earthquakes – Covered Line: Property, Fire and Dwelling Aggregate Catastrophe Program 2021 Aggregate Catastrophe Reinsurance Program 21 Retention 3-Year Term Placed 1/1/20 $100M xs $150M 31.67% Placed 3-Year Term Placed 1/1/21 $100M xs $150M 31.67% Placed* 3-Year Term Placed 1/1/20 $100M xs $50M 31.67% Placed 3-Year Term Placed 1/1/21 $100M xs $50M 31.67% Placed* 3-Year Term Placed 1/1/19 $100M xs $50M 31.67% Placed Retention 100% of first $50M R e te n tio n 5 % o f $ 2 2 5 M xs $ 5 0 M 3-Year Term Placed 1/1/19 $100M xs $150M 31.67% Placed 1-Year Term Placed 1/1/21 $25M xs $250M 95% Placed *4% was placed on an annual basis through Reinsurance Facilities
Earnings Call Presentation – 1Q 2021 Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities is a ratio that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the after-tax impact of net unrealized gains on fixed income securities by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. The Company uses the trend in book value per share, excluding the after-tax impact of net unrealized gains on fixed income securities in conjunction with book value per share to identify and analyze the change in net worth attributable to management efforts between periods. The Company believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are generally not influenced by management. The Company believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers. Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Goodwill is a calculation that uses a non-GAAP financial measure. It is calculated by dividing shareholders’ equity after excluding the after-tax impact of net unrealized gains on fixed income securities and goodwill by total Common Shares Issued and Outstanding. Book value per share is the most directly comparable GAAP financial measure. The Company uses the trends in book value per share excluding the after-tax impact of net unrealized gains on fixed income securities and goodwill in conjunction with book value per share to identify and analyze the change in net worth excluding goodwill attributable to management efforts between periods. The Company believes the non-GAAP financial measure is useful to investors because it eliminates the effect of items that can fluctuate significantly from period to period and are generally driven by economic developments, primarily capital market conditions, the magnitude and timing of which are not influenced by management. The Company believes it enhances understanding and comparability of performance by highlighting underlying business activity and profitability drivers. Non-GAAP Financial Measures 22 1Q'21 4Q'20 3Q'20 2Q'20 1Q'20 2019 2018 2017 2016 Book Value Per Share 66.74$ 69.74$ 66.47$ 64.15$ 57.54$ 59.59$ 47.10$ 41.11$ 38.52$ Less: Net Unrealized Gains on Fixed Maturities Per Share (6.74) (11.07) (9.84) (9.02) (4.01) (6.51) (1.70) (5.54) (3.52) Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities 60.00$ 58.67$ 56.63$ 55.13$ 53.53$ 53.08$ 45.40$ 35.57$ 35.00$ Less: Goodwill (17.13) (17.02) (17.03) (17.06) (17.04) (16.72) (17.18) (6.28) (6.30) Book Value Per Share Excluding Net Unrealized Gains on Fixed Maturities and Goodwill 42.87$ 41.65$ 39.60$ 38.07$ 36.49$ 36.36$ 28.22$ 29.29$ 28.70$ For the Periods Ended
Earnings Call Presentation – 1Q 2021 Return on Equity Non-GAAP Financial Measures 23 1Q'21 4Q'20 3Q'20 2Q'20 1Q'20 2019 2018 2017 2016 Rolling 12 Month Return on Average Shareholders' Equity (5 Point Avg) 11.1% 9.8% 10.8% 11.4% 11.8% 14.8% 7.7% 5.9% 0.8% Less: Net Unrealized Gains on Fixed Maturities 1.5% 1.5% 1.5% 1.4% 1.2% 1.5% 0.6% 0.7% 0.1% Rolling 12 Month Return on Average Shareholders' Equity Excluding Net Unrealized Gains on Fixed Maturities (5 Point Avg) 12.6% 11.3% 12.3% 12.8% 13.0% 16.3% 8.3% 6.6% 0.9% Less: Goodwill 5.5% 5.0% 5.6% 6.0% 6.5% 8.4% 3.1% 1.4% 0.2% Rolling 12 Month Return on Average Shareholders' Equity Excluding Net Unrealized Gains on Fixed Maturities and Goodwill (5 Point Avg) 18.1% 16.3% 17.9% 18.8% 19.5% 24.7% 11.4% 8.0% 1.1% For the Periods Ended
Earnings Call Presentation – 1Q 2021 Reconciliation of “All Other” Sources of Volatility Non-GAAP Financial Measures 24 Three Months Ended, As Reported Mar. 31, Dec. 31, Sep. 30, Jun. 30, Mar. 31, Variance Dollars per Unrestricted Share - Diluted 2021 2020 2020 2020 2020 QoQ - - All Other Volatility Partial Satisfaction of Judgment - - - - 1.05 (1.05) Sale of Classic Collectors Auto Business - - - - - - Refinement of CEI Estimate - - - 0.06 0.05 (0.05) Impact of Purchase Accounting (0.03) (0.05) (0.05) (0.06) (0.07) 0.04 Total All Other (0.03) (0.05) (0.05) - 1.03 (1.06)
