Business Segments

12 Months Ended

Dec. 31, 2012

Segment Reporting [Abstract]

Business Segments

NOTE 19. BUSINESS SEGMENTS

The Company is engaged, through its subsidiaries, in the property and casualty insurance and life and health insurance businesses. The Company conducts its operations through four operating segments: Kemper Preferred, Kemper Specialty, Kemper Direct and Life and Health Insurance.

The Kemper Preferred segment provides preferred and standard risk personal automobile insurance, homeowners insurance and other personal insurance through independent agents. The Kemper Specialty segment provides automobile insurance to individuals and businesses in the non-standard and specialty market through independent agents. The non-standard automobile insurance market consists of individuals and companies that have difficulty obtaining standard or preferred risk insurance, usually because of their adverse driving records or claim or credit histories. The Kemper Direct segment currently distributes personal automobile, homeowners and renters insurance products through employer-sponsored voluntary benefit programs and other affinity relationships. Prior to ceasing direct-to-consumer marketing activities in the third quarter of 2012, Kemper Direct also distributed its products directly to consumers through a variety of direct-to-consumer websites, including its own websites. The Life and Health Insurance segment provides individual life, accident, health and property insurance.

The Company’s earned premiums are derived in the United States. The accounting policies of the segments are the same as those described in Note 2, “Summary of Accounting Policies and Accounting Changes,” to the Consolidated Financial Statements. Capital expenditures for long-lived assets by operating segment are immaterial.

The Company does not allocate insurance reserves from its 2002 acquisition of certain insurance companies from SCOR (see Note 6, “Property and Casualty Insurance Reserves,” to the Consolidated Financial Statements). It is also the Company’s management practice to allocate certain corporate expenses, primarily compensation costs for corporate employees and related facility costs, included in Interest and Other Expenses in the Consolidated Statements of Income to its insurance operations. The amount of such allocated corporate expenses was $31.7 million, $33.0 million and $30.9 million for the years ended December 31, 2012, 2011 and 2010, respectively. The Company does not allocate Net Realized Gains on Sales of Investments, Net Impairment Losses Recognized in Earnings, interest expense on debt or retirement plans, and actuarial gains and losses on its retirement plans to its operating segments.

Segment Assets at December 31, 2012 and 2011 were:

DOLLARS IN MILLIONS	2012		2011
SEGMENT ASSETS
Kemper Preferred	$	1,562.0	$	1,544.0
Kemper Specialty	684.6		615.8
Kemper Direct	453.3		570.8
Life and Health Insurance	4,781.8		4,802.5
Corporate and Other, Net	527.4		401.6
Total Assets	$	8,009.1	$	7,934.7

NOTE 19. BUSINESS SEGMENTS (Continued)

Segment Revenues for the years ended December 31, 2012, 2011 and 2010 were:

DOLLARS IN MILLIONS	2012			2011			2010
REVENUES
Kemper Preferred:
Earned Premiums	$	879.4		$	859.8		$	888.0
Net Investment Income	45.0			48.8			55.4
Other Income	0.4			0.3			0.4
Total Kemper Preferred	924.8			908.9			943.8
Kemper Specialty:
Earned Premiums	419.8			445.2			474.9
Net Investment Income	19.0			22.8			25.8
Other Income	0.3			0.5			0.6
Total Kemper Specialty	439.1			468.5			501.3
Kemper Direct:
Earned Premiums	168.0			222.7			282.4
Net Investment Income	13.9			17.4			20.6
Other Income	—			0.1			0.1
Total Kemper Direct	181.9			240.2			303.1
Life and Health Insurance:
Earned Premiums	639.9			645.9			644.1
Net Investment Income	204.3			200.5			213.0
Other Income	0.1			0.1			0.2
Total Life and Health Insurance	844.3			846.5			857.3
Total Segment Revenues	2,390.1			2,464.1			2,605.5
Net Realized Gains on the Sales of Investments	65.4			33.7			42.6
Net Impairment Losses Recognized in Earnings	(6.9		)	(11.3		)	(16.5		)
Other	13.7			8.5			10.9
Total Revenues	$	2,462.3		$	2,495.0		$	2,642.5

NOTE 19. BUSINESS SEGMENTS (Continued)

Segment Operating Profit for the years ended December 31, 2012, 2011 and 2010 was:

DOLLARS IN MILLIONS	2012			2011			2010
SEGMENT OPERATING PROFIT (LOSS)
Kemper Preferred	$	(28.0	)	$	(40.6	)	$	66.9
Kemper Specialty	(2.8		)	24.2			25.6
Kemper Direct	(4.8		)	(47.2		)	(7.9		)
Life and Health Insurance	140.4			152.3			141.9
Total Segment Operating Profit	104.8			88.7			226.5
Corporate and Other Operating Loss	(40.9		)	(42.8		)	(26.3		)
Total Operating Profit	63.9			45.9			200.2
Net Realized Gains on Sales of Investments	65.4			33.7			42.6
Net Impairment Losses Recognized in Earnings	(6.9		)	(11.3		)	(16.5		)
Income from Continuing Operations before Income Taxes and Equity in Net Loss of Former Investee	$	122.4		$	68.3		$	226.3

Segment Net Operating Income for the years ended December 31, 2012, 2011 and 2010 was:

DOLLARS IN MILLIONS	2012			2011			2010
SEGMENT NET OPERATING INCOME (LOSS)
Kemper Preferred	$	(11.2	)	$	(17.6	)	$	52.9
Kemper Specialty	1.2			19.8			21.0
Kemper Direct	(0.9		)	(27.5		)	(1.7		)
Life and Health Insurance	90.8			98.9			87.4
Total Segment Net Operating Income	79.9			73.6			159.6
Unallocated Net Operating Loss	(26.1		)	(26.5		)	(14.4		)
Consolidated Net Operating Income	53.8			47.1			145.2
Unallocated Net Income (Loss) From:
Net Realized Gains on Sales of Investments	42.5			21.9			27.9
Net Impairment Losses Recognized in Earnings	(4.5		)	(7.3		)	(10.7		)
Income from Continuing Operations	$	91.8		$	61.7		$	162.4

Amortization of Deferred Policy Acquisition Costs by Operating Segment for the years ended December 31, 2012, 2011 and 2010 was:

DOLLARS IN MILLIONS	2012		2011		2010
Kemper Preferred	$	147.8	$	144.4	$	152.6
Kemper Specialty	58.7		62.6		67.7
Kemper Direct	6.1		8.8		9.8
Life and Health Insurance	44.4		44.9		42.1
Total Amortization	$	257.0	$	260.7	$	272.2

NOTE 19. BUSINESS SEGMENTS (Continued)

Earned Premiums by product line for the years ended December 31, 2012, 2011 and 2010 were:

DOLLARS IN MILLIONS	2012		2011		2010
EARNED PREMIUMS
Life	$	393.4	$	395.1	$	396.7
Accident and Health	165.2		166.3		161.9
Property and Casualty:
Personal Lines:
Automobile	1,050.1		1,129.4		1,249.5
Homeowners	318.0		304.1		298.7
Other Personal	136.9		138.7		139.0
Total Personal Lines	1,505.0		1,572.2		1,687.2
Commercial Automobile	43.5		40.0		43.6
Total Earned Premiums	$	2,107.1	$	2,173.6	$	2,289.4