Earnings Call Presentation – 1Q 2021 Kemper believes that Adjusted Consolidated Net Operating Income provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Income (Loss) from Change in Fair Value of Equity and Convertible Securities, Net Realized Gains on Sales of Investments and Impairment Losses related to investments included in the Company’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the Company’s investments, the timing of which is unrelated to the insurance underwriting process. Acquisition Related Transaction and Integration Costs may vary significantly between periods and are generally driven by the timing of acquisitions and business decisions which are unrelated to the insurance underwriting process. Debt Extinguishment, Pension and Other Charges relate to (i) loss from early extinguishment of debt, which is driven by the Company’s financing and refinancing decisions and capital needs, as well as external economic developments such as debt market conditions, the timing of which is unrelated to the insurance underwriting process; (ii) settlement of pension plan obligations which are business decisions are made by the Company, the timing of which is unrelated to the underwriting process; and (iii) other charges that are non-standard, not part of the ordinary course of business, and unrelated to the insurance underwriting process. Significant non-recurring items are excluded because, by their nature, they are not indicative of the Company’s business or economic trends. Non-GAAP Financial Measures 25
Earnings Call Presentation – 1Q 2021 Diluted Adjusted Consolidated Net Operating Income Per Unrestricted Share is a non-GAAP financial measure computed by dividing Adjusted Consolidated Net Operating Income (Loss) attributed to unrestricted shares by the weighted-average unrestricted shares and equivalent shares outstanding. The most directly comparable GAAP financial measure is Diluted Net Income Per Unrestricted Share. Kemper believes that Diluted Adjusted Consolidated Net Operating Income Per Unrestricted Share provides investors with a valuable measure of its ongoing performance because it reveals underlying operational performance trends that otherwise might be less apparent if the items were not excluded. Income from change in fair value of equity and convertible securities, net realized gains on sales of investments, impairment losses related to investments, acquisition related transaction, integration and other costs and loss from early extinguishment of debt included in Kemper’s results may vary significantly between periods and are generally driven by business decisions and external economic developments such as capital market conditions that impact the values of the company’s investments, the timing of which is unrelated to the insurance underwriting process. Non-GAAP Financial Measures 26 Per Unrestricted Share 1Q21 4Q20 3Q20 2Q20 1Q20 Net Income - Diluted 1.85$ 1.46$ 1.83$ 1.91$ 0.95$ Net (Income) Loss From: Change in Fair Value of Equity & Convertible Securities (0.62) (0.86) (0.53) (0.86) 1.39 Net Realized Gains on Sales of Investments (0.16) - (0.12) (0.14) (0.19) Impairment Losses 0.05 (0.01) 0.01 0.08 0.14 Acquisition Related Transaction, Integration and Other Costs 0.19 0.24 0.17 0.21 0.14 Debt Extinguishment, pension and other charges - 0.76 - - - Adj. Consolidated Net Operating Income - Diluted 1.31$ 1.59$ 1.36$ 1.20$ 2.43$ For the Three Months Ended
Earnings Call Presentation – 1Q 2021 Underlying Combined Ratio is a non-GAAP financial measure. It is computed by adding the Current Year Non-catastrophe Losses and LAE Ratio with the Insurance Expense Ratio. The most directly comparable GAAP financial measure is the Combined Ratio, which is computed by adding total incurred losses and LAE, including the impact of catastrophe losses and loss and LAE reserve development from prior years, with the Insurance Expense Ratio. The Company believes the underlying combined ratio is useful to investors and is used by management to reveal the trends in the Company’s property and casualty insurance businesses that may be obscured by catastrophe losses and prior-year reserve development. These catastrophe losses cause loss trends to vary significantly between periods as a result of their incidence of occurrence and magnitude, and can have a significant impact on the combined ratio. Prior-year reserve developments are caused by unexpected loss development on historical reserves. Because reserve development relates to the re-estimation of losses from earlier periods, it has no bearing on the performance of our insurance products in the current period. The Company believes it is useful for investors to evaluate these components separately and in the aggregate when reviewing the Company’s underwriting performance. The underlying combined ratio should not be considered a substitute for the combined ratio and does not reflect the overall underwriting profitability of our business. Non-GAAP Financial Measures 27
Earnings Call Presentation – 1Q 2021 Underlying Combined Ratio – Continued Non-GAAP Financial Measures 28 1Q21 4Q20 3Q20 2Q20 1Q20 Specialty P&C Insurance Combined Ratio as Reported 93.5% 91.7% 86.3% 91.0% 94.5% Current Year Catastrophe Loss and LAE Ratio (0.2%) (0.6%) (0.2%) (0.6%) 0.0% Prior Years Non-Catastrophe Losses and LAE 0.2% 0.2% (0.2%) (1.3%) (0.6%) Prior Years Catastrophe Losses and LAE Ratio 0.0% 0.0% 0.0% 0.0% 0.0% Underlying Combined Ratio 93.5% 91.3% 85.9% 89.1% 93.9% Preferred P&C Insurance Combined Ratio as Reported 105.4% 96.2% 129.9% 102.2% 92.6% Current Year Catastrophe Loss and LAE Ratio (14.8%) 3.1% (35.5%) (12.6%) (2.7%) Prior Years Non-Catastrophe Losses and LAE (0.1%) (5.6%) (3.6%) (5.0%) 1.8% Prior Years Catastrophe Losses and LAE Ratio 0.2% (0.1%) (0.1%) (0.2%) 0.6% Underlying Combined Ratio 90.7% 93.6% 90.7% 84.4% 92.3% Preferred Auto Combined Ratio as Reported 99.5% 112.3% 103.5% 100.1% 99.5% Current Year Catastrophe Loss and LAE Ratio (0.6%) (0.4%) (1.6%) (2.0%) (0.2%) Prior Years Non-Catastrophe Losses and LAE (1.2%) (9.2%) (5.3%) (9.8%) (1.9%) Prior Years Catastrophe Losses and LAE Ratio (0.1%) 0.4% 0.2% 0.3% 0.1% Underlying Combined Ratio 97.6% 103.1% 96.8% 88.6% 97.5% Preferred Home & Other Combined Ratio as Reported 115.7% 68.6% 175.6% 105.4% 80.7% Current Year Catastrophe Loss and LAE Ratio (39.5%) 9.2% (94.1%) (28.8%) (7.0%) Prior Years Non-Catastrophe Losses and LAE 1.9% 0.6% (0.6%) 2.3% 8.3% Prior Years Catastrophe Losses and LAE Ratio 0.7% (0.8%) (0.5%) (1.1%) 1.5% Underlying Combined Ratio 78.8% 77.6% 80.4% 77.8% 83.5% For the Three Months Ended
Earnings Call Presentation – 1Q 2021 As Adjusted for Acquisition – Continued Non-GAAP Financial Measures ¹ As Adjusted is a non-GAAP measure, which is comprised by excluding impact of purchase accounting in 2018 and including historical results of Kemper and Infinity in periods prior to acquisition date of July 2, 2018. 29 Specialty P&C Insurance Segment 31-Mar-21 31-Dec-20 30-Sep-20 30-Jun-20 31-Mar-20 Earned Premiums Kemper Specialty P&C - GAAP As Reported 877.6$ 882.4$ 871.4$ 759.0$ 822.5$ Current Year Non-CAT Losses and LAE Kemper Specialty P&C - GAAP As Reported 650.0$ 626.2$ 589.0$ 515.8$ 619.8$ Less: Impact of Purchase Accounting Amortization of Fair Value Adjustment to Infinity's Unpaid Loss and LAE 0.4 0.4 0.3 0.8 0.7 As Adjusted 1 649.6$ 625.8$ 588.7$ 515.0$ 619.1$ Insurance Expenses Kemper Specialty P&C - GAAP As Reported 170.3$ 179.1$ 159.5$ 161.2$ 152.1$ Less: Impact of Purchase Accounting 2.3 4.1 4.2 4.5 5.2 As Adjusted 1 168.0$ 175.0$ 155.3$ 156.7$ 146.9$ As Adjusted 1 Underlying Combined Ratio As Adjusted 1 Underlying Loss & LAE Ratio 74.0% 70.9% 67.6% 67.8% 75.3% As Adjusted 1 Expense Ratio 19.1% 19.8% 17.8% 20.6% 17.9% As Adjusted 1 Underlying Combined Ratio 93.2% 90.8% 85.4% 88.5% 93.1% Three Months Ended
Earnings Call Presentation – 1Q 2021 As Adjusted for Acquisition – Continued Non-GAAP Financial Measures ¹ As Adjusted is a non-GAAP measure, which is comprised by excluding impact of purchase accounting in 2018 and including historical results of Kemper and Infinity in periods prior to acquisition date of July 2, 2018. 30 Specialty Personal Automobile Insurance 31-Mar-21 31-Dec-20 30-Sep-20 30-Jun-20 31-Mar-20 Earned Premiums Kemper Specialty Auto - GAAP As Reported 785.4$ 796.1$ 792.2$ 689.8$ 753.2$ Current Year Non-CAT Losses and LAE Kemper Specialty Auto - GAAP As Reported 586.4$ 569.1$ 543.4$ 472.4$ 576.0$ Less: Impact of Purchase Accounting Amortization of Fair Value Adjustment to Infinity's Unpaid Loss and LAE 0.3 0.3 0.2 0.6 0.6 As Adjusted 1 586.1$ 568.8$ 543.2$ 471.8$ 575.4$ Insurance Expenses Kemper Specialty Auto - GAAP As Reported 155.3$ 162.8$ 145.6$ 146.7$ 139.2$ Less: Impact of Purchase Accounting 1.8 3.3 3.2 3.5 4.5 As Adjusted 1 153.5$ 159.5$ 142.4$ 143.2$ 134.7$ As Adjusted 1 Underlying Combined Ratio As Adjusted 1 Underlying Loss & LAE Ratio 74.6% 71.4% 68.6% 68.4% 76.4% As Adjusted 1 Expense Ratio 19.5% 20.0% 18.0% 20.8% 17.9% As Adjusted 1 Underlying Combined Ratio 94.2% 91.5% 86.5% 89.2% 94.3% Three Months Ended